Here we have the training videos for the marketplace financial model. This is for model version v1.0 (as of November 2020).
If you are struggling with something, sound out with what you would like explained and I’ll put up a video.
Quick model overview
We are going to go through the model at a high level, but enough to have an idea of what is going on.
Next, we are going to run through the basics of the model that I find some people get confused about. These are things like grouping, turning on automatic calculations, ensuring you use all threads to enable faster calculations, column structure and flows between sheets.
Even if you are a CFO or self-proclaimed Excel nerd, I still recommend just going through this video.
How to approach the filling in the marketplace financial model
In this 40 minute video, I’m going to give you my thoughts on how I would approach filling in the model. If you have never used a huge template like mine or much financial modelling experience, this will really help you to understand what you should be doing.
It’s important to internalise that this model will feel overwhelming to you at the start. You just need to start and keep learning more details over time. Eventually, it will make more sense to you. Understand that my models have facilitated learning experiences, not a destination you want to get to ASAP because “an investor wants one”.
As I commence in the video, the absolute first thing to do is to read my blog on how to fill in a financial model template. I don’t care how senior you are, you’ll learn at least one new thing. You have to do the exercise that I explain in order to triangulate (as I will constantly reiterate to you in the videos).
Control
I am aware that people know more and less about their business/metrics, and more more and less time to commit to the model. The control sheet enables you to set basic and detailed approaches to staff and marketing. You can take different approaches to market by being detailed, have a ratio to supply or demand and doing the simplest approach to marketing by making it simple. The staff sheet also has a basic and detailed approach. Finally, you can turn on and off revenue streams for both the supply and demand side.
Profit and loss, and Depreciation and Tax
We are going to understand the three profit and loss sheets, the pitch deck sheet, and the depreciation and tax sheet.
The annual sheet is the most work. The forecast sheets only have around 5 assumptions to fill in. The combined sheets have none.
The pitch deck sheet is an example of what you ‘could’ put in your deck. You can delete it for all I care (There will be no consequence, so you can delete it).
Finally, the depreciation and tax sheet enables you to do funky calculations assuming you are profitable. The title says D&A and tax. There is no amortisation in my model because it is irrelevant to startups. I’m just used to calling it D&A because I was a banker. You don’t have to do anything if you don’t understand the sheet. If you want to learn more, I probably made more content in older videos. See the end of this page for “Tax and Depreciation”.
D&A and Tax
I deal with this in the Profit and Loss video (video 3). If you want to learn more look at the old one done for the SaaS financial model. The sheet is the same for all my models. But frankly, unless you are an old company and know nerdy accounting things you can largely ignore this sheet.
KPI, Charts, and Source and Use
We are going to learn about the importance of the KPI sheet in the model. As an investor, this is a sheet I would certainly look at first. You will use it repeatedly to check you are on the right path, and at the end to ensure your assumptions coherently make sense.
We will also go through the charts sheet. They’re just charts so not much to learn! You use them to ensure that you are trending in the right direction.
How are you going to use the funds? What is your runway? We are going to go through this sheet briefly so you understand how to use it. When you have completed your model, you can use this sheet to calibrate the raise you need and runway.
If you want a ‘little’ more detail you can read and watch the video on my runway calculator page.
Staff and Expenses Forecast
The staff sheet is the core expense sheet in the model. It enables you to do quite a lot, but also simply. Most of the sheet is for the various departments you have. The end allows you to add the various costs that you will have, which are mainly staff related. Included is also the other general costs.
This sheet has two modules. A simple and a detailed version. You can choose the approach that you want to use in the control sheet.
Support staff on demand and supply side
This sheet comprises of automated support staff calculations for both the supply and demand side. For both, we have customer care and customer success.
Customer care is for your total customer base. You’ll set the % of your base that needs support, how long it takes to deal with customers and how many hours your staff are focused a day to result in the number of staff you need.
For customer care, exactly the same calculations are done but we assume this is for new customers.
These are optional automations. You do not need either, or of them.
These automations enable you to scale up your staff base depending if you increase or decrease marketing. These all direct into your main staff sheet.
Sales staff automations
Similar to the support staff, I’ve made it easy to forecast your sales staff requirement.
I can’t think of any marketplace which does sales on the demand side, so this sheet is only for the supply side of your business.
This sheet allows you to pick the number of suppliers that a sales person (account executive) can manage per month. Depending on your forecasts and some more detailed assumptions around the AEs, you automatically calculate your sales person requirement.
In addition, you can set ratios to build managers and support team staff. These all direct into your main staff sheet.
Expenses
This is a simple sheet that enables you to calculate your payment and tech costs. Tech costs include server and email costs.
Revenue on the supply and demand side
We generate traffic. These register on your site. They convert into customers. Now we want to make revenue from them. The supply and demand side sheets are near identical. The supply side has 4 revenue streams and the demand side has 6 streams.
You can turn these streams on and off in the control sheet.
I have built all the revenue streams that a marketplace might have. Just because there are options, do not mean you have to use them! That’s why there are options.
The revenue streams on the demand side are:
- Transaction Revenue
- Affiliate Revenue
- Member Revenue
- Listing revenue
- Payment revenue
- Ad revenue
The revenue streams on the supply side are:
- Transaction Revenue
- Member Revenue
- Listing revenue
- Payment revenue
Conversion and registrations assumptions
We generate traffic in the marketing sheets. These become registrations in the marketing sheet and become customers in the conversion sheet. The registration sheet is a pass-through so you can see the summary.
The registration sheet is only used if you set assumptions to option 2. Manual supply and demand. This is the basic approach to marketing.
These sheets are critical steps in the financial model. Whilst there are only a few assumptions, they are important ones.
Marketing sheets
We are covering all the marketing sheets in the model in this video. If you want to see some more detailed insight into the sheets (for example blog and social), you can look at the old ones done for the SaaS financial model. The marketing sheets across all my models are basically exactly the same.
Checking you got it right
This is the last video. I’ve sort of covered this in previous videos, but we will briefly go through some sense checks you should do to ensure you don’t send something to investors that make you look dumb (assuming you are raising- the model isn’t just for VC addicted startups).