Financial Model: Building financial projections...

Builds monthly revenue projections, expense forecasts, unit economics (CAC, LTV, payback), break-even analysis, cash flow tracking, and scenario modeling (best/base/worst).

Activation

When this skill activates, output:

Financial Model: Building financial projections...

Then execute the protocol below.

Context Guard

Common Mistakes

Protocol

Step 1: Gather Business Data

If the user hasn't provided details, ask:

1. Business model: SaaS, e-commerce, service, marketplace, or other?
2. Revenue streams: subscriptions, one-time sales, services, ads?
3. Current numbers: existing revenue, customers, growth rate?
4. Pricing: price points, tiers, average revenue per user?
5. Costs: known fixed and variable costs?
6. Funding: bootstrapped or funded? Current cash balance?

Step 2: Revenue Model

SaaS / Subscription revenue:

Month N Revenue = (Previous customers - Churned + New) × ARPU

Where:
- Previous customers: end of prior month
- Churned: Previous × monthly churn rate
- New: Acquired through marketing/sales
- ARPU: Average Revenue Per User (monthly)

E-commerce / Transaction revenue:

Monthly Revenue = Visitors × Conversion Rate × Average Order Value

Where:
- Visitors: Monthly unique visitors (organic + paid)
- Conversion Rate: % of visitors who purchase (target: 1-3%)
- AOV: Average Order Value

Service revenue:

Monthly Revenue = Active Clients × Average Monthly Retainer
  + Project Revenue (one-time)

Step 3: Unit Economics

Key SaaS metrics:

CAC (Customer Acquisition Cost):
  = Total Sales & Marketing Spend ÷ New Customers Acquired
  Target: recover within 12 months

LTV (Customer Lifetime Value):
  = ARPU × Gross Margin% × (1 ÷ Monthly Churn Rate)
  Example: $50 × 80% × (1 ÷ 0.05) = $800

LTV:CAC Ratio:
  = LTV ÷ CAC
  Target: > 3:1 (every $1 spent acquires $3+ in lifetime value)

Payback Period:
  = CAC ÷ (ARPU × Gross Margin%)
  Example: $200 ÷ ($50 × 80%) = 5 months
  Target: < 12 months

Unit economics table:

Step 4: Expense Forecast

Fixed costs (monthly):

Variable costs (scales with revenue):

Total monthly burn:

Burn Rate = Fixed Costs + Variable Costs - Revenue
Runway = Cash Balance ÷ Monthly Burn Rate

Step 5: Break-Even Analysis

Break-Even Point (customers):
  = Fixed Costs ÷ (ARPU - Variable Cost per Customer)

Break-Even Point (revenue):
  = Fixed Costs ÷ Gross Margin%

Example:
  Fixed costs: $10,000/month
  ARPU: $50/month
  Variable cost per customer: $10/month
  Break-even: $10,000 ÷ ($50 - $10) = 250 customers

Monthly P&L projection:

Step 6: Scenario Modeling

Three scenarios:

12-month outcome by scenario:

Step 7: Cash Flow Summary

Monthly cash flow:

Key dates:

• Cash-flow positive: Month [X] (when monthly net turns positive)
• Break-even (cumulative): Month [X] (when cumulative losses are recovered)
• Runway exhausted: Month [X] at current burn (worst case)

Output Format

# Financial Model: [Business Name]

## Revenue Model
[From Step 2: monthly revenue projections]

## Unit Economics
[From Step 3: CAC, LTV, payback, margins]

## Expense Forecast
[From Step 4: fixed + variable costs]

## Break-Even Analysis
[From Step 5, break-even point + P&L]

## Scenario Analysis
[From Step 6: worst/base/best]

## Cash Flow
[From Step 7, monthly cash flow + key dates]

## Key Assumptions
[List every assumption with the value used]

Completion

Financial Model: Complete!

Business model: [Type]
12-month ARR (base case): $[X]
Break-even: Month [X]
LTV:CAC ratio: [X]:1
Runway: [X] months
Scenarios modeled: 3 (worst/base/best)

Next steps:
1. Validate assumptions with real data (update monthly)
2. Track actual vs projected monthly
3. If LTV:CAC < 3:1, reduce CAC or increase ARPU before scaling
4. If runway < 6 months, raise capital or cut burn
5. Update the model quarterly with actuals

Level History

• Lv.1: Base: Revenue models (SaaS, e-commerce, service), unit economics (CAC, LTV, payback, LTV:CAC, gross margin), expense forecast (fixed + variable), break-even analysis with P&L projection, 3-scenario modeling (worst/base/best), cash flow timeline with key dates (cash-positive, break-even, runway). (Origin: MemStack Pro v3.2, Mar 2026)