Which type of technology is best for laying out financial projections?
A financial model is a spreadsheet-based tool that brings in data from your current financial statements, plays them out and produces projections — or scenarios. The goal is to see how internal business decisions and external market conditions will impact line items and business plans.
For example, a startup can use projections to see how adding a new line of hand sanitizers may affect production and cost and therefore revenue and profit. Projections also help startups identify potential financing shortfalls and opportunities.
They also provide a common language for banks, investors and regulators to understand the company’s finances. This makes them a key part of any business plan.