Mike Colwell created his finmodel4 Excel model, shown above, to simplify the financial planning process for startups. Screenshot from finmodel4 download.
Through his years of helping startups grow at the Business Innovation Zone in Des Moines, Mike Colwell has slowly but surely fine-tuned a financial model for early-stage businesses, and now he’s making it available to startups outside the BIZ.
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“I wrote the thing for the first guy, and then modified it for the second guy, and made it better for the third gal, and made it better, and made it better,” Colwell (left, photo from twitter.com) said. “And four years later I realized I wasn’t that far from really doing something special with it.”
That something special is finmodel4, a Microsoft Excel model made specially for startups. It’s available for free download at startupmodels.com, and a companion guide, “It’s not a Plan Until the Numbers Add Up,” is available as a Kindle download for $5.99.
Colwell, who honed in on the project in April and released it in mid-August, built out the model with the goal of simplifying the preparation of financial statements for entrepreneurs to allow them to devote time to other aspects of their businesses.
“I just don’t think the entrepreneur should spend a lot of time with the technicalities of a financial model,” Colwell said. “I mean, think about it: the math on an income statement and the cash flow statement doesn’t change much. It’s the same math. No matter how you get at it, at the end of the day, it’s the same math.”
The model is tailored to first-time entrepreneurs in the first year or two of a business venture. Colwell says the model is useful planning tool for almost any sort of startup except retail stores, and it comes backed by testimonials from Silicon Prairie startups like Tikly, Catchwind and PikuZone.
“I just don’t think the entrepreneur should spend a lot of time with the technicalities of a financial model.”
– Mike Colwell
Colwell touts his model as a good middle ground between the extremes of simple models that are easy to use but offer limited capabilities, and highly complex models that offer lots of functions but tend to be expensive and difficult to use. The real value of Colwell’s product, he says, lies in the revenue model and its customizability. It’s with customization in mind that Colwell made his models in Excel rather than as software.
“Most good investors, if they’re interested in a company, not only do they want to see your financials, but they want to see spreadsheets that they want to play with,” he said. “They want to change your assumptions. They’ll look at your sheets and go, ‘OK, you’re assuming a 90-percent renewal rate. What happens if your renewal rate’s 30 percent?’ “
Colwell intends to keep the model free. “I think there’s a lot of non-profits out there trying to help entrepreneurs, and if I’m running a business incubator somewhere and I don’t have a lot of money, they can pick this up for free and they can show them how to use it,” he said.
He plans to sell a “$10 or $15” downloadable story of a fictitous company, complete with spreadsheets populated by data, as another tool to help illustrate how to use the model. Beyond that, Colwell said he’ll offer additional Excel models for startups to use and he has three or four in mind.
