Business Plan & Financial Modelling

What is a business plan and financial model?

A business plan explains what a business does, for whom, how it will grow, and what it needs to get there. The financial model is its quantitative core: a connected set of projected income statements, balance sheets, and cash flows, driven by clear assumptions about customers, pricing, costs, hiring, and funding.

A good model is a decision tool, not just a document for investors. It shows how much money you need, when you'll run out, what drives profitability, and what happens if assumptions change.

The key terms

The building blocks of a sound model:

Three-statement model

Projected profit and loss, balance sheet, and cash flow, linked so that they always balance.

Drivers

The assumptions that move the numbers — customers, conversion rates, prices, churn, headcount, and costs per unit.

Unit economics

Revenue and cost per customer or unit, showing whether growth creates or consumes value.

Scenarios

Base, downside, and upside cases that show how results change under different assumptions.

Funding requirement

How much money the business needs, and when, derived from the cash flow.

Valuation

An estimate of what the business is worth, often using discounted cash flow or comparable company methods.

Sensitivity analysis

Testing how much results change when a single assumption moves.

Why it matters

A model shapes decisions and conversations with investors and lenders:

How much to raise

The cash flow shows the funding needed and when it runs out.

Credibility

Investors and lenders test assumptions. A model grounded in data earns trust.

Understanding the business

Building the model forces clarity on what really drives results.

Scenario planning

Seeing downside outcomes in advance helps plan responses.

Valuation discussions

A defensible model supports valuation negotiations.

Tracking progress

Actual results can be compared with the plan month by month.

Loan applications

Lenders need projections to assess repayment capacity.

Who is this for?

For the next 12 months' operational budget and cash flow, see our Budgeting, Forecasting & Cash Flow Planning service.

Financial model vs. budget

Related but distinct:

What we'll need from you

Historical data

Actual financials and operating metrics to date.

Business model

How you make money, pricing, and customer acquisition.

Plans

Growth, hiring, product, and expansion plans.

Market information

Market size and competitor benchmarks where available.

Funding plans

Planned rounds, loans, and their timing.

Purpose

Who the model is for, so it answers their questions.

Models are delivered in Excel or Google Sheets, with assumptions clearly separated so you can update them.

How we build your model

Our approach:

1. 1

   Understand the business

   We learn how the business works and what the model needs to answer.

2. 2

   Agree drivers

   Key drivers and assumptions are agreed, grounded in your data.

3. 3

   Build the model

   A linked three-statement model is built on those drivers.

4. 4

   Test scenarios

   Base, downside, and upside cases are run.

5. 5

   Review and refine

   We walk through the model with you and refine assumptions.

6. 6

   Support its use

   We help you present it to investors or lenders, and update it over time.

Keeping the model useful

A model should evolve with the business:

Track actuals

Compare actual results with the model monthly.

Update assumptions

Revise drivers as you learn more.

Refresh before raising

Update the model before every fundraise or loan application.

Keep it simple

Resist adding complexity that doesn't change decisions.

Version control

Keep versions so you can see how the plan changed.

Share consistently

Use the same model for all stakeholders.

Benefits and responsibilities