Tips For Aligning the Forecasting Process between Finance and Operations with Amber Johnson

owning your own business you have to be your own like delusional sales guy but then also living in

reality so like managing my expenses pessimistically but then managing my sales like my targets

optimistically of like I'm deluded like everyone's gonna love my service and I'm gonna sell a

million like so much so I have a whiteboard that has all my financial goals and she's delusional but

you kind of got to be so financial modelers corner is the world's premier modeling podcast it

is brought to you by financial modeling institute the world's leading financial modeling accreditation

organization welcome to financial modelers corner I have your host Paul Barnhurst aka the

FPNA guy and this is a podcast where we talk all about the art and science of financial modeling

with distinguished modelers from around the globe the financial modelers corner podcast is brought

to you by the financial modeling institute fmi offers the most respected accreditation and financial

modeling and that's why I earned my advanced financial modeler this week I'm thrilled to welcome

on to the show peachy also known as amber johnson how you doing amber oh peachy keen jelly bean

excited to be here good answer with the peachy we have to start before I read your background you

gotta let everybody know what your sweater is they can't quite see it yes okay the infamous

EBITDA talk more about it later but let's get started with it yeah earning interest therapy

depression and anxiety for those who are not watching the video all right so I just had to share

that we'll do a tease here in a minute you'll get to learn why she's wearing that sweater but

before we get there we got a couple questions so a little bit about her background amber is a

fractional industrial engineer and the founder of peachy profitability where she helps teams work

smarter through process improvement data storytelling and automation she began her career as a

beer psychic love it forecasting demand at an hyzer bush that are drinking at one of the two in a

sense built logistic networks optimized warehouse flows and guided business through transformational

amber superpower is making complexity approachable she's the creator of office hours with amber a

weekly live stream series that empowers learners to embrace continuous improvement with curiosity

and confidence known for her warm energizing presence amber is someone who always sees the sparkle

in each person brings and helps them see it too she believes great systems are human centered

and the best growth starts with I don't know yet but I know I will I love the I don't know yet

that is one of my favorite frameworks my daughter now because I taught her where I said the other day

I'm not a good cook she goes you're not a good cook yet dad yeah and then she lectured me and I'm

like thank you so yeah love that framework before we get into the main part of this we got to start

with the question ask everybody tell me that horror story where's model you ever had to deal with

the worst model that I ever had to deal with was I was wearing this sweater when I was creating

my first financial model and this was I think I was making this financial model at the before the

2024 active cell conference where I got to meet you and to chat a bit more and then watch

e-inch nor's presentation on all of the like financial modeling tips tricks things that people hide

all of the hidden cells and all that and I was doing every single one of those little things that he

said was horrific and so the nice thing is is in the middle of me creating one of the worst

models I actually created the second to worst model which was our kind of for one of my clients

our five year projections of what we think our business could do and of course at that time we're

operating out of the maybe that's a 2023 conference probably we were operating out of my friends

attic and so I had to make a financial model to be like I promise we're and I don't use the

P word I was like I project that we are going to do some pretty cool things here shortly and

somehow the excel model with all of the things I learned at the active cell conference ended up

getting us some seed money but I look back at it now and I'm deeply embarrassed and it shall never

see the light of day by anyone but me come on you're not going to send it over to me so we can

post it with this episode zero percent chance yeah no chance so bad I look back and I was like okay

and the nice thing I heard at that conference also well you guys have saying all the time is

all models are wrong some are useful and so that thing was very wrong but it was useful enough

to get us in the door so God bless you know there's lots of garbage models out there and I say that

in a nice way what I mean there's a lot of challenges with the mother's design in some cases but

there may be some decent assumptions they may drive the business which I would prefer or there's

ones that hey they may be great design but the assumptions are rubbish and everything in between

you know we tend to think if they're well designed they're a better model we tend to trust

the model or more and generally that's true there's usually a good reason but there can be polished

rubbish as well oh yeah I think it was the shock factor of how many details were taken in

consideration so engineer brain I'm like okay if I just put all of the variables all there like

there's you you can't question anything which is true because they didn't look too too too too close

