Models and Modeling:

What is a model?  If you favor brevity, a model:

predicts the outcome of a business issue, based on certain assumptions.

If, however you favor verbosity, a model is:

an algebraic equivalence, recorded on a spreadsheet, that predicts how an entity, or a transaction, will react to certain input (driver) conditions.  It connects the inputs (assumptions) to the outputs (expectations or results).  By definition, the model is predictive and quantifies what is expected to happen (outputs) based on certain assumptions (inputs).

The development of a useful model requires: (1) an appreciation of the needs of the user…an ability to discuss, challenge, and suggest options and alternatives; and (2) a basic understanding of how to use Excel.  This is a powerful combination of both art and science.  The art includes the model architecture, model data flow and comes mainly from experience.  The science comes from books and Google searches.  However, both skills should be subordinated to the acquired ability to “know” that the solution is suspect or maybe just wrong.  (This is commonly called “gut feel.”).

So why is a model important to you?  Because...

  1.  A model offers a fact-based spreadsheet solution to a business issue.

  2.  A model allows for improvements in your decision-making process by changing from a “seat of the pants” approach to a “model development” approach.  Improved decision-making leads to improved results.

Happy CFO

 

 

 

 

The following represents a partial list of some Excel-based models which may be useful in helping you work through some of your business issues.  Screenshots of these models are shown in the model screenshots  section.

Range of Excel-Based Models for the SEGC:

If you would like to explore how such models could help your SEGC, e-mail me at wyn@cfadvisorsllc.com or call me at (612) 232-1775 and let's talk.