The financial model in your business plan could be the most important document you create for your business.


That’s because it’s the first section any investor wants to see, says Michael Sheridan, COO of Docstoc. When creating a financial model that has the information an investor is looking for, he recommends that life science entrepreneurs spend time setting assumptions, projecting revenue and analyzing expenses.


It’s important to create a baseline of assumptions that the business plan is driven off of so people understand where you’re coming from in your financial model, Sheridan says. These assumptions can be about market growth rate, your ability to hire key salespeople and derive revenue or the multiple ways your business can create revenue.


There are two ways to create a financial model to project revenue: the bottom-up approach and the top-down approach. The bottom-up approach derives top line and sales revenue from the expenses that you have. For the top-down approach, Sheridan says, “It’s really starting with the end in mind. ‘Here’s the type of sales and projections that we need our business to have and what is it going to take from an expense line item to get those sales projections.’” Sheridan says either plan will work; Do whichever is easier for you.


The last piece of a financial model is all of your company’s expense line items: employee salaries, insurance, phone lines, travel, rent and everything else. “All of the nitty gritty details are so important in understanding how much it’s going to cost to run your business and get to the revenue projections that you want to, to be a successful business and to be appealing to potential investors,” Sheridan says.

Recently Published

Key Takeaway: Nanotechnology, which includes particles smaller than 10,000 times the diameter of a human hair, is playing a growing role in various industries, including medicine, cosmetics, and medicine. Nanoparticles can pass easily through the blood-brain barrier, potentially enabling better treatment of brain diseases and disorders like cancer and dementia. They can also be used […]
Key Takeaway: George Bernard Shaw referred to Ebenezer Howard’s “garden cities” concept in the late 19th and early 20th centuries, which he believed would offer the advantages of town and country without the drawbacks. Recently, a Silicon Valley consortium called Flannery Associates purchased land for California Forever, a contentious project that echoes Howard’s ideas. Howard’s […]

Top Picks

Key Takeaways: Nanotechnology is set to revolutionize clothing, transportation, and transportation. Clothing will be tailored to individual needs, with synthesizers in closets creating clothing that fits perfectly. Nanosuits, made of 5 microns thick fabric, will cover the wearer’s body, allowing separate holes for individual hairs and making them weightless. This technology will double the amount […]
Key Takeaway: Online algorithms on social media platforms amplify information people are biased to learn from, leading to social misperceptions, conflict, and the spread of misinformation. This mismatch between human psychology and algorithm amplification can result in functional misalignment, leading to incorrect perceptions of the social world and the spread of misinformation. Research on this […]
Key Takeaways: Online gaming communities could be a vital lifeline for young men struggling with mental health issues, according to new research. Members with more depressive symptoms and less real-life support were 40% more likely to form and maintain social ties with fellow gamers compared to those with more real-life support. This suggests the chat […]


I highly recommend reading the McKinsey Global Institute’s new report, “Reskilling China: Transforming The World’s Largest Workforce Into Lifelong Learners”, which focuses on the country’s biggest employment challenge, re-training its workforce and the adoption of practices such as lifelong learning to address the growing digital transformation of its productive fabric. How to transform the country […]

Join our Newsletter

Get our monthly recap with the latest news, articles and resources.


Welcome to Empirics

We are glad you have decided to join our mission of gathering the collective knowledge of Asia!
Join Empirics