“Come up with a financial model”
In order to get started on your business, you may want to or already have started a financial model. So what is a financial model? Think of it as a financial tool to help display solutions to a real-world financial problem. Financial models can help you through various aspects but how will it help? Essentially a model can be more structured, dynamic, contains hypothetical outcomes, and can show future outcomes to your financial project.
Financial models are ultimately designed to depict real-life situations in numbers to help individuals make better financial decisions. But it’s more than that, the problems will be analyzed and translated into a concept that can exponentially grow your business.
You can start by asking three questions:
How much are you going to charge?
How much will it cost to run the business?
How profitable can you be?
Keep in mind when you create your financial model to practice flexibility, structure, and transparency. Flexibility allows your model to be adaptable to every situation but it all depends on how simple it is to modify your model when necessary. Structure is important, if not the most important aspect of your model. The model should be able to represent reality in an organized and rigorous fashion. Finally, transparency, based on the numerical/statistical aspect should be easily understood by other financial modelers and non-modelers.
-Amanda Alvarez