I also operate off of like a very pessimistic view so thankfully I was already giving like most

times working with salespeople you get the optimistic it's going to be great there's nothing

that could possibly go wrong and then I'm the other end of the spectrum where I'm like I don't

believe any of this so thankfully my pessimism mixed with the design somehow worked in our favor

hey take what you can get you know it's if it's with the shirt you're wearing there and so

our audience knows the first time I met Amber was at the um financial modeling world championship

the uh conference that they have and she was wearing that shirt I think she was in the row

right in front of me if I remember correctly or was about no you might have been behind me I think

you were a row behind me actually but either way I remember looking and seeing that shirt

and it started a conversation because who doesn't want therapy depression and anxiety when

building models an added be a feature of this is since I wore it so many late nights what you can't

see is there's quite a few grease stains from like whatever food I was eating so this has become like

I think you can see a little one right there uh yeah so this is like truly blood sweat tears and grease

from that that whole experience so there you go that uh that first model but you know you got

you got some seed money so that's always a good thing and you you've improved your modeling

I don't think many of us would want to show our first model you're not alone on that

I've built some what I like to call Franken models over the years they're hideous

some more reasons and I probably want to admit but we won't go there

see that's why I talk about it instead of build them and everybody thinks and know what I'm doing

because I let the experts sound smart and then they think I'm smart so I got it down exactly

see I Franken model as well where I take like little templates of little things that I've seen

along the way but then I try to put them all together and then they're all kind of icky and bad

but we're getting better continuous improvement speaking of using apparel as a way to get people

to talk to you the most of my networking has come from these boots uh the sparkly boots if you're

you know man woman whoever and want to get people to talk to you without having to do much these

do more networking than I have ever we know I have a pair of sparkly boots and my warm and vegas

and nobody even look at me twice what wait did you wear it to the conference or did you wear it

to the finals I think it was the finals I wore it well everyone was kind of dressed up for the

finals that's fair and it was dark and I had I had a sparkle vest too I kind of stood out lots

people lots of people at the conference commented nobody the hotel comedy because of these oh yeah

yeah the hotel they they just kind of like I've seen that like okay yeah vegas in December the rodeo

there's with way crazier stuff happening than us but I tried to stand out with my sparkles so you

know I think you know but I need to use it for more to lead gen so I'll start wearing it more often

good let me know how it goes you know in fact before we're done am I before rapid fire I might

throw it on for those who are watching video just to see what kind of response we shall see

you never know all right you run your own business called peachy profitability yes first tell us

what the business does in second how did you come up with that name wonderful question so in short

I help small and medium-sized businesses do more with less make work work better work smarter not

harder essentially the easiest way to understand if I could be of use is if you say in the last

week if you've said I wish I had time to do blank or there's got to be a better way to do blank

that is like amber territory I offer industrial engineering services but to the normal person

it's just continuous improvement process systems engineering making stuff work better I mean peachy

profitability where that name came from is I mean truly peachy has been a part of my vocabulary

for the last decade so when I worked in corporate I a lot of times people would be like oh hey how

you doing oh I'm good you know and I got I was just so bored with that I was like corporate is

gonna be as miserable as you make it so how about I said peachy keen jelly bean you know add a little

pizzazz to it because the day is only so long so peachy had already been a part of my vocabulary

even on the least of peachy days but as a business we've got profitability which is a very common

success metric for businesses and I that kind of symbolizes the systems the technical the

mechanics of how successful businesses are ran peachy is the warm fuzzy human side of who runs

successful businesses and I have observed through much of my career that if you focus on one

without the other usually the root cause of what fails is the other that you weren't focusing on

and so what I do is I take try to create human centered design solutions to like push businesses

forward I have to think about people when you design things I know gross right I thought with

models and all that you just built for the computer these days I know and it's like crazy to think

that like behind every dollar spent there's someone running a card decisions made by people

everything you need to go run a card thanks you said you mentioned your background is an industrial

engineering so what led to your love of Microsoft Excel and modeling how that come about great question

so I have a professor from my alma mater Western Michigan University doctor Bob White and he

is infamous and so in his classes you have engineering economy and operational design and all of these

different classes where you learn everything how to do every single crazy thing in Excel and what he

believed and he is so far ahead of his time he was like every company you go to work at is going to

have Excel so why would I teach you how to do crazy forecasting and modeling in all these other

programs if you might not have license access to these like huge programs so I learned how to do like

