Financial Forecasting Model Builder

## ROLE
You are a financial planning and analysis (FP&A) expert who has built forecasting models for companies from pre-revenue startups to publicly traded enterprises. You specialize in creating models that are both analytically rigorous and practical enough for non-finance stakeholders to understand and use.

## OBJECTIVE
Create a detailed financial forecasting model framework for [COMPANY NAME] that projects revenue, expenses, and cash flow over [FORECAST PERIOD], incorporating multiple scenarios and clearly documented assumptions.

## TASK

**STEP 1: MODEL ARCHITECTURE**
Define the forecast structure:
- Forecast period: [12 MONTHS / 3 YEARS / 5 YEARS]
- Granularity: [MONTHLY FOR YEAR 1, QUARTERLY FOR YEARS 2-3, ANNUAL FOR YEARS 4-5]
- Base currency: [CURRENCY]
- Business model type: [SAAS / E-COMMERCE / SERVICES / MARKETPLACE / MANUFACTURING]
- Key revenue streams: [LIST REVENUE LINES]
- Reporting standards: [GAAP / IFRS / MANAGEMENT REPORTING]

**STEP 2: REVENUE FORECAST**
Build bottoms-up revenue projections:

*For SaaS/Subscription Models:*
- Beginning customer count by tier: [COUNTS]
- New customer acquisition rate: [MONTHLY/QUARTERLY ADDS]
- Churn rate by segment: [RATES]
- Expansion revenue (upsell/cross-sell): [RATE]
- Average revenue per account by tier: [ARPA]
- Pricing changes planned: [DETAILS]
- Formula: Revenue = (Beginning Customers + New - Churned) x ARPA + Expansion

*For Transactional/E-Commerce Models:*
- Traffic/visitor projections: [MONTHLY VISITORS]
- Conversion rate assumptions: [RATE]
- Average order value: [AOV]
- Purchase frequency: [ORDERS PER CUSTOMER PER PERIOD]
- Seasonal adjustment factors: [MONTHLY INDICES]

*For Services Models:*
- Billable headcount: [CURRENT AND PLANNED HIRES]
- Utilization rate target: [PERCENTAGE]
- Average billing rate: [RATE BY LEVEL]
- Project pipeline and close rate: [PIPELINE VALUE AND WIN RATE]

**STEP 3: COST OF GOODS SOLD / COST OF REVENUE**
Model direct costs:
- Hosting and infrastructure: [COSTS, SCALING ASSUMPTIONS]
- Third-party software and API costs: [PER-UNIT OR FIXED]
- Customer support costs: [COST PER CUSTOMER OR RATIO]
- Payment processing fees: [PERCENTAGE OF REVENUE]
- Professional services delivery costs: [IF APPLICABLE]
- Gross margin target: [TARGET PERCENTAGE]

**STEP 4: OPERATING EXPENSE FORECAST**
Project each department:

| Category | Current Monthly | Growth Assumptions | Key Drivers |
|----------|----------------|-------------------|-------------|
| Engineering | [AMOUNT] | [HIRING PLAN, TOOL COSTS] | [HEADCOUNT x AVG COMP] |
| Sales & Marketing | [AMOUNT] | [CAC TARGET, CHANNEL MIX] | [% OF REVENUE OR FIXED + VARIABLE] |
| General & Administrative | [AMOUNT] | [SCALING FACTORS] | [HEADCOUNT, RENT, INSURANCE] |
| Research & Development | [AMOUNT] | [INVESTMENT ROADMAP] | [HEADCOUNT, TOOLS, CONTRACTORS] |

For each category include:
- Compensation (salary, benefits, taxes at [BURDEN RATE]%)
- Software and tools
- Professional services (legal, accounting, consulting)
- Facilities and equipment
- Travel and entertainment
- One-time expenses vs. recurring

**STEP 5: SCENARIO ANALYSIS**
Model three scenarios:

*Base Case:* Most likely outcome using current trajectory and planned initiatives
*Upside Case:* Assumptions for [METRIC] exceeding targets by [PERCENTAGE] — what needs to be true
*Downside Case:* Conservative assumptions accounting for [RISK FACTORS] — cost cuts triggered at [THRESHOLD]

For each scenario, show:
- Revenue trajectory
- Burn rate and cash runway
- Break-even timeline
- Key metrics (CAC payback, LTV/CAC, Rule of 40, gross margin)
- Headcount plan adjustments

**STEP 6: CASH FLOW PROJECTION**
Build the cash flow model:
- Operating cash flow (net income + non-cash adjustments)
- Working capital changes (AR days, AP days, inventory turns)
- Capital expenditures: [PLANNED INVESTMENTS]
- Financing activities (debt, equity, line of credit)
- Monthly ending cash balance
- Runway calculation in months
- Minimum cash threshold before triggering fundraise or cost reduction

**STEP 7: ASSUMPTIONS LOG AND SENSITIVITY TABLE**
Document every assumption with:
- Source (historical data, industry benchmark, management estimate)
- Confidence level (high/medium/low)
- Sensitivity impact — if assumption changes by +/- 10%, effect on bottom line
- Review and update cadence

## INPUT
**Company name**: [COMPANY NAME]
**Business model**: [SAAS / E-COMMERCE / SERVICES / MARKETPLACE]
**Current annual revenue**: [REVENUE]
**Current monthly burn**: [BURN RATE]
**Cash on hand**: [CASH POSITION]
**Forecast period**: [TIME HORIZON]
**Key growth initiatives planned**: [INITIATIVES]
**Known risks or uncertainties**: [RISKS]