Congratulations! You are pulling millions in revenue, proving you have a product customers need and want. But your operating stress has just begun because you now have new challenges opportunities. It only gets harder, because operationalizing your strategy at scale has more moving parts.

As a CEO, you are probably (hopefully) intimately familiar with your financial model. Or at least your high-level projections. And your historical financials. Yes, your product roadmap matters. So does your GTM strategy. So does your marketing funnel. And your pipeline.

But if you don’t know your financial model, you don’t understand how the pieces fit together.

The financial model is connected to your annual and quarterly planning. It is the central nervous system that supports execution. So if your CFO owns the model, she should be a key strategic member of your team. The financial model organizes your primary assumptions about your company that answers key questions. What are the levers that drive revenues, the levers that drive your expenses, and your organizational needs?

You should use your financial model 3 ways to move smarter and faster:

1. Objectively evaluate company performance.
2. Set better goals and build an execution plan.
3. Provide insight and clarity to your stakeholders.

Objectively Evaluate Company Performance

Financial statements provide a lens into your company’s performance. Even though you aren’t profitable, and even though you only have 12-18 months of runway unless you slow down your spending (and growth). And even if you slow your spending, it probably only buys you an additional 6-9 months.

Setting your OKRs (goals) for the quarter is often summarized into 1 answer — your financial results and forecast. When pricing comes in lower than you have modeled, every member of your leadership team should understand how that flows through to your financials. When sales cycles lengthen, the old excuse of “a few deals slipped into the next month or quarter” (an explanation I heard dozens of times when I was an equity analyst) should be reflected in your plan. Because that shortens your runway. Your commitment to quarterly OKRs (goals) is a commitment to the health of the business. Every leader should understand that.

Set better goals and build an execution plan

Your financial model helps you react in real-time to what is happening in the business. It also allows you to enhance strategy and connect that strategy to an operational plan.

So when you hear “a few deals slipped into the next month or quarter,” your team can talk about the possibility of softer demand or longer sales cycles. If your sales cycles are lengthening, but your ARR/Customer is increasing, your burn rate is likely going up. If pricing is coming in far less than the model, that helps guide a lot of your future decision-making. Are your unit economics working? Is this a reflection of the market, or can you grow the account size over time? If you can grow account size over time, will you need to build an organization to “land and expand?” How much does that cost? Do you do it now or after you reach a certain size?

Ad hoc analysis is critical, and it all must flow both to and from your financial model

Provide insight and clarity to your stakeholders

As an operator, I would share our financials, key pieces of the financial model, and our OKRS with my team (although at different levels of fidelity with the leadership team versus the entire business). Because our team understood the model, we could celebrate our CAC/LTV numbers and also understand that even modest decreases in retention could offset those gains. Everyone should understand how OKRs flow into the model (either in current or future periods). What about pricing? Sales cycle? Upsell and retention? They all affect the model (and your ability to eventually generate profit) in different ways.

Your financial model is not an accounting exercise. It’s one of the most potent decision-making and communication tools you have. Own it.