Ladies and gentlemen, let’s get ready to modelll! Broadcast on ESPN, watched by tens of thousands of people around the world, and featured across CNN, BBC, ITV, and The Atlantic, the Financial Modeling World Cup (FMWC) is the hottest esport on the planet. If you ever wanted to apply for the Excel Modeling World Cup against top stars, feature on ESPN, or wonder if you have what it takes, this is the must-listen to episode of the year.
Chief Operating Officer of the FMWC, Maksims Sičs reveals the inside story of how the “Excel World Cup” was started and the success story ever since.
Maksims Sičs is himself an expert in Corporate Finance advising customers on financial planning and analysis at companies including AG Capital, and PNB Banka.
In this episode Maksims reveals:
- How the Financial Modeling World cup started
- The success of the sport in creating a global Excel community
- How a little help from Microsoft helped FMWC get broadcast on ESPN
- The glory: the prize fund for winning and being an Excel world champion stands at $30,000 jackpot and a trip to Las Vegas
- The pain: how one competitor tried to do the final stage in VBA and his Excel crashed five minutes before the final
- How to enter the tournament for only $20 ticket
- How good do you need to be to enter the competition?
- How a competitor called the Excel Wizard Bo Rydobon managed to complete cases in 2 minutes through dynamic arrays
- Helping SME business with finance in his (second) day job
- Why FP&A provides “light in the darkness” for a business
Enter the Financial Modeling World Cup
Follow Paul Barnhurst on LinkedIn
FP&A Today is brought to you by Datarails.
Datarails (www.datarails.com) is the financial planning and analysis platform that automates data consolidation, reporting and planning, while enabling finance teams to continue using their own Excel spreadsheets and financial models.
Paul Barnhurst
Hello everyone. Welcome to FP&A Today, I am your host, Paul Barnhurst, aka, theFP&A Guy, and you are listening to FP&A Today brought to you by Data Rails Financial Planning and analysis platform for Excel users. Every week we welcome a leader from the world of financial planning and analysis and discuss some of the biggest stories and challenges in the world of FP&A. We’ll provide you with actionable advice about financial planning and analysis. This is going to be your go-to resource for everything FP&A. I’m thrilled to welcome today’s guest on the show, Max Sics, Max, welcome to the show.
Max Sics:
Hey Paul. Hi everyone.
Paul Barnhurst:
Yeah, thanks for joining us. So let me just give a little bit of an introduction about Max and I’ll give him an opportunity to share a little bit more about himself. He’s coming to us from Latvia. He earned his bachelor’s in business and finance. He currently serves as the Chief Operating Officer of the Financial Modeling World Cup. Many of you may have seen that on ESPN or other places that that’s stream, so we’re excited to talk more about that. He currently works as the head of business development for AG Capital CFO services where they do financial consulting for clients globally. And previously he also worked in a commercial bank doing a lot of FP&A and other type tasks. So Max, could you maybe just tell us a little bit more about yourself and your background?
Max Sics:
Yeah, sure. So you covered the most part, but just to probably elaborate in short, I come with a finance education, so I used to work at a commercial bank as strategic project manager. When I did budgeting of the business, we had over, well not the big bank for US standards, we got over 200 employees, 60 branches. So I’ve been doing scoring analysis, budgeting, financial control, and then I joined AG capital. That’s the, you know, CFO services firm. We do budgeting, we do profitability reports, M&Avaluations. We do a lot of fulfillment reports for clients on a monthly basis. So it’s all the different kind of things. I also lead financial trainings, well I would say trainings in finance that include financial modeling, budgeting, cashflow forecasting, finance for non-finance people and stuff like that. And finally, the majority of my time takes Financial Modeling World Cup, where I am a Chief Operating officer. I usually do everything that is related to partnerships, sponsors, PR, marketing. I don’t do tasks for the battles, we have other people who are doing this. But I do more of kind of promotion and I would say commercial side of the business. So yeah, that’s in short about me.
Paul Barnhurst:
All right. Well thank you. I appreciate you sharing a little bit about yourself. And you know, mentioned that one thing I want to just kind of drill down in here for a minute is the financial modeling World Cup. You mentioned you’re the Chief Operating Officer for that. Can you tell us how you became involved in the organization? How did that come about?
