Financial modeling for startups

Abstract

Financial modeling for a startup is critical to building a viable business, yet many entrepreneurs still venture
into the business world without adequate financial knowledge. This work sought to gather the most
important topics of financial modeling and present them in an easy and didactic way. The two main
approaches used for this purpose are reviewed: the top-down method, which takes advantage of market data
to build a forecast, and the bottom-up approach, which uses internal company data, such as sales data or
production capacity. The main data needed to carry out the modeling and the results that can be obtained
are also explained.