5 Tips to Help You Hire the Right Financial Modelling Service Consultant
When you are starting a business, there are other things that you have to plan for accordingly. Rather than having the right amount of capital, you need to know how to deal with all the government paper and meet the risk and return requirements of your investors. Therefore, you need to spend some time preparing a rock solid financial plan, which normally involves the help of a specialized financial modeling consultant.. Here are 5 key tips how to best select such a financial modeling professional:
Financial Modeling Experience
Ensure you ask about the qualifications and previous work experience of the financial modeler you are going to hire. The best way to find out which skills the financial modeler possesses, is to go through his past projects and see how the financial models are structured and presented. This can be done by reviewing his financial model templates, which can serve as excellent credentials. Are they easy to understand? - Do they follow a natural logic and flow of thinking or is the data unstructured and all over the place? –It’s much easier to work with a well-organized person who will guide you in a well structured manner through the financial modeling process than somebody chaotic where at the end it will be very difficult to understand the value of his exercise. Also, design matters: how well designed are his financial models and are they easy to explain to colleagues and investors? Lastly, important to note is if the financial modeler focuses on the right financial metrics, e.g. for investment projects on the internal rate of return (IRR) and for valuation projects on the Net Present Value (NPV). Still today, many so called experts focus on the wrong metrics or do not understand which indicators are relevant for financial decision making.
Personal Service
Size matters – also in business. The size of the freelance finance projects firm determines if you can get attention at partner level rather than at analyst level. Partners have much more work experience, they know what’s relevant and what’s not while having to deal with an analyst might be more time-consuming. Important for the outcome of your work is that a senior professional takes responsibility for the work. For that reason, it can be an excellent idea to work with owner run small advisory firms or with skilled freelancers. A freelancer working on his own budget, will pay much more attention to customer satisfaction and the successful outcome than an employee in a large organization. A small firm will dedicate time and commitment to your project also because they will be more interested to keep you as a client grow together with you.
Industry Experience
You may think that a financial modeling consultancy is all about math’s, taxes, excel and financial calculations. While this is a good thing to have, this is just the basis you can expect anybody to have in this industry. The real differentiator is the industry experience of the financial modeler. Somebody who already has built several financial models in your industry will focus much better on the relevant value drivers and assumptions. He already knows from the feedback of his former clients how to structure the models and which type of bottom-up financial plan will be more convincing to investors. If you have to start with somebody who does not know the industry, you will first have to teach him, which means your money paid to him is not very well invested.
The Interpersonal Skills and Your Personal Fit
The other important skill required, are the interpersonal skills of the consultant and the personal fit with you. While some people prefer outspoken characters, others require somebody more eloquent in order to be convincing. The fact is, where people match together, the projects can be executed much easier as when one has to fight all the time about basic principles of how one wants to work together. All this matters and should be properly paid attention to.
Request a Proposal / Work Plan
Given you want the financial modeler help you to solve your project, you will require him to make you a proposal. What you can do is to request a short plan from him how he will go about your project, which steps he will perform in which order and what the deliverables of his work will be. The better structured and explained the answer from the financial modeler is, the more likely is that the outcome will meet your expectations. This can be another excellent way to filter out the qualified financial modelers from the not so qualified ones.
Above 5 points should make your hiring process more effective and in general should lead to a better outcome of your financial modeling exercises.
Financial Modeling Experience
Ensure you ask about the qualifications and previous work experience of the financial modeler you are going to hire. The best way to find out which skills the financial modeler possesses, is to go through his past projects and see how the financial models are structured and presented. This can be done by reviewing his financial model templates, which can serve as excellent credentials. Are they easy to understand? - Do they follow a natural logic and flow of thinking or is the data unstructured and all over the place? –It’s much easier to work with a well-organized person who will guide you in a well structured manner through the financial modeling process than somebody chaotic where at the end it will be very difficult to understand the value of his exercise. Also, design matters: how well designed are his financial models and are they easy to explain to colleagues and investors? Lastly, important to note is if the financial modeler focuses on the right financial metrics, e.g. for investment projects on the internal rate of return (IRR) and for valuation projects on the Net Present Value (NPV). Still today, many so called experts focus on the wrong metrics or do not understand which indicators are relevant for financial decision making.
Personal Service
Size matters – also in business. The size of the freelance finance projects firm determines if you can get attention at partner level rather than at analyst level. Partners have much more work experience, they know what’s relevant and what’s not while having to deal with an analyst might be more time-consuming. Important for the outcome of your work is that a senior professional takes responsibility for the work. For that reason, it can be an excellent idea to work with owner run small advisory firms or with skilled freelancers. A freelancer working on his own budget, will pay much more attention to customer satisfaction and the successful outcome than an employee in a large organization. A small firm will dedicate time and commitment to your project also because they will be more interested to keep you as a client grow together with you.
Industry Experience
You may think that a financial modeling consultancy is all about math’s, taxes, excel and financial calculations. While this is a good thing to have, this is just the basis you can expect anybody to have in this industry. The real differentiator is the industry experience of the financial modeler. Somebody who already has built several financial models in your industry will focus much better on the relevant value drivers and assumptions. He already knows from the feedback of his former clients how to structure the models and which type of bottom-up financial plan will be more convincing to investors. If you have to start with somebody who does not know the industry, you will first have to teach him, which means your money paid to him is not very well invested.
The Interpersonal Skills and Your Personal Fit
The other important skill required, are the interpersonal skills of the consultant and the personal fit with you. While some people prefer outspoken characters, others require somebody more eloquent in order to be convincing. The fact is, where people match together, the projects can be executed much easier as when one has to fight all the time about basic principles of how one wants to work together. All this matters and should be properly paid attention to.
Request a Proposal / Work Plan
Given you want the financial modeler help you to solve your project, you will require him to make you a proposal. What you can do is to request a short plan from him how he will go about your project, which steps he will perform in which order and what the deliverables of his work will be. The better structured and explained the answer from the financial modeler is, the more likely is that the outcome will meet your expectations. This can be another excellent way to filter out the qualified financial modelers from the not so qualified ones.
Above 5 points should make your hiring process more effective and in general should lead to a better outcome of your financial modeling exercises.
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