Max Sics:
Well, we together with Andrew Grigolyunovich, who is the founder and CEO, we started it basically back in September, 2020. This was all a spinoff of Ag Capital Firm where I started working with Andrew in 2020. And then at some point we’ve been, actually Andrew was waiting for the ModelOff Competition that time to be going in 2020, but he wasn’t. So at some point we just stopped by our coffee machine in the office and had a discussion and Andrew had an idea if ModelOff doesn’t come, so why would we do our own competition? So in the back in September 2020, actually we started it at some point in June, 2020, I guess in two months we launched the website, we did the rules, all the administrative work, the legal part and stuff like that. And in September it was already the first battle. So it’s really, let’s do it in short term, let’s see if that works, what feedback we get. Basically that’s how it all started and since the very beginning with that and I’m very happy how it grows and where we are today.
Paul Barnhurst:
Great. It sounds like came together pretty quickly without, during COVID, it sounds like as Model Off wasn’t doing one, you guys kind of jumped in and filled that void. Is that kind of how it worked?
Max Sics:
Approximately? Yes. Well, didn’t, no ModelOff would retire. So essentially when we started after first or second stage, they just emailed everyone basically it. But we just decided why, what do we try? There is not much to lose. We have the knowledge, we have all the things that we need to try this, so let’s just go ahead and try.
Paul Barnhurst:
Oh, great. Thank you for sharing that. So I know the FMWC or Financial Modeling World Cup has been covered by international news organizations, thousands of people online. It’s been broadcast by ESPN. Can you talk a little bit about how that all came about? How did it become so popular where you’re seeing it on ESPN, it’s kind of a global event?
Max Sics:
Yeah, well I think the popularity of it, I can tell you the long story and the short story. Lemme start with the short story. And the short story is probably because of the nature of the competition. So when you think about, we started with financial modeling and now the popular thing is very much about Excel eSports. So this is what people like and hype about. And the reason is, if you think about it, we’re moving into a gaming industry, we’re moving into eSports, and that’s where a lot of young people are right now. They’re playing games and because of COVID, actually many people were going remote and they were spending time home and there was nothing to do. So people started to surf the internet, do a lot of things, including playing computer games. But the thing with computer games is if you play Fortnite, Counterstrike or whatever else for five years together to the competitive level and eventually Counterstrike or Fortnite closes, what tangible skills you can get out of it, there is not that much.
You can keep it with you to the next game or to your next job or anything like that with X L E, sports is totally different. So if you train your skill at this competition, even if you don’t win it, you can actually apply that skill in your next job. You can be more productive for yourself. You can do your budgeting, your planning, all of the things can be very used and it’s all tangible that that’s perceived and is demanded by the market. So I think that the short story is that the idea of the competition really clicks with majority of the people. The long story is it’s all started with finance and we started doing to do different battles between different people. And this is the format that nobody was doing before. People like competitive field, people like entertainment and sports. So we started with finance battles and we got sponsored by Microsoft in 2021. They helped us a lot, especially in the very beginning to get introduced to the right people, including ESPN folks. And just naturally it started to grow. People started to hide about it, started to demand more of these battles and social started to pick it up just because it’s normal.
Paul Barnhurst:
That’s great. And I mean I definitely see a lot of it on LinkedIn. I see, I think it’s Diarmuid Early. I see a lot of him posting a lot of stuff. I know he is won it before and I watched one of his videos of him doing some stuff in Excel and I just thought, all right, that’s just a league all of its own as I’m watching, just the amazing speed with which they work. And I know Oz du Soleil has been a announcer for it. I think you’ve had Danielle Stein Fairhurst, which I know I’m having her on the podcast here soon. I know you’ve had Bill Jellen, I’m sure there’s been others, but those are some that I know of in the Excel community. They’re all big names that do a lot of training and stuff. And so I think that’s really, really fun. And Oz, if anyone’s watched any of his videos, he has a YouTube channel YouTube on, is that Oz on Fire I think, or something like that?
Max Sics:
Excel. Excel. Excel
Paul Barnhurst:
On fire. Excel, thank you. Excel on fire. His videos are just great because he’s such a storyteller. He always has a unique angle. One minute he has a sword, next thing he’s pulling a snake out of a hat as he is doing an Excel video. And he always just kind of makes me smile because often I remember that as well as I remember the example he was giving.
Max Sics:
So yeah, and why people like us because he’s very entertaining. Yes, he’s making Excel exciting. Essentially. You watch a video about Excel, but you enjoy it. You can watch it in the evenings drinking your coffee or a tea because he has this tone of voice, he’s doing that funny, exciting, etc. You enjoy watching him and he’s making it entertaining. And that’s why people also in Excel the esports that we do that there’s not only, you know, watch the tons of hours and hours of trainings on Excel, that’s, I apologize, but sometimes it might be very boring. But you actually watch people compete, host and announcers hyping for them, people writing in the chat, who is going to win, they’re betting and stuff like that, actions going on. It’s much more exciting to learn that way by the way. Meantime, you will learn new functions, new features, applications, then it can go and test them out later on. But it’s exciting to watch.