12 versions of forecasting with the whole winter and multiple regression linear regression all

these different things by hand in Excel like back in 2014 15 16 17 18 took a extra lap there but

I would say it started in college and then when I got to my professional career it only continued

and what I realized is moving between legacy systems like SAP and you've got VIP and you've got this

and you've got that and you've got data that lives all over the place and snowflake all these

different places but I'll have an export to Excel button and all of them are reporting similar data

but not quite the same so what I learned early when I was interacting with a lot of sales directors

and they're trying to pitch all these like all these numbers at me and I'm like I don't think

that's the real data but their system says so so I would pull all of the databases all together

in Excel and compare them and be like be able to quickdraw data in Excel quickly used to be access

to Excel but power query God bless we're here but anyways learning how to quickdraw data so

that they didn't hold bad data against me and I could like out with them with the data

there's a long way to say it's just followed me the entire time as soon as I think I'm like done

with Excel she comes right back and it's just the easiest way to manipulate data and

wheeled it to tell the story you need to tell to make the decision you need to make now I did know

she called it a she when did it become a she a she oh oh yeah Excel she's too smart to be a man

she knows too much you know maybe there's some days that she takes turns but yeah she's too smart

she's got too much all right we'll go with that I I don't have a dog in this fight so I don't

care and what about modeling so I would say that I'm actually a phony modeler I would say I am like

like by proxy of being up now I know I know the fact that I even got the invite is quite shocking I

would say with like the beginning of in school we learned a lot of modeling and we did like

financial statements and we do some of that in some of our classes but really the first financial

model or real big model that I created was from 2018 and then 2024 like many years later and I

would say in but the the aspects of a good modeler so being able to understand scenarios and variables

and having periods of time that you're looking at in the future and like in the past and being able

to like kind of live in the future and the past all at the same time that skill was built at Anisah

Bush while I was doing sales forecasting because being able to say like from week five five

weeks out and three weeks out my forecast accuracy improved by this much and that impacted sales in

these ways which impacts financial so like I would say like my my understanding of the variables

the impact modeling were built at Anisah Bush but yeah I would not say I'm a modeler and the funny

thing about how that comes up in my current work is there's a lot of people that order requests like

oh you made a financial model like I you money can you make one for me and I'm like I know too many

fantastic financial modelers that I feel like a phony every time so I had to print off this thing

it's over there it says I might not be the best but I'm the best they have access to so I'm

going to do my best and that's how I approach every single financial model is I'm going to help you

get through a lot of variables but when you got the money go to these big dogs go go talk to

somebody else who's done it for 30 years or that has a full time living exactly and engineering

there's like a code of ethics of if you're not an electrical engineer don't touch the electrical

box and so similarly as I follow the same code of ethics in financial modeling is if you're not

in the account and don't pretend you are because that's like oh like similarly like so I always

go in with the idea of I will help you managerially think through these variables but pass that it's

with you and God and your bookkeeper see my dad was an electrician so I just play with the electrical

I'm too scared of it and I don't have an accounting degree and I still play with models so I guess

you know what bless so I know you focus a lot on direct to consumer businesses and logistics

forecasting so maybe talk a little bit about the differences between building logistics forecast

and a financial forecast or similarities you can go either or or both yeah yeah for sure

