The Assumptions Sheet consists of five building blocks that together make up all the parts of your unique business. Here is how your Assumptions sheet is designed:

1. General Assumptions
2. Customers
3. Revenues
4. Cost
5. Funding

Starting from the top, we begin with setting some general assumptions.

First month-year of model: When you want the model to start.

Compare Actuals vs Forecast from: When the comparison should start.

Cash in bank at start of the model: How much money you have in the bank.

Corporation tax: What your tax rates are and when tax payments are due.

Here’s where you can set the assumptions about your customers.

# Customers

For each of your customer groups, you can can define how many of them you’ll have monthly or annually.

Churn Rate

The churn rate is the percentage of enrolled customers you think you’ll lose each month, which you can set annually.

# Active Customers

For each customer group, you can then specify the # of active customers that are using your product.

Other Assumptions

Additional customer assumptions that may be specific to your business will also appear here.

Here’s where you can set the assumptions about your revenue and business model.

Customer split

You can specify how you want to split your customers across tiers, such as Free, Basic, and Premium (depending on how you name the tiers).

Payment terms

You’ll be able to set whether customers pay monthly or annually and how much they pay. Additional payment assumptions relevant to your business will be shown here as well.

Other assumptions

Optionally, if it’s part of your business model, you will also be able to define assumptions on whether customers can switch, upgrade, or buy any upsells.

Here’s where you can set assumptions about your cost structure.

G&A (General and Administrative) Expenses

This is where you will put in your operational costs. So this is split up into two sections, being fixed overheads and unpredictable costs.

Firstly, your fixed overheads are predictable and recurring costs that you’re going to have to pay each month. If P&L data is available, we’ll add those categories for you.

Secondly, the unpredictable costs are things like one-off costs or other costs that are irregular or unexpected.

Core Team

This is where you put in your HR costs. You can easily add individual key roles, salaries, bonuses, tax benefits, start and end dates for anyone on your leadership team.

Other Teams

As for the Other teams, you can add entire teams of people here where it makes more sense to forecast based on average salaries and headcount by year.

Here’s where you can set your assumptions on your funding and valuation.

Equity Funding

This is where you can fill in your equity funding. If you have different rounds, you can specify the names of each round, when the money is gonna be in the bank, and how much you’ve raised at each of those rounds.

DCF (Discounted Cash Flow) Valuation

This is where you can calculate your startup valuation and the investor economics that go with it. Here’s a helpful article on determining your valuation and explaining it to investors. Note: In some cases, a different type of valuation method might be more relevant and used for you instead.

Conclusion

These are the five building blocks of your financial model. The exact assumptions under each block will depending on your startup’s industry, business model, and revenue model. Have more questions? Feel free to reach out via the live chat button anytime.