Spreadsheets for Startups and New Business Plans

Modeling Funded Growth without Knowing When Funds Will Be Received

One of the trickiest aspects in using Microsoft Excel to model a young company for funding is realizing that the actual date of the funding cannot be predicted. The first reaction is to model starting with the funding month rather than a calendar month.

While this is the right approach, it does not account for the fact that until the funding is received, the company will grow according to a different set of rules based on existing momentum and spending. These rules on sales momentum can be kept in a separate worksheet based on calendar month.

Upon funding, the funding month from this calendar-based worksheet becomes the starting point to the sales rollout in the funding (actually post-funding) model. This can be achieved by storing the starting month and using it in Excel's OFFSET formula to port the calendar-based information into the right columns in the funding model.

It is actually a little more realistic to assume that not all growth patterns can change instantly upon receipt of funds. In all likelihood additional offset months are also needed to define the number of months post-funding that it takes each funded program to become implemented. The result is a model that uses the initial offsets to define the starting point of the plan, a transition where pre-existing growth patterns are still in effect, and a growth period caused by funded initiatives.

posted by Scott Clyde @ 5:42 PM