Paul Barnhurst:
No, I totally agree. Oz makes it interesting. I know he does some, it’s like it’s folklore storytelling, if I remember right. And that’s the type of thing you can just see in the way he’s able to make something that, like you mentioned when you’re sitting through a training it can often feel boring. Here’s how this formula works. And you got some dry trainer up there and you’re just like, all right, when will this end. Instead, you know, have that excitement. The other things you mentioned, people betting on it, right? It’s like, okay, if this guy wins, I get a hundred bucks or chatting with their friend or someone who really loves Excel seeing some new way of doing something. So you get excited and I can go try this, right? Yeah, there’s a lot of that eSport mentality where there’s a lot you can learn and it’s almost a community type thing versus just watching somebody.
Max Sics:
Exactly. And this community actually grows very much, and especially what we like so much this year really launched Excel esports, like the whole season. Basically those battles take place every month and they’re structured in a way that competitors are doing the case in the beginning and then they come to the livestream. So every part of the livestream and they’re unknown stream players as well. So the non stream player, they come to the YouTube to actually watch how livestream players are playing. But there’s essentially what happens, they’re kind of having a huge discussion in the chat. So how did you just do the battle? And this community grows and they’re speaking to each other, they’re sharing knowledge. I know plenty of people actually of the competitors that started communicating between each other, asking advice, sharing knowledge, just because they see each other competing, doing well and better in some or other topic. So they’re making friends and that’s what I like about it, the community thing. And we’re growing with this community that’s just amazing.
Paul Barnhurst:
You know what it is like 13 different spreadsheets emailed out to 23 different budget holders, multiple iterations, version control errors, back and forth updates. You never really feel in control of the consolidation and collection process. Yep, I’ve been there. Stop. Breathe.
Data rails is the financial planning and analysis platform for Excel users. Data rails takes data from all your company’s disparate sources. No organization is too complex, consolidating everything into one place, secured in the cloud now all your data finally talking to each other, everything is automated back into your report in Excel. Cashflow FX conversion, intercompany transactions now automated and up to date, drill down and variance analysis in seconds. Don’t replace Excel, embrace Excel, turn your Excel into a lean mean FPNA machine. Find out more@www.data rails.com. Yeah.
So no thank you. That’s very helpful. So if I understand correctly, there’s the financial modeling and then there’s also kind of the Excel esport really the difference is it the cases and what’s allowed, I mean because I know there’s a lot of things you can do in Excel and financial modeling sometimes can have a very broad umbrella when you’re talking about Excel. So how do you distinguish, how are the cases different or how do you think about that?
Max Sics:
Right, so financial modeling essentially requires you to have some kind of knowledge of finance, at least basic knowledge. So you can have cases, you need to build a three-way statement, you need to do those sophisticated sales forecast, you need to do the valuation of that firm. So essentially you have to have some kind of understanding and knowledge of finance to solve those cases. When we talk about Excel esports, you don’t need any finance knowledge at all. And this is a competition to show that it’s not Excel is not only about finance and budgets and tables. You can literally do everything in Excel. Because I don’t think any of cases we had last year in our eSports battles, those are popular games. You can play Mario, you can play Battleship game, you can play snakes and ladders or any cases like that in Excel. So we’ve built the system in which you have to find the perfect solution to solve that case under 30 minutes by having different game moves or number of games or number of players doing different things. So it’s not only about budgets and numbers and boring tables, it’s actually more than that. It’s very exciting. You can literally do everything.
Paul Barnhurst:
So is there any anything you can’t do that’s available in Excel? Like is VBA allowed, using Power Query is pretty much anything that’s able to do in Excel, are you able to do during these competitions or how’s that work?
Max Sics:
Everything is allowed. You can do VBA, you can do Power Query, you can do ChatGPT if you wish. The only thing is you have 30 minutes, right? Yeah. So if you’re about to write a VBA and you can do that in 30 minutes without crushing the whole Excel file, that’s fine. Go and take that risk. Well I know one of the competitors some years ago tried to do the final stage in VBA and his Excel crashed five minutes before the final. And as you know with the VBA, you don’t have undo button so you have to redo the whole thing. So it’s just a matter of risk return. If you want to try it, you can, but you know you might fail hard. Sure. So mostly people do just formulas
Paul Barnhurst:
And that’s what I’d figure 95 plus percent of the time they’re just using formulas because like you said, that 30 minute window VBA and power query is usually something that’s going to take you a little longer. And so there’s not the benefit where formulas, if you know ’em well, it’s amazing how quick you can do things. So that totally makes sense and that’s kind of what I figured, but I just thought I’d ask, so what is the prize for the winners? If you win eSport or from Financial modeling World Cup, what do you get? How’s? How’s that work?
