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How to quickly forecast performance with our SaaS financial model template in Google Sheets

Why use a one-size-fits-all SaaS financial model template when you can use ours? Finally, a template with the flexibility you need for your unique business!
Praveen Rajaretnam
Planning
7 min
Table of contents
How SaaS companies differ from other types of businesses 
What to look for in a SaaS financial model template
What you’ll get with our template
The truth about SaaS financial templates
Is it time to level up your SaaS financial modeling?
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Summary

Every SaaS business is unique. So, why should you use a one-size -fits-all financial model template? 

While one may argue that the underlying fundamentals of a financial model are the same for any business, we strongly believe that the nuances associated with SaaS businesses need to be accounted for in the financial model. 

A run-of-the-mill financial model template won’t cut it if you’re planning to use it for your SaaS business. So, if you’re looking for a SaaS financial model specifically, you’ve come to the right place because we understand SaaS financial modeling, inside and out.  

But, just for the sake of clarity, let's take a look at what makes SaaS companies different.

How SaaS companies differ from other types of businesses 

Below you'll find a quick rundown of some of the overarching differences between SaaS companies and traditional businesses. 

Revenue model

  • SaaS companies – Built upon a subscription-based recurring revenue model in which the customer is billed on a recurring basis.
  • Other companies – Revenue model is usually built around one-time sales for which the customer is charged once for the product or service.

Customer acquisition

  • SaaS companies – Focus is on acquiring and retaining customers over time increasing lifetime value (LTV) of the customer.
  • Other companies – Focus is on continuous acquisition of new customers because each sale generates revenue only once.

Customer loss

  • SaaS companies – Loss of customers (churn) has an outsized impact on a SaaS company due to the recurring nature of payment. Each customer lost translates to increasing revenue loss over time.
  • Other companies – Given the one-time nature of sales, the loss of a customer means loss of potential repeat sales (an opportunity cost as opposed to revenue lost).

Profit margins

  • SaaS companies – SaaS companies have high gross margins due to low cost of good sold (COGS) once the software has been developed.
  • Other companies – Margins vary widely by industry but is typically lower than in SaaS due to higher COGS.

Cost structure

  • SaaS companies – Upfront development costs are higher, followed by lower incremental costs to serve additional customers.
  • Other companies – Production and/or service costs increase proportionally with additional customers.

Growth and scaling

  • SaaS companies – Expanding the customer base doesn’t proportionally increase costs because the product is already developed but additional headcount may be needed for customer support.
  • Other companies – Can be harder to scale because more customers requires additional production capacity, such as more labor and changes to physical infrastructure.

COGS

  • SaaS companies – COGS increases linearly with revenue, however there is no concept of inventory (once developed, the same SaaS product can be sold to any number of customers). COGS consists of direct costs for cloud hosting, CS teams and their software tools, and company overhead.
  • Other companies – COGS increases linearly with revenue. It includes direct costs attributable to the production of goods, such as raw materials and labor as well as factory overhead costs.

Keep in mind that while most SaaS companies have the above characteristics in common, no two SaaS companies are the same, even if they are at the same growth stage and industry.

What to look for in a SaaS financial model template

SaaS financial modeling templates can be enormously helpful, especially for early-stage startups. However, they are only a starting point. 

Because every SaaS business is unique, there is no one template that will work fit for any SaaS (although many appear to be built on that assumption). Beware of SaaS financial modeling templates that promise to give you everything you need – they just can’t! 

For a SaaS modeling template to be truly useful, it needs to be flexible enough to work for your unique business. 

It should also be intuitive and easy to use. 

Of course, all templates should be, but they often miss the mark here. Some are super complex, with a dozen or more worksheets to manage, while others pretend to be simple by cramming everything into one or two worksheets.

Either way, most templates out there are a nightmare to update when needed. Just finding the right cells to update is like finding a needle in a haystack. 

Let's say you need to update your model. We all know that model assumptions often change, which can have ripple effects across the entire model. Ideally, all these assumptions should be in one place in your template to make them easier to change when needed as your business and market conditions change. Unlike other templates, ours puts all your assumptions in a separate worksheet so you don't have to work to find them. 

This is just one example of how we designed our template with the user experience (i.e. you) in mind. We also made it very flexible so you can easily adapt and customize it for your business.

What you’ll get with our template

When you download our free SaaS Financial model template, you'll get a driver based financial modeling template that is intuitive and which factors in the core components that impact your business. All you need to do is plug in your actuals. (That's right -- no need to enter any formulas!) 

