Financial Modeling & Analysis
Provide practical financial modeling guidance for businesses at any stage. Focus on the numbers that drive decisions, not accounting perfection.
Unit Economics
The foundation of every business model. Always start here.
SaaS / Subscription
- MRR/ARR: Monthly/Annual Recurring Revenue — the heartbeat metric
- ARPU: Average Revenue Per User — segment by plan tier
- CAC: Customer Acquisition Cost — fully loaded (ads + sales team + tools)
- LTV: Lifetime Value = ARPU × Gross Margin % × (1 / Monthly Churn Rate)
- LTV:CAC ratio: Target 3:1+ (below 1:1 = losing money on every customer)
- Payback period: Months to recoup CAC — target <12 months for venture scale
- NRR: Net Revenue Retention — >100% means existing customers grow revenue
Marketplace / Platform
- GMV: Gross Merchandise Value — total transaction volume
- Take rate: Revenue / GMV — typically 5-30% depending on value added
- Liquidity: Match rate, time-to-fill, supply/demand ratio
- Contribution margin: Revenue per transaction minus variable costs
E-commerce / Physical Products
- COGS: Cost of Goods Sold — materials, manufacturing, shipping
- Gross margin: (Revenue - COGS) / Revenue — target 60%+ for DTC, 30%+ for wholesale
- Contribution margin: Gross profit - variable selling costs (ads, fulfillment)
- AOV: Average Order Value — key lever for profitability
- Repeat purchase rate: Cohort analysis of repurchase behavior
Services / Consulting
- Billable rate: Revenue target / billable hours available
- Utilization rate: Billable hours / total hours — target 65-80%
- Project margin: Project revenue - (direct labor + direct costs)
- Revenue per employee: Total revenue / headcount — benchmark by industry
Revenue Forecasting
Bottom-Up Approach (Preferred)
Build from specific, measurable inputs:
- Traffic/leads: How many potential customers will you reach?
- Conversion rates: What % convert at each funnel stage?
- ARPU: What will each customer pay on average?
- Retention: What % stay each month/year?
- Expansion: What % of revenue comes from upsells?
Formula: Revenue = New Customers × ARPU + Existing Customers × ARPU × Retention × (1 + Expansion Rate)
Cohort-Based Modeling
Model revenue by customer cohort:
- Each month's new customers are a cohort
- Apply retention curve to each cohort
- Sum all active cohorts for total revenue
- This naturally accounts for churn and growth
Scenario Planning
Always model three scenarios:
- Base case: Realistic assumptions with current trends
- Bull case: Everything goes right (2x base growth rate)
- Bear case: Things go wrong (50% of base, higher churn)
P&L Structure
Guide through a clean P&L:
Revenue
- COGS (hosting, infrastructure, direct costs)
= Gross Profit (target: 70-80% for SaaS, 40-60% for marketplace)
- Sales & Marketing (CAC, marketing team, tools)
- Research & Development (engineering, product team)
- General & Administrative (ops, legal, finance, office)
= Operating Income (EBITDA)
- Depreciation & Amortization
- Interest
- Taxes
= Net Income
Key Ratios by Stage
| Stage |
Gross Margin |
S&M % Rev |
R&D % Rev |
G&A % Rev |
| Pre-revenue |
N/A |
High |
60-80% |
10-20% |
| Early ($1-5M) |
60-75% |
40-60% |
30-50% |
15-25% |
| Growth ($5-20M) |
70-80% |
30-50% |
25-35% |
10-20% |
| Scale ($20M+) |
75-85% |
20-40% |
20-30% |
8-15% |
Cash Flow & Runway
Runway Calculation
- Monthly burn: Total monthly expenses - total monthly revenue
- Runway: Cash in bank / monthly burn rate
- Buffer: Always plan to fundraise with 6+ months runway remaining
- Default alive vs default dead: At current growth and burn, will you reach profitability before running out of cash?
Cash Flow Management
- Collect faster: Annual prepay discounts (20% for annual billing), shorter payment terms
- Pay slower: Negotiate 30-60 day payment terms with vendors
- Variable > fixed: Use contractors, cloud services, and variable-cost tools
- Cut deeply once: If cutting costs, cut 30%+ at once rather than death by 1,000 cuts
Break-Even Analysis
Help calculate and visualize break-even:
- Break-even units: Fixed Costs / (Price per Unit - Variable Cost per Unit)
- Break-even revenue: Fixed Costs / Contribution Margin %
- Break-even timeline: Month when cumulative revenue exceeds cumulative costs
- Sensitivity analysis: How do changes in price, volume, or costs affect break-even?
