Modeling mistake

Feb 11

Last month, I made a big mistake with a client:

I was working as a Strategic CFO in partnership with another Fractional CFO Firm who's been managing the books.

(I do this often - L.P.C. doesn't do controller/bookkeeping so we recommend accounting partners for this.)

The partnership had been going great.

The Fractional Firm had been recommended by the client's investor,

And I'd been absolutely loving working with the controller they provided.

He was excellent - easy to work with, giving me an amazing impression of his company.

So, then it came time to build a financial model for the business.

Now, typically when partnering with another firm, I raise my hand to build the model for our client.

So I'm typically the most obvious person for the job.

But for this client, the other Fractional Firm was really gunning for the model.

They quoted a really fair price.
They claimed to have someone who was super experienced on staff.
My team didn't have a ton of extra modeling capacity that month.
And I thought this other Firm owning the model might be in the best interest of this client (since the investor already trusted the Firm).

So I recommended the client let that firm build the model,

And then hand it off to us when done so we could use it in our strategic work.

That was the plan, anyway.

Here's how it actually turned out:

The modeler assigned had never built a STARTUP model before, only a BigCorp FP&A model.
They spent hours in founder interviews asking about input values, but failed to truly understand the model goals, growth levers, core metrics, or cash flow structure of the business.
They took a relatively simple SaaS business and somehow turned it into a big, complex, not-UI-friendly model that the founder didn't want to touch with a 10-foot pole.
And now, my team is pouring all of our time into unwinding and rebuilding this model so that it's actually usable to the founder for an upcoming fundraise.

All this to say,

If you're a founder who needs someone to build a financial model for your business, please don't make the same mistake I did:

Modeling for startups is a VERY specialized skillset.

Professional modelers (like this person)

And Startup modelers (like my team)

Are NOT the same.

Pick the right person to build it the first time,

Or you may need to hire the right person after,

To do it all over again.

(Or just hire me to coach you and build it yourself - which is the most guaranteed way to get it right.)

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