Max Sics:
So if you win financial modeling, you would get, well the official prize that it was announced is $25,000, but now we have another sponsor coming which is Order.co, which will contribute another 5K grant to the sponsorship fund. So essentially for finance it’s $30 k for X L E sports it’s a little bit more than $15,000, but the prize money is split throughout the whole year. So we can win smaller prizes s if you win a stage and you can get the bigger price if you win the finals. So Microsoft Excel World Championship, and by the way, the finals of this competition will be in Las Vegas this year in person. So we will pay for the finalist, we’ll cover the costs and we’ll broadcast it from Las Vegas to the whole world.
Paul Barnhurst:
Right. Well when you send me the information when the finals are, I might have to do a road trip. I’m not far from Vegas.
Max Sics:
Sure.
Paul Barnhurst:
Come down. I’d love to do that if I can make a work. So please send me that information. Cool. And we could also put that in the show notes for people if anyone else is interested. Next question. Let’s say somebody wants to enter the tournament, they’re listening and thinking, hey, that would be fun. How does somebody do that?
Max Sics:
Oh, it’s very simple. You just go to the website, you get a ticket. Well the ticket costs money. So one stage ticket is about 20 bucks. But if you buy a seasonal pass, it’s much cheaper. So most of the majority of the players, they have just seasonal passes. And the thing is that you not only get an access to the stage, you also get an access to three cases, each case worth $20 . And also you get the solutions, you can buy case without a solution, which will be difficult if you want to figure out if you’re correct, we do provide the solution files. And when I say solution, I don’t mean answers. I mean literally all the formal with all the explanations, kind of explanations and outline model with best practices how to do that case. So it’s really a lot of value at the end of the day, if you just buy a ticket, you get at least three cases, you get a lot of learning opportunities, you can score yourself against others. But at the end of the day to participate it’s just go and get a ticket.
Paul Barnhurst:
Got it. No, that totally makes sense. And that’s what I thought. I remember looking at it one time, it’d been a little while back. And so what would you say if somebody wants to participate, what skill level do they need to be? I mean how good do they need to be in Excel?
Max Sics:
Well, it depends what they want to achieve. If they want to be number one, well I probably need a little bit of training practice experience. But if you just want to try, I mean for Excel esports you don’t don’t need any specific knowledge. You don’t know VBA BA or Power Query. If kind of basic formulas “if” and “then” statements, then you’re good to try it. I mean it is just a matter of time probably that would take you a little more time to do the case rather than for other people who know more advanced than latest formulas, dynamic rates and stuff like that. For finance, well as I mentioned before, you need to have some basic finance knowledge and you also need some basic Excel. So as long as you know Ifs and Sum ifs, you should really get to go.
Paul Barnhurst:
Got it. No, that makes sense. Thank you. So what’s your favorite part of being involved in the financial modeling World Cup? I mean what keeps you being involved in it? What’s your passion with this?
Max Sics:
All of it.
Paul Barnhurst:
All it. Have you competed?
Max Sics:
No, I haven’t competed. Well I did compete probably here in the office with the colleagues, but not on the broader level when I compete with other people. The thing is, it’s also kind of a conflict of interest. There is no other competition like us that will do that. So sometimes I need to test the cases and I do the cases myself, my colleagues either solve the cases or create the cases themselves, but we do not really compete just because of the conflict of interest.
Paul Barnhurst:
That totally makes sense. I figure as much that, yeah, you’d have to do something that’s not sponsored by you guys to be able to, because you’re putting together the cases and those types of things.
Max Sics:
Things because it will be weird if Max from FMWC will be winning a stage after stage,
Paul Barnhurst:
Everybody would be wondering yes, that would be a bad idea. Totally get it. So another question here and then I want to get a little bit into the work you do, but one last question on financial modeling World Cup, what’s the most unique thing or maybe unique solution that you’ve seen someone do in Excel?
