This is a SaaS model that is driven primarily by ratios. This is because one of the most common ways to scale recurring revenue contracts is by basing the new customers on how well Account Executives can perform in signups. Once these customers are signed up, they need to also be maintained by customer support representatives. Instead of trying to estimate how high your headcount must be over time, you can instead define it with ratios.
The financial model will output a 5-year pro forma monthly and annual as well as an annual summary and lots of visualizations, a DCF Analysis, IRR, and contributions / distributions per configuration of investor financing. It can ofcourse be run with only owner financing or only debt financing as well.
The inputs the user can enter in each of the 5 years include:
# of SDRs added per month (SDR stands for sales directors and usually there are fewer SDRs compared to Account Executives (AEs) and it makes sense to then define the number of Account Executives based upon how many a given SDR can manage)
# of AEs per 1 SDR
Start month of each
Percentage of quota attained over 5 monthly ranges (to account for the fact that an AE will be more productive the longer they are there)
Annual all=in salary of SDR / AE / CS (CS means customer service rep)
# of CS reps needed per each customer added
Fully loaded salaries for SDR/AE/CS
Percentage of revenue designated for Engineers and their fully loaded salaries
The model includes three revenue tiers that are defined by their monthly price, churn rate, one-time setup fees, and percentage of new users falling into each tier.
Fixed expenses are defined by the start month, monthly amount, and description.
The nice thing about scaling a model in this way is that there is precise scaling logic so as revenue grows, the relevant expenses that are likely to scale with that (sales staff and customer support) also automatically scale per the ratios input by the user.
Advanced metrics are included such as LTV, CaC, LTV to CaC, and months to pay back CaC.