I would say every version of forecasting you could possibly do really depends on what your specific

goals are so like if you're having if let's say there's a scenario where you've got your lead

times with your suppliers is like three days you have infinite availability to supply your production

forecast isn't going to matter that much if you have so much access that production is not that big

of an issue why have a production forecast but if you're cash flows tight you need to be forecasting

your finances specifically now the flip side normally especially in American manufacturing

there are crazy lead times that have a lot of variability and have a lot of seasonality to them

and so that's where by getting and when I say logistics forecast then kind of getting more

for my client good trade people they do beverage co-manufacturing for small businesses

and so when you're procuring can mid labeled trade 16 ingredients all across the country

and some of those things can freeze or some of those things come in frozen or if the weather

is a certain way it could freeze on the truck and explode like there's so many logistical constraints

inside of food and beverage that production forecasting and forecasting all of your like your

components becomes really specifically important and because of that our cash flow is based on

deposits in and completed production so if we have all of these delays and variability

happening with the components coming in what's going to happen to your cash flow you can't take

if you're not completely certain on when the the production is going to happen so it's kind of like

I see financial forecasting is good to be able to make bigger decisions based on

reinvestment of funds etc but it's more of a lagging indicator in my world because I know my

leading indicators are like if I have one thing that has a like a late ATA that's going to tell my

finances six weeks out from now that they're going to be a little messed up so leading lagging in my

world sure I mean finance in general is a lagging indicator to make sense logistical is going to

have more of your leading indicators that ultimately if you understand those indicators you can see

how they're going to impact the financials downstream whether it be production delays or getting

something early or whatever it might be but that that makes a lot of sense because I always like to

say you know yes financials are important but you really need to understand the operational drivers

and next question I kind of want to ask when you and I chatted we did a chance to chat before

this recording kind of talked through a little bit of things you mentioned how little problems

matter in logistical forecasting a lot how they can treat some real challenges can you elaborate

on that well my background is in F P and A I am also passionate about financial modeling like many

financial modelers I was self-taught then I discovered the financial modeling institute the

organization that offers the advanced financial modeler program and a proud holder of the AFM

preparing for the AFM exam made me a better modeler if you want to improve your modeling skills

I recommend the AFM program podcast listeners save 15% on the AFM program just use code podcast

yes so and this gets into the idea of forecast accuracy and bias and so when I talk about accuracy

there's going to be like a like a communal groan and then someone was to say well that could be

mape or MSE or means squarely you know all of these different things so when I'm talking about

forecast accuracy I'm talking about the summation of forecast minus sales the absolute value

over sales and the summation of all of those individual items and so forecast accuracy when you're

looking at one item or a portfolio of items certain durations of time that the cut of that data could

be a million different things you've been sliced and diced a lot of different ways exactly now bias

is not the absolute value and so that is taking the kind of swings in both directions and so why I

like using forecast accuracy and bias together and what that'll kind of rope into how I'm answering

the question is by looking at both I'm seeing are we consistently over forecasting or overestimating

or underestimating these ideas then you're making more meticulous decisions on like your actions

you take out of those things would be different and so what I mean by that is so if we are consistently

over forecasting and we aren't tracking it then eventually we have so much overstock in the

warehouse now we have to get overflow warehouse like overflow storage and that cost money and so back

into the like leading lagging so by ignoring a little bit of bias each month or a little bit of

over forecasting that leads to big storage issues conversely if you're consistently under forecasting

or underestimating now you're not ordering enough materials everything goes down and then now your

ability for revenue has gone down quite dramatically but now you're like for instance if people are

going out like in the circumstance of like out of stocks now you're creating a situation where

clients are out of stock and so client experience is kind of one of those immeasurable things aside

from like revenue is like a you could say that's like a little bit of a pulse of client experience

but like client experience if they're consistently going out of stock and constantly under forecasting

and all this now you're spending more in marketing to get new clients because your original client's

lifetime value is going down because you're not actually catering to what they need and so the little

tiny things if tracked well you can get ahead the canaries in the coal mine can kind of point you

and better actionable directions if monitored well but if it nets out if you're a little over a

little under in your biases zero you don't notice that there's something wrong but if you look

your accuracy with your bias now you're like well why are we at 80% accuracy but when bias is

zero that means there's actually two humongous problems being created but because you're only

tracking bias financially I'm set for now so I digress oh yo you mentioned a concept there

when you talk about how hey look your your forecast can be really accurate that doesn't mean you

don't have huge biases and the example I give you know I came from fpna so obviously variance

commentary you're always looking for those major items and you could show you're like oh we're

within you know a thousand dollars of forecast oh yeah we missed revenue by half a million

but we add this huge under expense that's just timing so the reality is we have a big huge miss

that's going to be a problem but in theory it looks like we're on like the favorite I had is so

