Now that you know what a financial model is, it’s time to demonstrate the power of it. In today’s video Troy demonstrates this using a financial model for a fictitious company called “Dollar Cave Club”. Find out how to use your assumptions to predict what could happen in 5 years.
2 Responses
Hi Troy, well done on the video and the spreadsheets look amazing. I wish mine could look that good. At 4:50 the churn rate is set at 8% and the cash balance falls, it would be nice to have a quick explanation as to cause(s) for this. Covering these levers will help entrepreneurs identify those to discuss with VCs if the topic comes up. Personally, I would like to explain "If the churn rate is 8% revenue declines due to so and so…" Thanks!
Andy, Thanks for the comment! It is tough as I am trying to keep these videos short and concise, but there is a LOT of additional info to cover! When the churn rate goes up, and you are still paying the same amount to acquire the customers, your spend (Marketing) does not change, but your revenue goes down. Since the revenue from each customer that you have goes down, you have less cash at the end of the day. I hope that makes sense.