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  8.18. Assignment: Validate the Financial Model

The financial model will be one of your final hypothesis-testing activities before you launch your business in full force, so you need to take the time to sit down and model all your assumptions, putting numbers on each of them, and determine if the business still makes sense. At this stage, you shouldn’t expect to fully understand the financial model. However, you should have at least a general understanding of how the numbers will work out.

Assignment Directions:

1. To the best of your ability and understanding, complete the following:

  • List out fixed and variable costs
  • Calculate margins, customer acquisition costs, and the break-even point
  • Do a sensitivity analysis on your assumptions (good-, neutral-, and bad-case scenarios)

2. Record your thoughts on how the numbers look and your general financial model. Are there things you can change to improve the model?