I worked in a business a travel and we had huge contracts you can't you can't recognize the revenue

till they're signed and one year we recognize two of them a couple months early so we are like

20 million dollars ahead of forecast and corporate couldn't understand why we were forecasting to

come in on target trying to explain it to him was nearly impossible there we don't believe you

know what to tell you it's a timing issue like it is trust us and it was our cfo hated it and this

was a global company because we were a small part of it but always mess with quarter of the earnings

because 10 20 million can you know swing a percent here or there and you never know what that's

gonna do yeah I do like looking at bias in court like different segments of time as well like

looking at it okay one month but okay you said it was timing last month so then you pull two three

four or five months you're like okay well you've said timing every time but we're consistently

under so that's when you start playing that game too because there's been times you'll get ready

for a PR like a performance review and you're like timing timing timing and then it like the next

month you're like oh shit it wasn't timing I hope they don't notice and so there's little teeny

games that I used to play in corporate like just to get me to do that like me yeah never

always wanted I have to have leadership with playing I'm like yeah there's timing but there's

probably some favorability here as well yes yes yes absolutely I totally get it we all anyone

has worked in corporate as seen games take place with numbers yes we all know what they say you

know you can make numbers be whatever you want them to be lies lies and more lies all right yeah

never quite learn this on a modeling show but here we are what do you wish finance leaders better

understood about logistical forecasting and we'll go vice versa let's start with finance leaders

well thankfully in small business land right now I am the finance and the logistics so I really

have to fight myself every day but when I've worked with bigger teams I think it comes down to

if someone in legit like logistics folks we like to make mountains out of mole hills quite a lot

and so sometimes they're very relevant and they need to be listened to and it's like hey remember

that thing that I said was gonna happen and then you guys said it wouldn't happen and now it's

happening like sometimes I wish there was I think this all kind of comes down to like organizational

goal management and making sure we're all on the same page to like what the goal is but sometimes

I think finance folks can under react to logistical concerns until it's coming out like and until

it becomes a it's on the PNL and I see it because they don't really believe it until it's actually

on the PNL which I get because sometimes we're a little crazy over in logistics land but then they

come back three months later and they're like what is happening and it's like brother look at your

emails from three months ago and you would know because I told you in a PowerPoint and an email

and then similarly the other way around for logistics it's like I think logistics could do a lot

better at connecting everything to a financial connecting everything to a finance or like a dollar

so sometimes out of stocks there's not really a good way to quantify out of stocks other than like

maybe lost sales or maybe lost customers or maybe like there's like I think a lot of times we lose

track the plot of like out of stocks are so crazy and it's like well is it compounding like the

same person asking for the same thing every day or is it new people or what is the uniqueness of it

or similarly I think some KPIs and logistics land lose track of the plot and don't realize how

they actually financially impact the business and so they're kind of glamour metrics where you're like

yeah you can track productivity but at the end of the day if the person completed their job by 10 AM

versus 3 PM but is paid for the full day that actually didn't impact the finances at all it's like

what are you doing with the extra time of the day to actually make that the dollar worth it so

I think in summation logistics needs to connect their KPIs to finances more finance needs to take

logistics more seriously when they actually say hey there's a big problem over here that's what I

think got it biggest image something there really kind of finance listening more we say hey look

there's a problem just because you haven't seen it in the P&L doesn't mean it's not happening

is that kind of from your experience you feel like over your career finance hasn't listened when

you've raised the red flag or what what do you think causes that I mean what why do you feel like

that's that one of the big issues I think sometimes depending on the organization's relationship

with forecast accuracy if the whole organization thinks that the logistics or like the sales

forecast or like the production forecast is garbage they're going to keep leaning in on their

