Blair Morrison, CEO

How Much Does a Financial Model Really Cost, Anyway?

I love this question. My co-founder, Lindsey, likes to ask people, “Do you value your time?” For me, the answer is a hard yes. I have charged by the hour for my consulting clients for years, I know how much my time is worth.

This doesn’t stop me from doing my own bookkeeping, my own scheduling, and countless other things. But it does make me think about how much time it takes me to build a financial model, even a simple one.

Every time I build a financial model in excel for a business owner, I have to spend hours getting to know their business. What are the drivers? How does their business work? All of this is knowledge they already have in their heads. I then spend hours pulling their current (already existing) historical financial information into Excel and formatting it in a way that can be easily forecasted. I make custom formulas that make it easy to try out different assumptions without hours of rework later.

Once the model is complete, we talk through the assumptions, tweak a few things, and spend a couple of hours adding more detail where needed. After that, I have to build a balance sheet projection and a cashflow projection.

Then every month, the only person who can update this complex model is me. Essentially they’re paying me thousands of dollars upfront to build a financial forecast, and I am the only one who can maintain it. Financial models are so complex, with so many formulas and so many ways to break them. They are incredible resources for predicting your business’s future so you can plan, but they are also expensive to maintain if you hire someone to do it because they are complex and thus time intensive.

What About Building Your Own Forecast?

Almost every business owner I know either has a forecast they maintain or someone in their organization maintains it (maybe the COO). It may not be a fancy CFO level forecast model, but it tracks what has happened and what you expect to happen to make sure you don’t go out of business. Every so often (more frequent if cash is tight or you obsess over it), someone spends hours updating it with the current financial information from your accounting system and updating future assumptions with the most recent knowledge on customers and expenses.

Someone is spending hours on this model. Yes—hours! Worrying about it, updating it, and fixing broken links and formulas. But what can you do? You don’t have thousands of dollars to hire a CFO and the work has to be done. If someone in the business doesn’t know where you are today and can’t plan for the future, you are in for a rock road indeed. So someone in your organization spends hours on a spreadsheet or hours stressing over the bank account and whether their mental math is right this time. Maybe it’s nights and weekends, so it’s not ‘interfering’ with their work. It’s still hours they could be spending recharging or thinking about growth.

What if you could pull the historical information in automatically? What if your formulas updated automatically to incorporate information from the most recent month? What if anyone from your leadership team could log into the file at any time and not break the spreadsheet? What if you could have a budget (fixed) and an ongoing forecast where you could tweak a couple of assumptions (hire this person, increase that salary) and have an estimated impact on cashflow in minutes?

What if you didn’t have to hire someone to do any of this and your team didn’t have to spend hours on it? And what if you could get a real-time, live, visual dashboard of the couple of numbers you need most updated at any time with the click of a button? Imagine not having to pay anyone for their time to pull an updated report. Not having to call your COO during family dinner because you need a number and the accounting software is refusing to give up its secrets. Imagine the future!

Or just log into a free trial of AutoCFO and start your future today. Imagine, you can have your very own spreadsheet gremlin constantly feeding you real-time data for peanuts. You won’t ever have to navigate your accounting software and you can drill down on the data whenever you want, without asking for a special report or braving the accounting system. You can tweak your assumptions in minutes and know where your business stands right now.

Get your pocket CFO today. Get set up with AutoCFO in just minutes (a process that used to take me, as a highly trained CFO, HOURS).

You got this, we can help. Sign up for your free trial and get out of your spreadsheets and into strategy.