"What If" financial models for bootstrappers
Looking for some feedback from fellow bootstrappers.
We've been building financial scenario planning tech with an initial go-to-market of Fractional CFOs. Rethinking this (really hard to get them to abandon their spreadsheets) for now and have shifted to Startups instead.
Big difference though between funded startups raising an A and a couple of devs building a project on evenings and weekends.
The question - for bootstrappers - do you even bother running any best/worse case runway and pricing models? Do you download a spreadsheet and hack in some numbers - or simply build and spend and market and build... never really keeping an eye on the money?
And if you don't - why not?
Lastly - would you pay a one time fee (say $100) to have someone build a bespoke, interactive custom model of your business - or is the fact that spreadsheets are free and templates can be found online enough?
THanks
Firstly, I think its great that you're asking, this is perfect community. Here is my take.
Generally there are a few hurdles, which you allude to, firstly people need to know their numbers, revenue most people know, everything else, in my experience is a mixed bag.
In order to build a useful model you need to know your fixed and variable costs and the relationship between price and cost, sometimes they are tied (commissions, licencing etc).
For me, opening Excel and building a model from scratch takes an hour or so and I can update it as I remember the little pieces I forgot, and, as I am sure you are aware, Excel has a 'What If' analysis engine built in: https://www.excel-easy.com/data-analysis/what-if-analysis.html.
I think the biggest issue for a service like yours is that I'd need to invest a lot of time upfront in collecting all of the data, give it to you, then worry I'd forgotten something or something needed adjusting, and what I got at the end, would it be significantly better than what Excel gives me.
Another big point is that, for a business like mine, its effectively the cost of staff, cost of IT infrastructure, and the product is built on a 'cost plus pricing model' so the sums are incredibly easy, its effectively volume x profit margin, and the profit margin only changes if there are changes to employees, infrastructure or cost/selling price of the product, this probably represent a large number of start-up's selling at margin.
Solving problems that exist in Excel is a great business model I'm just not sure its worth the friction for having to essentially invest a lot of time in back and forth with a third party.
These are just my thoughts, if you believe in your product, keep doing what you think is right, I'm just here to help if I can.
Great points - feels like friction is the catch here.
One of the product strategies we've been struggling with is whether to build the "Canva" of financial modelling or the "Photoshop" of financial modelling.
Canva - templated. Fast. Perfect for 80% of the people 80% of the time - with little to no learning curve whatsoever. But when you hit a wall on something you want to do - it is a hard stop.
Photoshop - complicated. Powerful. Can do anything. Steep learning curve. But you can cover any and all edge cases.
Obvious challenge is that building the Photoshop version of something is a daunting task for a bootstrapped founder. Canva version means that the moment someone hits an edge case, they have to revert back to existing tools - like Excel.
Love this question as it's perfect customer research before you go heavy into developing something.
For me, if we're still in indie phase and ramping then there's no way we'd pay for what could be done in a free google sheet. If it's successful however then support becomes more important. And maybe less about the template but more as a plug and play sort my financial strategy for me.
I think there definitely is a demand for new companies. Balancing profit sharing models vs time of tenure vs contribution vs value vs equity sharing models vs exit clauses
Thanks! Really leaning into the concept of smart, flexible templates that don't require a Founder to chase crazy formulas. Assuming that for most indie founders, if they aren't looking for a 17 page long financial plan - just quick answers to quick questions like pricing or outsourcing a piece of their development.
Simply build and spend and market and build... never really keeping an eye on the money. And there is a reason for this. Devs are not that good at coming up with pricing models, contemplating best/worse cases, marketing, and so on. As a dev, I've never used a spreadsheet working on the pricing model. I always set the pricing more on intuition and what competitors are charging (if there are any).
If you could provide data (available from other similar use cases, based on the traffic, sales and so on) and advice on the right pricing model. Yes, I will pay you 100 bucks.
Great feedback - thanks!
The idea of providing sample data for similar companies or products, as a template, is an interesting concept.
usesummit.com does this very well
Yep - one of the players in the space. Have also been looking at companies like pry.co (YC backed startup) and forecastr (Techstars).
Summit has built something with a very similar approach to our tech (that connect the dots, if-this-then-that approach).
We started initially with personal finance in mind (almost four years ago now) but shifted our focus to business use cases instead
Coming from a capital-intensive business (cleaning) that actually required hard capex I kind of doubt small software solopreneurs find the need to run any financial models like finding the IRR of undertaking whatever improvement since the main cost isn't capital but time.
Great point - thinking more now about more established companies, with real data, as a better market. The simpler the model, the less likely founders are going to sweat the numbers.