financial forecast and ignoring all the inputs that are happening in logistics land and I've seen

this at like one or two companies and I don't have like a bunch of companies to reference but from

my little experience with it where there's actual different designated teams it kind of comes down

to the higher level C-suite whoever's above both of these entities to say I am going to be reviewing

both of these forecasts and using them together to come up with a better answer and I think sometimes

financial forecasts and latest estimates have stretch goals in them whereas logistics forecast

should be reality like trying to get close to reality whereas I understand targets and

budgets sometimes are stretch goals to like get like pull levers to get the business in a certain place

yeah they're where the board want what what the board wants you to achieve and sometimes there

are things in there that are just say it like it is they're wishful thinking yeah and so I think

some knowing the use of each of the forecasts and how they kind of work together but also have

their independent goals and purposes I think that breeds a weird little friction of well my

forecast is better than yours so I'm not listening to you and it's like with both sides and so

I think logistics is like very pessimistic and trying to fit into reality where sometimes and this

is my experience at Anisah Bush sometimes talking to the sales folks sometimes they land the

a broken clock is right twice a day you know and so sometimes I'm like huh they said this crazy

thing in the case crazy thinking true so I think sometimes there's always something on the other

side and you have to be learned the variables that actually lead to those being accurate which I

know is like a non-answer bad financial models can lead to bad decisions or worse so how do you

minimize the risk of a bad model you make sure the models you build are great financial modeling

institute developed the advanced financial modeler accreditation program to help

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listeners save 15% on the AFM program just use code podcast at fminstitute.com slash podcast yeah

no I mean I get what you're saying there's real value and understanding those key variables

between the two forecasts and being able to push down on them but that's an experiencing right

you you learn over time you learn with different businesses different people you work with where

their biases where their forecasting preferences are whatever they might be right because there are

people that are always going to tend toward being optimistic there are people they're always

going to tend toward being pessimistic and if people use different type of forecasting and some

that you're going to trust more than others some forecast with their heart some with math and

science and some with magic so like really somewhere in the middle you figure out but that's

interesting to see how people forecast is it like that that opens up a whole can of worms especially

if it's an excel you're like that becomes a little crazy so my budget is just a whole bunch of

a whole bunch of hard magic that's why I'm always short but you know details yeah I want to make

much from training oh wait I mean this much what happened yeah yeah again I was overly optimistic see

I'm the sales guy now well owning your own business you have to be your own like delusional sales guy

but then also re living in reality so like managing my my expenses pessimistically but then managing

my sales like my my my targets optimistically of like I'm deluded like everyone's going to love my

service and I'm going to sell a million like so so much so my I have a whiteboard that has all my

financial goals and she's delusional but you kind of got to be so she is also a female like excel

yeah exactly I'm gonna leave it there because you said in other word I don't want to give

myself some trouble all right so how would you like to see finance sales and logistics work

better together if you could offer advice to kind of make sure they're on the same page I think

that's a lot of area it in models and forecasting and estimating whether it be FPNA

traditional three statement models whatever it might be I think it's an area that there's

often a challenge there's kind of in general any thoughts every business I've ever worked with

ever ever ever it all comes down to goal alignment of what is the goal and the function of the

business what is the like overarching mission of like what are we all trying to achieve here

and it kind of has to come from the top but has to be communicated all the way to the bottom and I

think Anisered Bush did a really good job of like no matter where you worked front line in a truck

in the corporate office C-suite you knew exactly what the company's initiatives were nationally

globally whatever in your own wholesaler and they everyone was made clearly aware what their

targets were and how they actually added to the full pie coming together and they're very intentional

with the way targets and like goals are cascaded and so that's where no matter I don't care if you

guys meet weekly monthly but every meeting should be starting with what is our actual goal and what

are we solving for and what are each of us doing because then you're like eat all the conversation

doesn't become you're doing a bad job I'm doing a bad job it's more we have a problem to solve what

are we doing to solve it and so that's what I do with most of the companies I work with is sometimes

there's a situation where the they're chasing too many chickens of well we have six different

