There isn’t a single “correct” way to think about and manage a business.

– Do you analyse revenue by product line, sales channel or customer?
– Do you forecast trade debtors using days sales outstanding or a payment profile?
– Do you model payroll costs as a percentage of sales, by grade, or by individual role?

None of these approaches are inherently right or wrong.

What matters is that your financial model reflects the way you think about, manage and report on your business.

When it does, a number of things become easier:
✔ Populating the model
✔ Understanding and interpreting the outputs
✔ Explaining actual versus forecast performance
✔ Creating a consistent narrative for lenders, investors and other stakeholders
✔ Securing buy-in from people across the business because they’re looking at information in a way that feels familiar

It sounds obvious, yet we have seen plenty of situations where the model was built around how the modeller thought the business should be viewed, rather than how management actually ran it.

The result?
People spend time translating information between different formats, reconciling numbers and explaining variances that only exist because the model and the business aren’t speaking the same language.

A financial model shouldn’t force you to think differently about your business. It should reflect the way you already understand it. So, it’s worth asking a simple question:

𝘋𝘰𝘦𝘴 𝘺𝘰𝘶𝘳 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘮𝘰𝘥𝘦𝘭 𝘴𝘩𝘰𝘶𝘭𝘥 𝘴𝘱𝘦𝘢𝘬 𝘵𝘩𝘦 𝘴𝘢𝘮𝘦 𝘭𝘢𝘯𝘨𝘶𝘢𝘨𝘦 𝘢𝘴 𝘺𝘰𝘶𝘳 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴?

If your financial model doesn’t reflect how you actually run your business, speak to Ben Whitworth. He can help you build a model that does and that works for everyone who needs to use it.