Get Started

Get Started is the core input sheet in Hemrock models. Other modelers call this sheet "Assumptions", "Inputs", or "Key Drivers" - rename it if you prefer. The name is meant to signal where to begin.

Get Started is a convention across all Hemrock models, but the content and inputs vary by model. This doc focuses on its usage in the Standard Financial Model.

How to use

The Get Started sheet is divided into a few sections, and each impact the model in different ways:

1. Model Structure. This section contains overall model structural settings, and is detailed in the Inputs section below.
2. Revenue Assumptions. This section contains the key inputs for the prebuilt revenue model, and is detailed at Revenues.
3. Revenue Model. This section defines the prebuilt options available for the Revenues sheet. You can change the name used to define the business model types; many businesses will modify the prebuilt revenue model and add in custom revenue streams, it is not necessary to change the assumptions here to do that, this is only used to change the prebuilt calculations on the Revenues sheet.
4. Balance Sheet. Optional inputs covering revenue recognition and cash collection, depreciation and amortization, debt repayment, corporate income taxes and VAT, inventory, and valuation. Each input is explained at the links above. The most important input is Cash on hand, beginning of model, which should reflect cash on hand at the start of the first forecasted month. You can detail the opening balance sheet on Statements, but this is the critical input. Do not include any cash to be raised in the forecast period (that flows through Forecast); do include any cash on hand from past fundraising (debt, equity, grants, owner's equity).
5. Seasonality. This optional section allows you to set positive and negative percentage impacts on a recurring monthly basis that is separate from the growth rates above. The two layer on each other, creating cyclical, seasonal effect by redistributing a year's rate of change over the time period. By default this can be applied to any number forecasted by the Drivers as well as a number of the forecasted items in the Growth, Conversion, and Revenues sections on Revenues and Forecast sheets. This structure is detailed at Seasonality
6. Model Checks. This section helps you monitor for potential issues in your use of the model, and may result from model calculations or business viability concerns. Explained at Model Checks.

Inputs

The inputs for each section above are detailed on their respective sheets, except for Model Structure, explained below.

• Company Name This is used in the Legal Disclaimer sheet, which is purely optional, but something many people choose to include in their projections when they provide them to potential investors.
• Base Timescale You can use the model to forecast monthly, quarterly, or annually, and then the model will use that as its base timescale. Many inputs and calculations will adjust automatically, but just be sure to input numbers that reflect the time period you selected. Almost all users choose to use the model on a monthly timescale.
• # of Months in Model. This sets the # of periods in the model. (1 period = 1 month, or 1 quarter, or 1 year, as set in assumption above.) By default this is 72, reducing it will not automatically change the number of periods in the model calculations but it will turn off necessary calculations after the input period. Can be extended if needed.
• Date of first period in model This input is for the last day of the first forecasted period in the model. Best convention is to input the actual last day of that period, although the model timescale will adjust it if not. This sets the timescale used on all the resulting sheets.
• Fiscal year end Defines the end of the fiscal year used in the model. By default it is assumed to be December of the year assumed in the prior input, but this can be changed if your fiscal year end is not a calendar year end.
• Do you want to use relative or absolute dates? The dates above set the start date and fiscal year end used in the timescales, but you can also set here whether you want the primary timescale used for reports and charts to be absolute (e.g. Jan 2021 or 2021) or relative (month 1 or year 1). Does not change model calculations, just how they are presented in certain summaries and reports.

Common Modifications

The sheet is completely open for editing and can be customized by users to handle anything you want to add to the model. The most common modifications include:

1. Removing sections that are unnecessary for specific business models. While all sections can be safely ignored it not needed, some people may choose to delete sections permanently unnecessary for their business. For example, businesses not selling physical products or having to deal with Inventory may choose to delete the Inventory inputs and calculations on the Forecast sheet, and the resulting lines on the Statements and Summary sheets. People may choose to remove the Valuation section if it will not be used. Debt Repayment is also optional, and easy to delete from the Forecast sheet, although recommendation is still to keep it included in cash plans change.
2. Replicating the existing Revenue Model. The prebuilt revenue structure works for many business models, but often companies want to expand the prebuilt structure to add in more customer segments or pricing plans than the two prebuilt segments. Often the best choice is to replicate the revenues inputs on Get Started and the Revenues sheet to create multiple instances of the revenue calculations, and then link the new revenue calculations into the Forecast sheet. That linking process is detailed at How to build custom revenue forecasts in a Hemrock base model.

Adding custom revenue streams does not require you to add the assumptions into Get Started, but is often done for consistency in structure and presentation.