Driver-Based Forecasting
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      How to set Formulas in Modeliks?

      Modeliks enables you to construct your financial plan based on the specific value drivers of your business, allowing for more accurate and insightful forecasting.

      💡 If you're new to the driver-based model and want to understand its importance, be sure to check our article on Driver-Based Forecasting ✔️

      How it's done 💪: Example 1 

      Step 1

      Let's take the example of a consulting business that aims to establish a consulting revenue stream. In Modeliks, you can easily create a new revenue stream by clicking on "Add New Revenue". For this example, we will name it "Consulting Revenue" and choose the "Service Revenue" revenue type ✅

      consulting revenue

      Step 2

      Next, we need to determine the number of billable hours and the hourly rate. However, instead of directly inputting the number of Billable hours, we want to calculate it based on its drivers, which in this case are the number of leads and the conversion rate from lead to customer.

      set formula 1

      set formula 2To set up this calculation, click on the "Set Formula" button, which opens a new window ✅

       

      Step 3

      Here, we define the drivers we want to use in the calculation. To start adding your driver, click on "Add Driver". First you need to give it a name, select the data type - it can be a $ currency, % percent, or # number data type and select the driver category which can be average or sum, or Opening balance & Closing balance. Next you can select the period, the choice is between current and previous period. To create the driver click on "Create Driver".

      We will start by adding the driver "Number of Leads" and specify the DataType - in this case, it will be # number. Next, select the Driver Category which is "sum" since we'll be summing up the monthly leads to calculate the annual value. For the period, we will select current period. By clicking "Create Driver", the driver will be successfully created.

      create driver 0

      Repeat the process for the second driver, "Conversion Rate" specifying the data type as "%" percent and the category as "average".

      create driver 1

      💪 You can remove and edit any of your drivers, at any given time.

      Step 4

      Now that you have added all relevant drivers, it is time to create the formula for calculating the number of billable hours. In the "Create Formula" bar, on the left side, you can see the available "Drivers" that are already created and on the right side, you can see the "Operators" which will help us create the formula.

      create foperations new

      To create the formula, just click on a Driver, add the relevant operator, in our case, it is "X"-multiplication, and click on the second driver. Finally, click "Set Formula" to save the calculation ✅

      ✍️  Billable Hours = Number of Leads X Conversion Rate

      formula done

      Step 5

      Now, when entering the values for the two drivers, the number of billable hours will be automatically calculated based on the formula.

      In our case, the value for the driver "Number of Leads" will be 1,000 all-time, while the "Conversation Rate" will be set to 5% all-time ✅

      set formula 4

       

      set formula 5

      Proceed to input the hourly rate, in our case we will add $100 for the first year ✅

      Click "Save & Close" and Voila 🌟 Your Consulting Revenue is now calculated based on the drivers you defined.

      set formula 6


      ❗We're not done yet: Example 2

      Let's move on to calculating the Marketing Costs based on the driver's "Number of Leads" to create a logical and dynamic financial model.

      Step 1

      Go to Expenses and click on "Add Expense." In our case, we will name it "Marketing Cost" and proceed.

      expenses

       

      Step 2

      Next, click "Set Formula" to define the calculation. Click on "Add Driver", search and select the existing driver "Number of Leads" from the dropdown list. Then, create a new driver called "Cost per Lead" with the appropriate $ currency for data type, average category and current period.

      marketing cost

      marketing cost 0

      Step 3

      Create the formula and save the changes before you proceed to the next step 👇

      ✍️  Marketing cost = Number of Leads X Cost per Lead 

      cost per lead

       

      Step 4

      Since "Number of Leads"  is an existing driver, the data will appear automatically. Now we need to input the data for the "Cost per Lead", which in our case will be $50 per month for the first year. 

      marketing cost 1

      Click "Save & Close" to finalize the calculation.

      marketing cost 3

      🔎  If you make changes to the number of leads in the revenue section, both your revenue and marketing cost will automatically adjust accordingly.

      📝 Edit your numbers

      Keep in mind that blue-colored numbers are editable right on the spot, black numbers are calculations and the arrow option allows you to paste the value to the end.

      arrow optionpaste values

       

      🌟 Congrats! Your Marketing Costs are calculated based on the Number of Leads and the Cost per Lead!

       

      ❣️ Watch the video tutorial for step-by-step guidance and start optimizing your financial planning process today.