Max Sics:
Well, I can probably mention the unique or weird or maybe interesting thing that I’ve seen in Excel. This probably I’m referring to Excel Wizard, I’m not sure if you’ve heard of him, but as the guy from Thai, his name is Bo Rydobon and is, I think he is one of the first guys who started to really deep, deep in dynamic arrays. And when I say that I really mean deep in this. And how does that happen? Well we have Excel battles that do every month. So basically, and well let me probably before that brief intra like last year we created an account on speed run.com. So the speed run.com is the website where there are all the different kinds of games and people publish speed runs of the game. So speed run is to do the game or complete the game as quick as possible.
We created an account with a goal and purpose for our contestants to do the Excel battles that we provide as soon as possible. So that you know, can train a lot, you can do your homework when you come, try to record as quick as possible as you can solve them. And actually on 90% of the videos that are there the Excel Wizard [Bo Rydobon], he’s the winner of those cases. He’s doing those cases that are meant for 30 minutes and this is very challenging to do for 30 minutes. Sometimes he does them in two to five minutes. It’s crazy. The thing is, you know how he does that? Basically he writes one formula that answers like majority of the questions. He basically fills in all the level. And his formulas may be long and they may be challenging to understand they could be two row three rows.
And from financial modeling, we know that’s not the best practice, especially when presenting the model to a client. But just when you think about the ways, how he approaches it and how think he thinks about it, he does all the latest formulas, Lambdas, dynamic race, all the kind of latest array formulas and just combining all them he makes just if I was solving the case, I would do a lot of helper columns, do it on the side, making sure that I have clearly outlined, you know, understand your solution. He just does this just in one cell. So if you go on speed round Microsoft World Championship, take a look at few of his videos, you’ll get what I mean.
Paul Barnhurst:
I’ll have to do that. I’ll remember that. The Excel wizard. Yeah, that’s amazing. I remember I worked with the guy and this is before I’d really got into Excel and I’d see his formulas and I’m just like, okay, this guy is just next level. And you just see those people where you’re like, how do you solve some of these things? How do you think that way?
Max Sics:
Yeah, yeah. You are right, you know really need a lot of practice. I’m just, to be honest, I’m very beginner in dynamic arraysand dynamic formula. So I love when I start approaching the case with the mind that I’m going to do that with a dynamic arrays it, at first it’s much harder to understand how would you do that? It’s just much easier to do it a regular way. But when you do that you actually feel like, oh wow, you could have done this many times before. It saves so much time. And myself, to be honest, I’m just a beginner in comparison to Bo. But as I get and proceed through them and do more of those, I like them more and more.
Paul Barnhurst:
I’m just starting to scratch the surface with dynamic arrays, getting more comfortable with them and you can do some really neat things with them. I’ve built sensitivity tables, I did a CapEx where it will update automatically from five to 20 years. It’s just make a change and everything flows through. And so it’s really, it’s cool the things you can do, but it does take a different way of thinking and it takes time.
Max Sics:
Exactly, exactly that. That’s what I mean. You have to go through that thinking because if you learned to work in a single cell, now it’s a different approach. You need to work with the DRA and you need to understand how would it look and how would Excel read your array? Would it really horizontal or vertical or how many values will be there? So a different thing.
Paul Barnhurst:
Yeah, no, to totally agree. I tried to be fancy one time for my boss when they first came out and I built something all with dynamic rays and we got in there and it busted and I was just like, yeah, I’m feeling pretty stupid as I’m in with the general manager and this whole thing’s not working and I thought I would be fancy. And so I learned my lesson. It’s like make sure you actually, it works before you get in there. I mean it worked for everything I had tested, but I really hadn’t tested it enough. And as soon as he asked me to do one type of thing, it fell apart.
Oh man, just you kind of shame hanging my head. Fortunately I had a really good relationship with him. He gave me a little bit of a hard time about it, but it was all good. But I still felt, felt kind of stupid. So yeah, it takes some time for sure.
Max Sics:
Yeah. Just a quick note. Same happened to me. I was leading an Excel training for a company and I was teaching dynamic race and at some point I’ve created a task and I’ve solved it at home. I prepared myself and I know what is doing. But eventually when I was doing this in class, it stopped working and I don’t understand is because of the thing that I’m not dealing so many things that I just probably mixed either in apostrophe or something, it just didn’t work. And I was like, whatthe hell is going on? It should work the way I think I understand that, but it just doesn’t work and it shouldn’t be like this. So it’s really a lot of practice it takes.
