Service
Financial modelling and projections
A model is not a forecast of the future. It is a transparent calculation of what has to be true for the business to work — and what happens when it is not.
- Excel model with every assumption visible and editable
- P&L, cash flow, break-even and scenario switches
- Built to match the plan narrative, not separate from it
- No accuracy claims and no funding guarantees
What the model has to do
A financial model serves three audiences at once. The founder needs to understand the business. The lender needs to see repayment capacity. The investor needs to see the shape of the opportunity.
That means the model cannot be a single tab of numbers. It needs a clear structure:
| Sheet | Purpose |
|---|---|
| Assumptions | Every input in one place: price, volume, growth, costs, payment terms |
| Revenue build | Volume × price, by product or channel, with seasonality |
| Operating costs | Fixed and variable costs, staffing, rent, marketing |
| P&L | Monthly for year one or two, annual thereafter |
| Cash flow | Receipts, payments, working capital, closing cash |
| Funding and debt | Drawdowns, repayments, interest, equity |
| Break-even | Fixed costs ÷ contribution margin, in units and revenue |
| Scenarios | Base, downside, upside with named switches |
Assumptions first
The most useful page in any model is the assumptions page. If a reader cannot see what you assumed, they cannot evaluate the plan — they can only react to the output.
Every assumption gets a value, a unit, a source or rationale, and a note on whether it is verified or estimated. Examples of what belongs there:
- Average selling price and expected discounting.
- Units per day, week or month, with seasonality.
- Cost of goods, including wastage and shrinkage.
- Staffing numbers and salary burden.
- Rent per square metre and service charges.
- Payment terms from customers and to suppliers.
- Capital expenditure timing.
Where a number is an estimate, it is labelled. A model full of false precision is less credible than one that separates known from assumed.
Break-even and sensitivity
Break-even is the clearest single output a founder can read: how much must be sold, at the assumed margin, before the business covers its fixed costs.
The model shows it in units and in revenue, and then tests it:
- What happens if volume is 20% lower?
- What happens if the price has to drop 10% to win customers?
- What happens if the fit-out takes three months longer?
- What happens if receivables take 90 days instead of 30?
Those four questions expose most of the fragility in a small-business plan. If the business only works at the top of every range, the model should say that plainly.
Cash is not profit
A profitable business can run out of cash. The cash flow sheet therefore sits alongside the P&L, not beneath it, and includes:
- timing of receipts, not just sales;
- supplier payment terms;
- VAT and other statutory payments where relevant;
- loan drawdown and repayment;
- owner drawings or salary.
This is the sheet a lender reads most closely, and the one founders most often skip when they build their own model.
What you receive
An Excel workbook with visible formulas, an assumptions sheet, scenario switches and a one-page summary. If the model supports a business plan, the numbers in the plan are generated from the model rather than typed separately.
I do not lock cells or hide formulas. You paid for the model; you should be able to maintain it.
What I will not claim
I will not claim the projections are accurate, that they guarantee funding, or that they reflect what will happen. A model is a structured set of assumptions. Its value is that the assumptions are visible, testable and internally consistent.
Where the model is used for a bank loan application, it includes a debt schedule and a downside case. Where it supports an investor plan, it includes unit economics and a use-of-funds schedule.
Common modelling errors
| Error | Why it matters | Fix |
|---|---|---|
| Hard-coded numbers inside formulas | The model cannot be audited or updated | Move every input to the assumptions sheet |
| Annual totals with monthly seasonality ignored | Cash requirements are understated | Build monthly, then aggregate |
| Revenue growing without capacity | The operating plan cannot deliver it | Tie revenue to a physical or staffing limit |
| Costs that never step up | Profit is overstated as volume grows | Add step-cost triggers |
| Balance sheet that does not balance | Signals a timing error somewhere | Rebuild cash flow rather than plugging the difference |
| One scenario only | No sense of fragility | Add a downside case with named changes |
What "good" looks like to a reader
A lender or investor should be able to open the workbook and answer four questions without help:
- What are the main assumptions?
- What does the business earn, and when?
- How much cash does it need, and when?
- What happens if the key assumptions are worse?
If the model requires a guided tour, it is not finished. The summary sheet exists for exactly that reason.
Updating the model after delivery
A model is a working tool, not a one-off exhibit. After the first months of trading, the assumptions should be replaced with actuals and the projections re-run. That is how the plan becomes useful beyond the funding application.
The handover note explains which cells are inputs, which are calculations, and how to add a month without breaking the formulas. It is a short document, but it is the difference between a model that gets used and a file that is never opened again.