The IF function is one of the core formulas used in our startup financial model template, allowing for dynamic, rule-based calculations. Instead of using static assumptions, our model integrates conditional logic to adjust key financial metrics based on milestones, assumptions, and constraints.
The IF function is widely applied across the model to automate revenue and expense forecasting, control hiring timelines, adjust marketing budget scaling dynamically, cap key metrics like churn, retention, and traffic growth to prevent over-optimistic projections.
One of the examples of IF logic in action is how we calculate startup customer retention rate dynamically. Instead of assuming a fixed retention percentage, our model considers:
- When user acquisition starts (defined in the roadmap).
- Gradual improvements in retention as the product and operations improve.
- A cap to ensure the retention rate stays within realistic industry benchmarks.
How the Formula Works=IF(H2=Projections!$E$13;Projections!$C$29;IF(H2>Projections!$E$13;MIN(Projections!$C$31;G18*(1+Projections!$C$30));0))Setting an Initial Retention RateIf the current period (H2) matches the defined user acquisition start date (Projections!$E$13), the model assigns an initial retention rate (Projections!$C$29).
Example: If a startup begins acquiring users in April 2025, the retention rate is initially set to 40%, reflecting early-stage engagement challenges.Gradual Retention ImprovementIf the period is after acquisition has started, retention improves based on a monthly growth factor (Projections!$C$30), representing better product adoption, improved customer success efforts, or optimizations.
The function prevents retention from exceeding a realistic maximum cap (Projections!$C$31).
Example: If the retention rate increases by 2% per month, but is capped at 65% (a realistic target for SaaS or subscription-based models), the formula gradually improves retention without exceeding industry norms.No Retention Before Acquisition BeginsIf the model is in a period before user acquisition starts, retention is set to 0, ensuring the forecast doesn’t assume customers before they exist.