Paul Barnhurst:
There’s a shirt that I have told myself I’m going to buy, but I haven’t bought it yet. And I think anyone who’s done Excel formulas, programming, S Q L, any of those type of thing, any kind of coding at any level, whether it’s an Excel function, all the way to detailed coding, the shirt says roses are red, violets are blue, you have a left bracket on line 42, there’s your error type of thing. I just always laugh because I wrote SQL for about a year and I’m like, yeah, that totally, you forgot your parentheses, you forgot your comma and you’re spending two hours, you’re like, why is this not working? And you’re just like, right, forget it. I’m going to do something else and I’ll look at it later.
Max Sics:
Yeah, yeah, yeah.
Paul Barnhurst:
So that shirt always makes me laugh. So switching gears here a little bit to the work you do advisory services a lot for corporate finance customers. So can you talk a little bit of what kind of work you’re doing in your day job? What’s the kind of services you’re providing?
Max Sics:
So usually those are like SME type of clients. Sometimes those are kind of larger. We work with investment funds and banks, but usually those are SME type of clients that do not half their CFO in the company or a finance guy as you would call him, FP&A Guy like you. So basically company that are run by, you know, CEO who and an accountant, but they actually need a more deep analysis of what they’re doing. So usually it might be a manufacturer, let’s say, I don’t know, a retailer or somebody that has some of the branches. And at some point he started the business, he managed it on himself. There was one branch or two branches. He managed to do this on his own, but as long as there are 20 branches, there are a hundred people, you’re not capable anymore to manage the whole thing.
So this is the time when we come and say, Hey, we’re here to help. If you don’t need us full time, that’s fine. We can either do your analysis, for example, you need to track finance from banks. We’re going to help you, we’ll build out the model, take the negotiations and ourselves and help you out with the finance or you need the budget, let USS do the budget and it will keep it to yourself for the rest. Or we would do a monthly service with them. So basically firms that who have not hired a full-time CFO yet, sure, but they already need that kind of service. We are helping them to optimize that. And sometimes your companies hire us just because CFOs do not have time to do certain things. So we would just come and help them at a specific project.
Paul Barnhurst:
Got it. So it sounds like for the most part, a lot of these are companies that haven’t built out the finance yet. A little bit smaller companies, you’re providing some of those advisory fractional budgeting, kind of whatever needs they have. Sometimes it might be project specific where they just need to staff up, but a lot of time it’s helping a company come in and look at things and give them the finance support that they don’t have internally. Is that the way you think of it? Right?
Max Sics:
Yes, exactly. But you do not have to mix it with accounting. So we don’t do accounting at any means. We do financial planning, budget, think forecasting and stuff like that. So it’s more Got it. It’s more on strategic level rather than historical.
Paul Barnhurst:
Sure, yeah. Staying away from the bookkeeping side of things, right, the historical and its strategic forward looking strictly the financial advisory services.
Max Sics:
Yes, yes, yes,
Paul Barnhurst:
Exactly. Now we’re seeing a lot of that. Definitely. I get contacted pretty regularly now from people who are thinking of starting fractional CFO services and they ask about what consulting I do and things like that. So it’s been growing a lot and it’s exciting to see because I think small companies really need that. They need that strategic advice. Often the founder doesn’t have a financial background and things can be messy without somebody looking after those things. I’m sure you’ve seen it. You get into a company and the data’s a mess and you can’t even start building a forecast until you can make sense of the financials.
Max Sics:
Exactly.
Paul Barnhurst:
You are laughing cause you can relate.
Max Sics:
So many times I feel that. So many times I’ve seen that. I’ve seen companies working in the business until everything is okay until the company makes profits. But nobody was looking like they have six business lines and three of them are profitable. They’re just subsidizing them and eventually once something happens, they came to us and say, Hey, we got a loss at this month, what happened? And we actually take a look. You’ve been losing money for three years already, guys, just because he didn’t have a proper CFO guy to point out to this problem.
Paul Barnhurst:
Yeah, yep. No, I agree. And so I think it’s great that we’re seeing more and more of that. So I’m curious from your perspective, what you see with these small companies. Why is FP&A so important? Why is that such an important part of finance?
