All blogs and articles that discuss the creation and use of a financial model and financial modelling best practices

Make Your Projections Realistic

A common concern often raised by experts who review business plans and financial projections has to do with under-estimated selling, general, and administrative (SG&A) cost assumptions. As a business scales, variable costs ratchet in tendem. But SG&A is often driven by factors other than sales.

When is it the Right Time to Hire?

I've had this question asked of me a lot lately: "Is it time for me to hire another employee?" I also hear questions like: "Is it time for me hire?" or "When can I add another manager to take some of the load I have been carrying?"

Report Card on 2010 Entrepreneur Trend Predictions

Here is a look at the predictions I made for 2010 at the end of 2009 so you can see how I did. Of the ten identified trends, I gave myself 4 As, 4 Bs, 1Cs, and a D, for an overall GPA of 3.1.

Most Popular Blog Posts of 2010

2010 has been a very good blogging year for CFOwise®. In the spirit of planning for a great 2011, here are the eleven most popular blog posts from the year 2010:

'Tis the Season--Budget 2011, But Make Sure You're Ready with Plan B

2010 is coming to a close, and its time to get serious about having your 2011 plan in place. And I'm not just talking about a revenue target or a net income budget.

Bootstrap for Slow-Growth or Raise Equity to Accelerate

There is a lot of talk and content on the internet about "bootstrapping." I had an interesting experience with this just last week. A company is looking to roll-out an innovative business model in a very competitive online business space. One partner in the business wants to grow slowly, gaining customers slowly and using the revenue generated to fund future growth.

Removing the Financial Stress of a Seasonal Business

Most businesses have at least some seasonality to them.  Perhaps the first quarter of every calendar year is always slow, or your business comes to a stand-still every November through December.  Here is an example of a business that slows dramatically ever summer:

Please Define "Business Model"

I have long suspected that most business people cannot give a simple definition for the common term of "business model." It seems to be a nebulous and vague term that escapes most. Most people think they know what it means, but when you ask them to define it, they usually can't come close to verbalizing it. 

I Cannot Predict the Future...Budgeting is Worthless!

I have heard this statement more often than I care to admit: "I cannot predict the future so a budget would be worthless for my business."


An article entitled How to Create a Budget in BusinessWeek prompted me to recollect some of my experiences with helping people who have the above attitude towards budgeting gain a new appreciation for the process and, more importantly, the results the process can generate. 


Build Your Business Model Around People

This is a real situation experienced by a real emerging company.  Names and figures have been altered to protect anonymity.


manufactureA company has a new opportunity and they create a financial model to try and forecast how their general assumptions for this opportunity will materialize.  Specifically, they made significant assumptions

Bridging the Gap between Financial Modeling and Budgeting

A financial model and an operating budget are two different things, but the two should correlate with and complement each other. I’m going to briefly discuss the differences, what each is used for, and how to use them both more effectively to run and improve your business.
bridging the gap 

3 Common Mistakes When Modeling Your Balance Sheet

Every sensible financial model projects the results of all three major financial statements - the profit & loss, balance sheet, and statement of cash flow.  The balance sheet, not the profit and loss, is what drives the cash flow of the business.  If the balance sheet is not correctly modelled, then the cash flow forecast is most likely inaccurate and worthless.  Yet the balance sheet is the part of the model that is usually the most neglected and le

3 Critical Supplemental Worksheets to Your Financial Model

A good financial model should feed into three main pages, which happen to match the three main financial statements of a business - profit & loss, balance sheet, and statement of cash flow.  These three components of

2 Biggest Flaws with Break-Even

Most of the folks who read our blog know we write from the CFO advisor perspective on start-up, emerging, and medium-sized businesses.  This post will be no different, and its intent will be to clarify the two most significant flaws entrepreneurs, business owners, and CEOs experience when trying to understand their break-even point, both in terms of sales volume and units.



The traditional method for calculating

How Many Forecasts Do You Have?

How many forecasts do you keep concurrently in your company?  If the answer is zero, then we have some serious work to do.  But if your answer is one, you may be falling well short of what is necessary in these difficult economic times.


Here is a real story of a conversation I had with a banker in the last 6 months about a client of our CFO firm.  My client needed to finance some heavy growth and we stretching to try and use only bank financing to accomplish this growt