Instead of one forever-long worksheet you have to scroll through to figure out where to enter what, our template provides seven separate worksheets:

  • Key assumptions you’ll use in your model
  • An actuals worksheet where you'll enter actuals each month (and watch the model update automatically when you do)
  • A comprehensive summary of your financial performance
  • Several important SaaS metrics calculated for you
  • A comprehensive set of churn metrics with associated revenue retention
  • An Income Statement (P&L) that calculates your revenue growth, gross margin, and EBITDA margin, and total operating expenses.
  • A dashboard that illustrates your financial performance with an ARR waterfall, your P&L, and important trends in your business

Each worksheet appears in an order that walks you through the modeling exercise step-by-step and is designed to make it easy to know where to enter data and find what you need. This provides a granular yet uncomplicated view of your financial performance.

Here’s what you will find inside:

A worksheet in which to enter your historical data and the key assumptions you’ll use in your model, making the model easy to update when needed.
A worksheet for entering your actuals data each month, which will automatically provide an up-to-date comprehensive summary of your financial performance.
Several key SaaS metrics, which are calculated for you, including a comprehensive set of churn metrics with associated gross revenue retention (GRR) and net revenue retention (NRR).
An income statement (profit and loss) that calculates your revenue growth, gross margin, EBITDA margin, and total operating expenses.

A financial performance dashboard

You also get a dashboard that illustrates your financial performance with an ARR waterfall, your P&L, and important trends in your business, which can also make your financial reporting easier. 

ARR waterfall chart.
Chart to show trend in LTV:CAC.

The truth about SaaS financial templates

SaaS financial model spreadsheet templates can be very useful, whether you're an early-stage SaaS startup or a well established SaaS company. They're especially especially for the many different types of standard SaaS planning and reporting tasks that finance teams must do on a routine basis. And if they’re well designed (like ours), they can save you a ton of time and actually be fun to use.   

The real limitation inherent in templates is often not immediately evident, and that is that they are all only useful up to a point. This is because comprehensive financial planning requires several different models and financial statements, and they all need to “talk” to each other to be in sync. Some examples include:  

  • ARR and Customer build-up
  • Annual budget (Expenses or Costs)
  • Sales capacity planning
  • Headcount planning
  • An integrated, three-statement model (income statement, balance sheet, and cash flow statement)

As we’ve established, no single template can possibly do all of these things, nor would you want it to. Yet, trying to do all this with multiple separate spreadsheet templates or one giant spreadsheet with dozens of worksheets will quickly become unmanageable as your company grows. 

This approach might work for early-stage startup very simple business model. But spreadsheets simply aren’t scalable given the obvious problems like version and access control, formula errors, copy-and-paste errors and other types of data input errors, to name a few. Trying to keep everything synced up gets difficult very quickly.  

Is it time to level up your SaaS financial modeling?

If templates are still working for you, great! Download our template to see how easy it can be to start building your own SaaS financial model. 

And while you’re there, bookmark our Templates and Cheat Sheet page so you can easily find your way back. We’re continually adding more resources to help you manage your SaaS financial planning and analysis (FP&A) work.   

Now, if you’re a company that’s reached the inevitable breaking point where spreadsheets no longer work, check out Drivetrain. We can make all this heavy lifting go away and make your financial modeling a breeze! Here's how we do it:

  • Modeling: With our cutting-edge data modeling capabilities, we can help you create more accurate and dynamic models that reflect the real complexities of your operations. With our integrations, you can automatically pull data from different source systems to build a single source of truth for your organization. This ensures that every model you create is built on a solid foundation of real-time data that's always current.   
  • Planning: Drivetrain’s analytics can help uncover insights and trends that inform strategic planning. Using ‘What if’ models, you can simulate different business scenarios that can help in planning for various contingencies and opportunities.
  • Budgeting: You can use Drivetrain to analyze historical financial data and make informed future budget decisions. You can now come up with granular and accurate budget allocations based on past performance and predicted future trends. More importantly, with Drivetrain, organization-wide collaboration is a given. No more silos. 
  • Forecasting: You can see your pipeline, billing, ARR, burn rate and more in one place. You can also compare actuals against plans to identify which parts of your business are thriving or struggling. You can use all these data points to predict future trends and sales.
  • Monitoring: With real-time dashboards and reporting features, you can continuously monitor your crucial KPIs and metrics. Drivetrain also alerts you in case there are deviations from planned metrics, enabling quick responses to potential issues or market changes. Finally, you can find blockers to your growth with built-in root cause analysis (RCA).

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