‘The single largest factor in the failure of small businesses – up to 80% of all cases – is poor cashflow management.’ Peter Denton from Lothbury Business Management gives us the lowdown on how a robust financial model offers invaluable insights into a startups’s health, future prospects, and potential pitfalls. Crucial ingredients in winning over potential investors.
Why is Financial Modelling important?
Financial modelling is a critical part of understanding the health of a business, projecting what the company can expect to achieve over a future period. It also offers validation to investors around fundraising and investment. As part of normal operating practice, it should be a key tool that feeds into the strategic decision-making, planning and risk management processes. It will assist a business in identifying peaks and troughs in cashflow prior to them occurring.