Management Case, Base Case and Worst Case
I wrote a post yesterday on the Union Square Ventures blog about a methodology we use at Union Square Ventures that I call the three case analysis.
Here’s a snippet from the post:
For entrepreneurs, I have some suggestions.
– build a good solid model that has at least a couple years of projections for revenues, cost, headcount, etc.
– make sure to create a cash flow projection that ties into the profit
and loss. ideally you’d have a full balance sheet projection.
– make it easy to adjust the model so that it can be used for a scenario analysis
– do the worst case analysis before the venture capital investors do it so you’ll be prepared for the conversation
If you are interested in how VCs play with financial models, go give it a read. As always comments are appreciated.