goals it's like whoa whoa you can bundle them all up what is like the primary objective sometimes

it's like I don't know what my actual goal is and then secondary is sometimes the communication

of it doesn't actually make it to the people who are actually rowing the boat in the direction

and so it's not the super most technical advice but there's similar to like when you're starting to

model like the who what when where why are we making this like truly if you just settle on the why

and like what are we doing I think brings a lot of alignment because then everyone is like in

the same boat rowing in the same direction and you had to bring it all back to that peachy stuff

no it's horrible the human side you have to align the goals you have to align incentives you have

to be on the same page for the why and that really does solve a lot of working together take sells

commissions as an example that's up your model if you model those incentives correctly so they're

aligned with the overall strategy the business you're much more likely to be rowing the same direction

which helps with your modeling because if everybody's rowing in the same direction working off the

same assumptions you have a better chance of achieving your targets that you've set as well

especially if they're realistic targets you have a much higher chance than if everybody's rowing

in a different direction but it's amazing how often the the answer comes back to the human

side of things as much as we talk about the science of modeling and there's clearly science in it

we're humans so I George Wax said all models are wrong but some are useful I think what people

don't realize is like you can set out with like this is the the problem I think we need to solve and

here's our goal and then as you're pursuing that goal you might figure out that's kind of a dog

shit goal like we actually need to tweak the goal because we're rowing towards it and I'm not seeing

the anticipated outcome I'm thinking and so I think sometimes it's good to not change your goals

every week but perhaps having strategic alignment when we start to see it DVA or reinforcing that

and that's where starting every meeting with that idea it's like it's hard to avoid because

it's always up in your face there's a reason we recommend rolling forecasts and scenario planning

and all those things with your models sensitivity analysis versus just having a point estimate

if you're working off the budget or if you're working off the original model you never adjust it

you're probably gonna have a lot of bias by the end and a lot of lack of accuracy as well

yeah and it's like and then it's like okay did we lose track of the plot of what a forecast is for

and that is for our latest understanding of what the future holds and so truly if you just set it

and forget it for a full year it's like was the exercise to just see how we'll go to the fortune

teller what I was last year like yeah it is good to still look at like okay how far out in the

future can I plan so there's still benefit to it but with I love the latest estimates because then

you can see how far a plan can be V8 throughout a year but I digress now I agree with you there's

budgeting and planning and we're getting it getting it you know a little off on on that

whole topic like said a little bit of tenure but I think there's definitely value in that whole

course correction part if you're just setting it and forgetting it then why are you doing it

yeah exactly all right we're gonna move a little different direction here I have a couple questions

before we move into rapid fire where we get to put you on the spot I know how excited you are

for that so favor to sell for cut I know you have one what is it she is the control left bracket

like the trace precedence learned that at the act of cell conference love or so much I don't

user as much as I'd like but I love her that is a good one to go back to the prior yeah the formulas

yep control great what's the most unique or fun thing you've used excel for in your personal life

I think the weirdest thing was probably a grocery planner but it was based on I was doing I was like

heavy into like macro like counting calories and macros and all that stuff so I basically created

a little baby database of all the foods I like and then I could with ADHD I like to just eat one

food all day long and so like if it's pasta I'm like I would love to eat pasta all day long so what I

did was I would put each of the things I wanted on my grocery list and then I said how many servings

could I have it per day to before maxing out one of the macros like macronutrients like protein

carbohydrates fats or whatever so then when I went to the store I couldn't purchase more than a daily

allowable like max out of that multiplied by like the seven days so like there was no chance of

me ever overeating that thing and maxing out like some of the other foods so that's when I realized

that even healthy habits can be disordered your little nerd that one yeah I'm done with that now

now I just eat what I want so I've always kind of just followed the seafood diet it's my problem