Max Sics:
Well, I think it’s when you walk in the dark without a light. So how would you forecast your financials if you don’t do analysis? How like, okay, FP&A’ss part of forecasting, how would you make a decision if you don’t have proper number of the background? You can make a decision based on your feelings and your thoughts on your previous experience, but if it doesn’t have a number to support your decision, that’s not really thorough decision, that’s not a wise decision. So what we’re actually doing, we have been working with plenty of industries already. I think we work, we covered all of them, but you know, can’t really be expert in all of the industries. And the reason that we can consult companies because we do build financial models that support our opinion, that support our decision. If we say that, ‘Hey guys, your cost of capital is very much above the market’ because we just see that you have to lower that, you have to restructure, refinance. Or if we see your administrative cost or salary fund or motivation system is out of, went out of control. That’s because we know that that’s because we see that we analyze, we can watch what the market benchmarks are, we can see what’s the historicals where, et cetera. So it’s all about numbers. It’s all about decision making. And if you don’t have a proper FP&A, you’re literally working without a lighter in the darkness and trying to find the right door. And you might find it, you may not. If you’re not, you will fail.
Paul Barnhurst:
I like that analogy. It’s like we’ve all stumbled around in the dark before and you stub your toe or hit the door or whatever it might be because you decide I don’t need to turn on the lights, I can, it’s my house, I know my way around. And then next morning you end up with a stubbed toe or a bruised knee or something and you’re like, why did I do that? And so I think that’s a good analogy is you’re really missing some things without that light, without that perspective that FP&A can bring.
Max Sics:
And sorry for interrupting. No, please, please. But I can actually build on this analogy kind of could be, okay, if you’re living in a small house where you have one room, one bathroom, you pretty much know what’s the thing. But as your company grows, your house is getting bigger, you have two story house, you have a garage, then you have the garden. And as it becomes more complicated, you literally, it’s hard to navigate if you don’t have the proper guidance where to go and what to do as your property, as your assets are growing is just so much harder to take care every, to make sure that everything runs smoothly and runs fine. And you need an FP&A.
Paul Barnhurst:
It’s funny as you say that I was thinking about as I’ve been scaling and growing my business, not fp a, but thinking, okay, at what point do I hire a virtual assistant, right? It’s like, okay, I’m doing this and that and that. And I’ve been starting to think more and more about that. And I think it’s very similar with finance and FP&A. Sure. If you’re a really small company, one product, one or two employees, the founder can manage most of that. ,
Max Sics:
Yes
Paul Barnhurst:
Can be fine. But as you continue to scale, you have to be smart enough to know when to say, okay, I need to bring in the expert it. It’s no longer beneficial. So often we think, but I need to save the money and I don’t want the expense. And the reality is, good FP&A will pay for itself good financial advise advice, whether it’s fractional, CFO and FP&A whatever it will pay for itself. If not, then you probably need to look at who’s working for you because it should provide more benefit than it costs you.
Max Sics:
Absolutely. Otherwise it doesn’t make to hire FP&A. But the thing is that sometimes it’s just hard to observe that benefit, but because very, very often it is not the money earned, it is actually the money saved. But you don’t understand that if your FP&A advises you not to do this business or it advises you to cost and cost there or restructure your funding loan, you would just appreciate the advice. You wouldn’t calculate, oh my God, you literally saved me thousands of dollars by just giving this advice and making this decision. Because some companies would just, especially some CEOs wouldn’t think that way. And that’s sometimes hard.
Paul Barnhurst:
Agreed. So we have just a few more questions here. I know we’re coming up toward the end of our time. So one question I want to ask you. And when it comes to building a good model, one that helps the business make better decisions, what do you see as the key? What do you think is the most in important thing to make sure you’re able to build a good financial model?
Max Sics:
Good question. Well, I don’t want to say formatting and stuff like this. It is important, but sometimes you can get a roundabout it best practices probably. Yes. I would say from my perspective, it is just understanding of the business. It’s just outlining the key business drivers that are important and showing them in front at the very front so that everybody gets clear what’s what drives the business. So just to give an example, it’s not about revenue drivers. If you’re a construction business that does long-term agreements, revenue doesn’t like, okay, let’s say an energy business that has long-term contracts, revenue matter, your revenue wouldn’t, wouldn’t be volatile from month to month. You don’t care about this stuff. What do you care about your costs, arrival costs? If you’re an energy company, you care about market prices of energy. So you would do sensitivity analysis to see how your results would change based on the volatility of energy prices on the market.
You would think about what is the hedge options, etc. If you are a B2B business, you would be looking at employees much, much more in deep rather than doing your, I don’t know, profitability analysis or full cost analysis just because it doesn’t matter that not as for manufacturing business. So what I want to say is just really each industry and each business has its own important drivers. Their KPIs, they have to be observed, they have to be addressed at the first page. Sometimes your admin cost doesn’t really matter. Optimization doesn’t really matter as much as the main thing does. So I would say good FP&A good model would make this as a key and everything else because building three-way statements, it’s just a matter of skill. If you get used to, it’s not that hard.
