Your First Forecast

A comprehensive guide to building your first complete financial forecast.

This guide expands on the Quick Start to help you build a comprehensive financial forecast that’s ready to share with investors or use for planning.

Understanding the Building Block Approach

Profitual uses building blocks to construct your financial model. Each block represents a part of your business and is accessed through the sidebar navigation:

Building Block What It Models Sidebar Location
Revenue Streams How you make money Building Blocks → Revenue Streams
Operating Expenses Fixed and variable costs Building Blocks → Operating Expenses
Team Salaries and hiring plans Building Blocks → Team
Fundraise Equity investments and convertible notes Building Blocks → Fundraise
Debt Loans and repayment schedules Building Blocks → Debt
Capital Assets Equipment and property Building Blocks → Capital Assets
Prepaid Expenses Costs paid in advance Building Blocks → Prepaid Expenses
Grants Non-dilutive funding Building Blocks → Grants
Taxes Corporate tax modeling Building Blocks → Taxes

You configure each block with your business inputs, and Profitual automatically generates the corresponding financial statements.

Creating a Complete Forecast

Revenue Modeling

Most businesses have multiple revenue streams. Navigate to Building Blocks → Revenue Streams in the sidebar.

Click + Add Stream for each revenue source. For a SaaS company, this might include:

Monthly Subscription:

Name: Pro Plan Monthly
Stream Type: Subscription
Price: $49

Annual Subscription:

Name: Pro Plan Annual
Stream Type: Deferred Revenue
Price: $470/year (2 months free)

Professional Services:

Name: Consultation Services
Stream Type: Other
Price: $5,000

After creating subscription streams, expand it to enter your customer forecasts by month - new customers, churn, and growth assumptions. Deferred Revenue streams let you receive cash upfront, but spread the revenue across the full term.

Cohort modeling
Profitual tracks each month’s customers separately, letting you model different retention rates and expansion revenue over time.

Expense Planning

Navigate to Building Blocks → Operating Expenses in the sidebar.

Organize expenses by category using the Add Expense button:

Fixed Costs:

Name: Office Rent
Category: General & Admin
Expense Type: Fixed
Amount: $4,000/month

Variable Costs:

Name: Payment Processing
Category: Cost of Goods Sold
Expense Type: Variable
Percentage: 2.9%
Target: Pro Plan Monthly

Variable expenses can track revenue streams or other expenses. For example, you can model sales commissions as a percentage of a specific revenue stream, or contractor costs that scale with your marketing budget.

Team Members

Navigate to Building Blocks → Team in the sidebar.

Click Add Team Member for each person:

Current Employee:

Name: Jeremy Matthews
Job Title: Senior Engineer
Salary: $150,000
Start Date: January 2024
Category: Research & Development

Future Hire:

Job Title: Account Executive
Salary: $80,000
Start Date: July 2024
Category: Marketing & Sales

Profitual automatically calculates:

  • Payroll broken down by category in your Income Statement
  • Taxes and Benefits based on your configured percentage
  • Individual raises based on your configured frequency and percentage

Use Bulk Add to quickly add multiple team members at once.

Funding

If you’ve raised or plan to raise money, configure it in the appropriate building block:

Equity Financing: Building Blocks → Fundraise

Name: Seed Round
Raise Type: Preferred Shares
Amount: $1,500,000
Closing Date: March 2024

Debt Financing: Building Blocks → Debt

Name: Equipment Loan
Principal: $100,000
Interest Rate: 8%
Term: 5 years

Grant Funding: Building Blocks → Grants

Name: SBIR Phase I
Amount: $275,000
Duration: 6 months

Viewing Your Financial Statements

Click Statements in the sidebar to see your complete 3-statement model:

Income Statement

Verify that:

  • Revenue grows as expected based on your stream forecasts
  • Gross margin looks reasonable for your industry
  • Operating expenses are complete and categorized correctly
  • Net income trajectory makes sense

Balance Sheet

Check that:

  • Cash position reflects your funding and burn rate
  • Assets include any capital equipment
  • Liabilities include debt and deferred revenue
  • Equity reflects fundraising events

Cash Flow Statement

Watch for:

  • Months where cash goes negative
  • Large one-time expenses affecting timing
  • Differences between profit and cash flow

Using Scenarios

Profitual supports multiple scenarios to model different outcomes. Use the scenario selector in the header to switch between scenarios or create new ones.

Common approaches include creating:

  • Base Case - Your expected outcome
  • Optimistic - Things go better than expected
  • Conservative - Slower growth, higher costs

See Scenario Planning for details on creating and comparing scenarios.

Sharing Your Forecast

Your forecast is ready to share:

  • Dashboard - Present the visual overview in meetings
  • Statements - Export to Excel or PDF for detailed review
  • Reports - Generate professional monthly or weekly reports

Next Steps