Finance

📊 When creating or even just rebuilding your company’s financial model, there’s little reason for you to start from scratch. There are dozens of resources around SaaS modeling which can serve as a great starting point. Stéphan Nasser’s review of his top 12 choices, which compares each based on 5 key criteria, should be the first stop of your modeling journey. We personally are big fans of Taylor Davidson’s SaaS Financial Model and SaaS: Enterprise, SME & Users by Alexander Jarvis (both covered in the article).

🏦 The management of your margins only becomes more important as you scale. We liked how the SaaS CFO addresses margin by spitting his P&L into two simple layers: gross profit and operating leverage. Gross profit is just your revenue less COGS, and should scale at a relatively similar rate as revenue. Operating leverage, on the other hand, should be closer to a fixed cost as you scale, growing at a much slower rate than revenues. Check out the equation below to calculate – the scale maximum for positive operating leverage is $1, meaning if you achieve $1 of operating leverage, you kept operating expenses flat year over year.