Build your model

Pick how to start

Go to Create model. There are three ways in, and they all end up in the same editor.

1. Describe your business: write a few lines about what you sell, or enter your website. Caiflo prepares a first draft of products, prices, team, costs and funding in about a minute, and lists every assumption it made so you can check each one.
2. Build it step by step: fill in eleven short sections yourself. Allow 15 to 30 minutes.
3. Import a spreadsheet: upload an Excel model you already have, in any layout. You see what was found before anything is saved.
4. Just exploring? Open the worked example at the bottom of the page. It's a made-up hardware and subscription company that you can change freely.

Tip: Not sure the idea is worth a full model yet? Run an Idea check first (see the last section of this chapter).

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1. Company and timeline

Who the model is for and the period it covers.

1. Enter the Company name, a Model name (for example "Seed round plan, March"), and who prepared it.
2. Choose the Country. This sets the currency, sales tax, corporation tax and employer payroll rules. US and EU companies can also pick a state or member state.
3. Set the start month and how many years to forecast. Three to five years is normal for investors.
4. Use Notes and key assumptions for anything a reader should know before they look at the numbers.

2. Tax and opening position

The tax rules, plus anything the business already owns or owes on day one.

1. Check the tax settings the country filled in. Change them only if your situation is different, for example if you aren't registered for VAT yet.
2. Under Opening balance sheet, enter the cash in the bank on the start date, plus any money customers owe you (debtors), stock, bills you owe (creditors), equipment and existing loans.
3. Leave everything at zero if the company hasn't started trading.

3. Products and pricing

What you sell, what customers pay and what it costs you.

1. Add each product or service, with its Launch month.
2. Enter the price the customer pays. Sales tax is taken off for you, so revenue never includes it.
3. If you sell through shops or distributors, tick Sold through retailers / distributors and enter their margin. Caiflo takes their share off your revenue.
4. Enter your cost per unit. Add a Bulk discount on unit cost if it falls as you buy more.
5. For subscriptions, enter the monthly price and the Monthly churn (the share of subscribers who cancel each month).

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4. Demand and market

How many you sell each month, and how big the market really is.

1. Set the starting monthly volume and the Monthly growth.
2. Use Growth slows by so growth tapers off. Nothing grows at 20% a month for five years, and investors know it.
3. Add Seasonal demand if your sales peak at certain times of year.
4. Under Market and capacity limits, enter the Target market size, the most of it you could realistically win, and your Production capacity. Sales stop growing when they hit either limit.

5. Scenarios

What happens if things go worse, or better, than planned.

1. Base, Downside and Stress are set up for you.
2. Adjust how much each one changes volume, price, unit cost and running costs. For example, the Downside might have 25% fewer sales and 10% higher costs.

6. Team

Every hire, with start date and salary.

1. Add each Role with its Department, FTE (1 for full time, 0.5 for half time), Annual salary per FTE and Start month.
2. Check Employer on-costs. The country fills in employer tax and pension, so a salary of 50,000 might cost you nearer 57,000.
3. Set an Annual pay rise.
4. Use Later change for someone who starts part time and goes full time, or gets a raise after funding.

7. Overheads and launch costs

Rent, marketing, software, professional fees and everything else.

1. Add each cost with a Name and a category.
2. Choose how it behaves: a fixed monthly amount, a cost per head, or a Share of revenue (common for marketing and payment fees).
3. Add an Annual increase for costs that rise each year.
4. Use Launch then run-rate for costs that are high at launch and settle down later, such as a launch campaign.

8. Capital spend

Equipment, tooling and building your own software.

1. Add equipment and tooling with its cost, the month you buy it and its Useful life.
2. Set IT equipment per new hire so laptops are bought automatically when people join.
3. Add capitalised development if you're building software or IP you'll use for years.
4. If you'll sell an asset, enter the month and the Sale proceeds.

9. Funding: the ask

How much you're raising, when, and what each tranche of money will deliver.

1. Under The ask, add one row per tranche. For example, Round 1 of 400,000 in month 3, and Round 2 of 600,000 in month 15.
2. For each one, fill in Delivers: the milestone that money has to reach. For example "Launch in 20 shops and reach 5,000 customers".
3. Add a Pre-money valuation if it's agreed, and any Option pool after round the investors want. Caiflo then works out the cap table and dilution.
4. Add any loans, shareholder loans or finance leases under Debt and leases.
5. Set a Minimum cash buffer: the least you ever want in the bank. Three to six months of costs is common.
6. Underneath, Caiflo shows how many months each tranche lasts if the next one never comes. Red means the money runs out first.

10. Working capital

The timing of cash: when customers pay you and when you pay others.

1. Enter how many days customers take to pay (Direct customers pay after). Retailers often take longer, so set them separately.
2. Enter how many days you take to pay suppliers.
3. Set Stock held, in days of sales.
4. Add Customer deposits / pre-orders if customers pay before they get the product.

11. Review and generate

Check the essentials, then build the full model.

1. Read the list under What the model will flag. Each item says what's wrong and offers a fix, often a single click.
2. Click Generate model. The income statement, cash flow and balance sheet are built for every month, and the balance sheet balances.
3. You can come back and change anything at any time: click Edit assumptions on the model page.

Import a spreadsheet

Already have a model in Excel? Bring it in rather than starting again.

1. Go to Import in the menu.
2. Either Download blank template, fill it in and upload it, or upload your own workbook in any layout (.xlsx, up to 10 MB).
3. Caiflo shows what it found and where each figure came from, before anything is saved.
4. For your own workbooks, it also checks the spreadsheet itself, for example numbers typed over formulas or figures saved as text, and names the sheet and cell.
5. Click Open in editor and work through the sections as above.

Check an idea first

A quick look at whether an idea is worth building a model for.

1. Go to Idea check.
2. Describe the idea in a few lines and choose the market.
3. Caiflo research looks at the market, competitors and likely numbers, and scores the idea on four things: business concept, financial model, market opportunity and commercial viability. Every claim comes with its source.
4. If it looks promising, click Open the model to carry on with a draft model.

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