1. Revenue streams: The financial model should take into account the sources of revenue for the business, such as sales, subscriptions, advertising, or licensing fees.
2. Cost structure: The model must also factor in costs such as overhead, salaries, rent, and supplies.
3. Assumptions: The model should be based on realistic assumptions regarding market size, competition, pricing, and growth rates.
4. Cash flow: The financial model should project cash inflows and outflows, including investments, expenses, financing, and payouts to shareholders.
5. Sensitivity analysis: The model should account for various scenarios, such as changes in interest rates or unexpected events, and analyze how these affect the business’s financial health.
6. Valuation: The financial model should help estimate the company’s valuation and the value of individual shares.
7. Timelines: The model must identify timelines for revenue generation, expenses, and any investment or fundraising activities.
8. Metrics: The model should track key metrics such as gross margin, operating expenses, profit and loss, and return on investment.
9. Reporting: The financial model should be comprehensive enough to be used for regular financial reporting and analysis.
10. Flexibility: The model should be dynamic and able to adapt to changing business conditions, new products, or updates in market trends.
