You Wouldn't Run Your Product Without a Roadmap. Why Run Your Business Without a Financial Model?
Most founders push off building a financial model.
They'll get to it when there's more revenue, more clarity, more time.
But if you're running a company without one, you're basically building blind.
A few months ago, two founders I coach were on the verge of imploding.
They were drowning in operations, unsure who on their team was actually pulling weight, and couldn't get a clear read on whether they were scaling or just burning cash faster.
They'd made layoffs, but it still felt chaotic. One was up at 2am working through deliverables. The other was questioning if they'd ever regain control.
When we got on a call, I told them the truth:
"You don't have a people problem. You have a clarity problem."
And then I had them build a financial model.
Not a complicated spreadsheet with tabs nobody understands. A simple, constraint-driven model that answered five questions:
How much profit do we need?
How many people do we actually need to get there?
How much can we pay them?
What's left for us as founders?
What does the timeline look like?
This changed everything.
They went from making emotional decisions to operating with calm, grounded conviction. Instead of constantly discussing team dynamics or drowning in Slack messages, they had a single source of truth.
If a decision helped them hit $3.1M in profit in the next 12 months (while each working just 20 hours per week), it stayed. If not - it didn't matter who liked the idea or how hard it was to let someone go - it was out.
Suddenly, the business felt light again. Predictable. Back under their control.
I Run All My Companies This Way
I didn't start out as a numbers person.
Early on, I delegated our financial modeling to CFOs. They'd give me 10-tab spreadsheets with formulas so fragile that if I changed one number, the whole thing broke.
So I stopped using them. And that's when I realized I was making huge decisions with no anchor.
So I scrapped theirs and built my own - simple, fast, and actually useful.
When I was scaling my last company to $200M, I'd sit down weekly and run through questions in the model:
What happens if I hire this person?
Can I afford a $450K sales lead?
What if I front-load cash or back-load bonuses?
What needs to be true to grow while staying lean?
And within minutes, I had the answer... without needing to call my finance team.
It became a bit addictive. I'd "mess with the model" the way some founders play with product design.
Suddenly, I could see everything with complete clarity. I knew where I could push further and where I needed to cut deeper. I could finally tell which parts of the business were moving the needle and which were just expensive distractions.
But the most powerful part wasn't the insights; it was the honesty.
For the first time, I had a clear understanding of where the business stood and where it was headed. No more guessing. No more hoping the numbers would work out.
The model forced me to confront reality, and that reality put me back in the driver's seat.
Why Most Founders Avoid Financial Models
Most founders avoid building a model.
They might have a spreadsheet from their finance person or a slide deck for investors, but nothing they actually use to run the business.
Here's why:
It's intimidating. You don't want to stare at numbers you don't fully understand.
It feels premature. You're still figuring things out, so why "lock in" a plan?
It feels futile. You're building, but the revenue isn't there yet.
Or worse: you tried to build one once, and it got so complex it made things worse.
But here's the truth: A simple, founder-led model doesn't restrict you. It frees you.
Here's What a Model Actually Does
When done right, your financial model becomes:
A decision-making filter: Should you hire? Launch that product? Cut that cost? You know instantly.
A sanity stabilizer: Last week, a founder told me, "I was spiraling about cash flow. Opened the model. We're fine."
A bullshit blocker: You stop saying yes to things just to "see what happens." You know what actually moves the needle.
A cash confidence tool: You see your future margin, your take-home, and whether this business is worth it, before another year passes.
And the best part? It doesn't have to be complicated.
How to Build a Model You'll Actually Use
You don't need a shiny CFO model to get started. You don't need 10 tabs. You just need a simple model that helps you make decisions.
Here's how I like to start:
1. Set Your Constraint First
What's non-negotiable in the next 12 months?
It might be hitting specific profit margins. Maybe finally paying yourself market rate. It could be capping your team at 15 people, or building a business that doesn't need you for every decision.
Pick one. That's your anchor. Everything else bends around it.
2. Map Your Revenue and Margin
What are you selling? How much do you actually keep after costs?
Make a list of your offers and their real contribution margins. This step alone will tell you which parts of your business are carrying the weight, and which ones are just noise.
3. Back Into Your Operating Expenses
Now that you know what the business has to produce, you can ask:
What can I afford to spend on people?
What's the headcount ceiling?
Where am I leaking cash on things that don't move the needle?
The model doesn't need to be perfect. It just needs to give you something you can look at and say: "This is what needs to be true for the business to work."
This doesn't require an MBA. It requires a Google Sheet, some honesty, and 90 minutes.
Don't overbuild. Just create something you can revisit every time a major decision shows up.
Why This Actually Matters
Most founders don't need more advice. They need a lens.
The right model - one you actually understand and use - does the opposite of what you fear. It calms you down and makes hard decisions easier. Most importantly, it gives you back your role as the one driving the business, not reacting to it.
Those two founders I mentioned? They didn't need more advice. They needed clarity.
The model didn't just change how they ran the business - it changed how they felt in the business.
If you're overwhelmed, uncertain, or stuck in constant decision loops, start here. Build a model that becomes your anchor, then get back to building the business you want.
Reply to share your thoughts - I read every message.
See you next week! 👑
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