Financial modelling
A financial model is a working version of your business in numbers. Change an assumption, such as a second crew, a new location, a price increase or a loan, and see what happens to revenue, profit, the balance sheet and cash over the next three to five years. We build models that are driven by the operating facts of your company, that reconcile to your history, and that you can keep using after we leave.
What you leave with
A three-statement, driver-based model that you can use to test decisions and that a lender, investor or buyer will accept.
Who it is for
- Owners facing a large decision, such as a new location, a major hire, an acquisition or a building purchase
- Founders raising capital who need a forecast that survives questions
- Companies whose bank has asked for projections
What we deliver
- A three-statement model: income statement, balance sheet and cash flow, monthly for three years and annual after
- Driver-based revenue and cost assumptions, documented on their own sheet
- Scenario toggles for the downside, base and upside cases
- Debt and equity schedules with covenant calculations where relevant
- A reconciliation to your last two years of actuals
- Training so your team can update the model each quarter
How it runs
01Frame
We agree the decision the model needs to answer and the time horizon it must cover.
02Build
We build the drivers, the three statements and the scenarios, and reconcile the first year to your history.
03Stress
We test the model against the questions a lender, investor or buyer will ask and fix what breaks.
04Hand over
We walk you through every assumption and train the person who will maintain it.
Engagement and fees
A Workshop of two to four weeks at $30K to $80K for a complete three-statement model. A Strategy Session of 90 minutes at $499 is a sensible first step when you are not yet sure which decision the model needs to answer. Every engagement is scoped after a call and confirmed in writing. See consultations and fees.
Driver-based, not line-based
A model that forecasts revenue as last year times a growth rate tells you nothing. A model that forecasts revenue as crews times jobs per crew per week times average ticket tells you what happens when you add a crew, raise the ticket or lose a week to weather. The drivers are the operating facts of your business and they are where the thinking goes.
Costs follow the same logic. Labour is headcount by role times loaded cost. Vehicles, tools, software seats and rent step up at the points where capacity is added. Working capital follows the terms you give and receive. When the model is built this way, every line on the three statements has a reason, and the reasons are what a reader checks.
Three statements, because cash is the point
An income statement forecast on its own will tell you the business is profitable while it runs out of money. The balance sheet carries receivables, inventory, equipment and debt. The cash flow statement shows what that does to the bank. The three together are the only way to see that a profitable growth plan needs a line of credit in month eight.
This is also why lenders and investors ask for three statements. They want to see debt service coverage, working capital movement and the cash low point, and they want the assumptions behind them. A model that stops at the income statement is a sign that nobody has thought about financing.
What a model is for
The first use is decision. Should we open in Kelowna. Should we buy the building. Can we afford a sales manager. What does a ten percent price increase do if we lose a tenth of our customers. The model answers each in an afternoon, with the cash consequence visible.
The second use is communication. A bank, an investor or a buyer reads the model as evidence of how the company is run. A clean, documented, reconciled model with a downside case does more for credibility than any narrative. The third use is routine. Updated each quarter, the model becomes the rolling forecast and the budget comes out of it.
- Monthly financial statements for the last 24 months
- Your operating numbers: capacity, volumes, prices, headcount and terms
- The decision you are trying to make and when you have to make it
Industries where we run this most
Questions about this service
Do you build models in Excel or in a planning tool?
Most are built in Excel or Google Sheets, because the owner and the CPA can open them and a lender can audit the formulas. For companies with several entities or heavy reporting needs we use a planning tool connected to the accounting system. The method is the same either way.
How accurate will the model be?
It will be as accurate as its assumptions, which is why the assumptions are documented and tested against your history. The model's job is not to predict the future exactly. It is to show which assumptions matter most and what happens to cash when they move.
Can the model be used for a valuation?
It is the starting point for one. BizSell.ca, Ali's brokerage, produces a formal valuation at $3,500 flat using discounted cash flow, market multiples and asset-based methods. A driver-based model feeds the discounted cash flow method directly.
What if our books are not clean enough to reconcile?
Then the first step is cleaning them, because a model reconciled to wrong numbers is worse than no model. We tell you in the first week whether the history is usable and what it would take to make it so.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.