Paul Barnhurst:
I like how you focused on really around the assumptions and knowing the business because that’s so important. You can have the most beautiful built three statement model, but if you don’t have valid assumptions, it’s not going to help you make smart decisions. So I think for me it comes down to, I think there’s two things I look at as first design, designing something that can be easy to maintain and keep updated. And that’s thinking about how it should flow, how the data should be updated. And really understanding the business and making sound assumptions doesn’t mean you’re going to be right because no model’s, right, what is right anyway, I mean nobody’s hits the exact number they forecasted, but if you can support your assumptions and it can be easily updated and used that, that’s gold. Because we’ve all dealt with that model where you’re like, all right, I’m just starting over. This thing just sucks
Max Sics:
That, that’s very true. We had one client where we did a sophisticated model, financial model, it was very thorough, everything was flexible, et cetera. And then while we came to pitch to the client, we showed, hey, that’s the result. He was like, what the hell the result is about. And this all came down to the assumptions because the assumptions, the client didn’t reply to us. So we were like, okay, we’re going to put our estimates, but our estimates were wrong of what their actuals is. And the result didn’t make sense again because so he was saying, what the hell you are presenting to me, I can calculate the numbers myself, but you know, youpromised to build me a sophisticated model and it just looks like a crap just because number doesn’t make sense even though the model was correct by the structure. .
Paul Barnhurst:
Yeah, exactly. So we have a couple personal questions. We’d like to end with one personal and one kind of fun that we ask everybody. So what is something unique about you that you can share with our audience? Something we wouldn’t be able to find out about you online?
Max Sics:
Okay, that’s a trap question. I didn’t expect this one. What is unique about myself? Well probably the unique thing that about myself is that I love finance, I love doing financial modeling, but I also like to talk to people and doing sales. So it’s kind of a mixture of two. It’s probably not the thing, not the skill you particular would find. It’s either analytical type of person or it’s a salesperson. I’m working as a head of business development and AG Capital for services. Sometimes I do projects, sometimes they do sales. So I really like this, a mixture of both and that’s probably a unique thing that I might think about myself. I don’t know, I didn’t get an, I didn’t know.
Paul Barnhurst:
No, that’s a good one. It’s a unique set to have and I’m finding myself enjoying the sales a little more than I thought I would doing my own business. So I can relate a little bit to that answer. And so next question. This is one we like to ask everybody. What is your favorite can be Excel function feature? What’s your favorite thing about Excel?
Max Sics:
So I can definitely say I enjoy dynamic arrays and learning them more. I’ll probably figure Dynamic formula as well. Well probably the one I use the most. It’s, it’s very simple, it’s just sequence. I mean you use it so much and you can even do sequence of words, you can do different tables, different sequences of sequences. You can forecast your days. I mean it’s just so easy. I like it. So it is the one that I use more often than others.
Paul Barnhurst:
Great. I really like Sequence. I used it. I’ve used it a lot for dates and other times when I just need to test something and can be really helpful. So that’s a great one. And Dynamic Arrays in general, that’s one of my favorite these days. I’ve been playing with some of the new ones a little bit. I’m reading a book called, I don’t have it down here but Up Up and Array and it was, it’s written about nothing but dynamic arrays. It’s about 200 pages and it has the new ones like vs Stack H Stack and so it’s fun. Yeah, learning some new tricks.
Max Sics:
Yeah, I like V Stack and H Stack with unique because we do a lot of databases with F F W senior participants and sometimes you have to unite the unique values and you would just do H stack unique and you would need to, before that I had to basically pay one under another and just do find unique values.
Paul Barnhurst:
Either using Power Query or you’re doing some copying and pasting without dynamic arrays. Right. Yep. Last question here. If somebody wants to learn more about you or they want to get in touch with you, what’s the best way to do that?
Max Sics:
It’s probably just reach out on LinkedIn. I pretty much check it out regularly on a daily basis. That’s one of my tools for work. So yeah, LinkedIn will be the place to go.
Paul Barnhurst:
Great. And we’ll make sure to put that in the show notes and anything else you want us to include around websites for people who are interested in financial modeling and both the Excel and the financial modeling one, let me know and we’ll make sure those go into the show notes. But finally, I just want to thank you for being on the show. I really appreciate it. I know we got off to a little bit of late start and had a few technical issues today, so I appreciate your patience with me and I can’t wait to, for our audience to hear this episode. I’m excited to share it with them. So thanks for being on the show, max.
Max Sics:
Thank you. Thank you Paul very much. It’s been a pleasure.