Mentoring Style
- Math with context: Numbers without narrative are meaningless — explain what drives them
- Sanity check assumptions: If someone projects 50% monthly growth for 3 years, push back
- Benchmarks: Always compare to industry benchmarks and comparable companies
- Decision-focused: Every model should answer a specific question or inform a specific decision
- Simple first: A clear 3-line model beats a complex 50-tab spreadsheet nobody understands
- Iterate: Models are living documents — update monthly with actuals vs projections
1---2name: financial-modeling3description: This skill activates when the user asks about "financial model", "revenue projections", "cash flow", "P&L", "profit and loss", "break-even analysis", "unit economics", "budget", "financial forecast", "burn rate", "runway", "margins", "cost structure", "financial planning", "pricing model", or needs guidance on financial analysis, business math, or financial decision-making.4---56# Financial Modeling & Analysis78Provide practical financial modeling guidance for businesses at any stage. Focus on the numbers that drive decisions, not accounting perfection.910## Unit Economics1112The foundation of every business model. Always start here.1314### SaaS / Subscription15- **MRR/ARR**: Monthly/Annual Recurring Revenue — the heartbeat metric16- **ARPU**: Average Revenue Per User — segment by plan tier17- **CAC**: Customer Acquisition Cost — fully loaded (ads + sales team + tools)18- **LTV**: Lifetime Value = ARPU × Gross Margin % × (1 / Monthly Churn Rate)19- **LTV:CAC ratio**: Target 3:1+ (below 1:1 = losing money on every customer)20- **Payback period**: Months to recoup CAC — target <12 months for venture scale21- **NRR**: Net Revenue Retention — >100% means existing customers grow revenue2223### Marketplace / Platform24- **GMV**: Gross Merchandise Value — total transaction volume25- **Take rate**: Revenue / GMV — typically 5-30% depending on value added26- **Liquidity**: Match rate, time-to-fill, supply/demand ratio27- **Contribution margin**: Revenue per transaction minus variable costs2829### E-commerce / Physical Products30- **COGS**: Cost of Goods Sold — materials, manufacturing, shipping31- **Gross margin**: (Revenue - COGS) / Revenue — target 60%+ for DTC, 30%+ for wholesale32- **Contribution margin**: Gross profit - variable selling costs (ads, fulfillment)33- **AOV**: Average Order Value — key lever for profitability34- **Repeat purchase rate**: Cohort analysis of repurchase behavior3536### Services / Consulting37- **Billable rate**: Revenue target / billable hours available38- **Utilization rate**: Billable hours / total hours — target 65-80%39- **Project margin**: Project revenue - (direct labor + direct costs)40- **Revenue per employee**: Total revenue / headcount — benchmark by industry4142## Revenue Forecasting4344### Bottom-Up Approach (Preferred)45Build from specific, measurable inputs:461. **Traffic/leads**: How many potential customers will you reach?472. **Conversion rates**: What % convert at each funnel stage?483. **ARPU**: What will each customer pay on average?494. **Retention**: What % stay each month/year?505. **Expansion**: What % of revenue comes from upsells?5152Formula: Revenue = New Customers × ARPU + Existing Customers × ARPU × Retention × (1 + Expansion Rate)5354### Cohort-Based Modeling55Model revenue by customer cohort:56- Each month's new customers are a cohort57- Apply retention curve to each cohort58- Sum all active cohorts for total revenue59- This naturally accounts for churn and growth6061### Scenario Planning62Always model three scenarios:63- **Base case**: Realistic assumptions with current trends64- **Bull case**: Everything goes right (2x base growth rate)65- **Bear case**: Things go wrong (50% of base, higher churn)6667## P&L Structure6869Guide through a clean P&L:7071```72Revenue73- COGS (hosting, infrastructure, direct costs)74= Gross Profit (target: 70-80% for SaaS, 40-60% for marketplace)7576- Sales & Marketing (CAC, marketing team, tools)77- Research & Development (engineering, product team)78- General & Administrative (ops, legal, finance, office)79= Operating Income (EBITDA)8081- Depreciation & Amortization82- Interest83- Taxes84= Net Income85```8687### Key Ratios by Stage88| Stage | Gross Margin | S&M % Rev | R&D % Rev | G&A % Rev |89|-------|-------------|-----------|-----------|-----------|90| Pre-revenue | N/A | High | 60-80% | 10-20% |91| Early ($1-5M) | 60-75% | 40-60% | 30-50% | 15-25% |92| Growth ($5-20M) | 70-80% | 30-50% | 25-35% | 10-20% |93| Scale ($20M+) | 75-85% | 20-40% | 20-30% | 8-15% |9495## Cash Flow & Runway9697### Runway Calculation98- **Monthly burn**: Total monthly expenses - total monthly revenue99- **Runway**: Cash in bank / monthly burn rate100- **Buffer**: Always plan to fundraise with 6+ months runway remaining101- **Default alive vs default dead**: At current growth and burn, will you reach profitability before running out of cash?102103### Cash Flow Management1041. **Collect faster**: Annual prepay discounts (20% for annual billing), shorter payment terms1052. **Pay slower**: Negotiate 30-60 day payment terms with vendors1063. **Variable > fixed**: Use contractors, cloud services, and variable-cost tools1074. **Cut deeply once**: If cutting costs, cut 30%+ at once rather than death by 1,000 cuts108109## Break-Even Analysis110111Help calculate and visualize break-even:112- **Break-even units**: Fixed Costs / (Price per Unit - Variable Cost per Unit)113- **Break-even revenue**: Fixed Costs / Contribution Margin %114- **Break-even timeline**: Month when cumulative revenue exceeds cumulative costs115- **Sensitivity analysis**: How do changes in price, volume, or costs affect break-even?116117## Mentoring Style118119- **Math with context**: Numbers without narrative are meaningless — explain what drives them120- **Sanity check assumptions**: If someone projects 50% monthly growth for 3 years, push back121- **Benchmarks**: Always compare to industry benchmarks and comparable companies122- **Decision-focused**: Every model should answer a specific question or inform a specific decision123- **Simple first**: A clear 3-line model beats a complex 50-tab spreadsheet nobody understands124- **Iterate**: Models are living documents — update monthly with actuals vs projections
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