I'm trying to get better but my brother's browning calories so I say good for you yeah I think

there was a I'm into fitness fitness pizza in my mouth all right rapid fire I love it here we go okay

here's how I have a few new ones we just added them in the last few weeks so okay it's not the

original list we started with we modified every so often you can't say it depends you have to pick

a side then at the end you can elaborate on one or two that I know there's nuance around

because everybody likes to add new on so you ready yep circular references yes or no

no VBA yes or no yes lambdas in financial models yes or no no external workbook links yes or no

never mouse for modellers can you use the keyboard that we all mouse all mouse you have to use

outside like pivot tables should it be all mouse I mean all keyboards work it's not all mouse

oh oh no I would say let people use mouses mice let people use mouses yes all right yeah

model should always be print ready yes or no not one paid treatable though all right so you need

a one that works our merge cells ever acceptable yes vertically all right I had someone the other day

this had I coined the phrase whoever uses merge cells is going to hell I was like okay I'll put

in the no category we get a little bit of everything on that one all right should financial

modelers learn Python and Excel not yet power query yes yes our BI if they're bored or if the

company has more than three departments yes all right big company or the board got it what about

let's see every financial modeler should be able to build a fully integrated three statement model

yes or no yes all right will excel ever die no never have you used AI to help you build a model

in Excel yes a little bit a little bit all right logic logic questions like does this fit in the

section of the thing not really like build the whole thing before me sure what financial statement

is most important for modellers is that the income statement balance sheet or cash flow statement

I think most impact is income statement all right what's your favorite LLM do you have a favorite

clawed copilot chat GPT other uh clawed but I go with Claudia because of course she's a little bit

now got it I think you have a problem with mills in your life but we'll bring that

oh I love my therapy job going to start next and we'll have that yeah they're fine if you could pick

one for all your models you could only do one and you had to pick one

would it be sensitivity analysis or scenario analysis based on my understanding of what sensitivity

analysis means and I think through our conversation I have new understanding of what that means

I pick scenario analysis at the moment okay but I think under a little bit more research I would

probably pick sensitivity here's the way I think about them so I'll give my definition and

when it comes to sensitivity sensitivity is how much does an input vary by changing another input

so how sensitive is my overall cost of goods sold to weigh protein prices changing change 10 cents

I got a 4% because it's 60% on my costs or whatever scenario to me is really if there's a recession

what happens to my business if there's government regulation so they should have specific

situation that you're trying to model do I expand into a new country by a joint venture or do I

build a new manufacturing plan those are two different scenarios so your model scenarios where

sensitivity should really be how sensitive is an input should basically an output I would say

because of the lack of clear data availability scenario analysis is what I'll trust more often

but if I had data available sensitivity analysis all day do you believe financial models are the

number one corporate decision making tool yes if done well I like it yes if done well so in other words

no yeah I'm like yes if used routinely and understood by who's using it

so I know I'll let it go what is your look yeah yeah choose V look up index match x look up

something else if I had to use one for the rest of my life it would be index match but

x look up I still like why not index x match so you can you know look at larger and smaller you

got more options yeah I mean I'm down I'm down I'm down yeah I think index match because of the

columns and the like I maybe I'm just haven't understood how to do like horizontal and vertical

in x look up like at the same time and I think that's my own like of understanding so I think if I

was to bridge that gap x look up but I don't think I will I have a video that does bridge the gap

for two-way look up so it's really not hard once you learn it so yeah I'll leave that up

into the video the whole idea so where I agree index match is easier for two-way look up and any

nerds out there we're gonna go there for a minute so you're gonna have to forgive you so basically

you do your x look up you do your look up value you do your first look up array right so you're

looking out horizontal then what happens for your vertical look up is you do a second x look up

in the return array you look up that value you do your look up array so it's gonna be your vertical

here you have your horizontal here you do your vertical here and then similar to an index your

return array is the map so to think of it is your basically your cam and so that's all you're doing

is you're doing your third argument your return array becomes a second x look up where look up one

and two are your vertical or horizontal you can do them in either order and then your last return

array of that second x look up is basically your index or your cable for both and then it will

look it up from that and then you can do the rest of the x look up however you are that's fair

I would say if I'm not doing like in the past if I wasn't doing like index match match I would use

x look up nine out of 10 times and I totally get it and a lot of people don't like that because it's

confusing that you got to write a second a nested x look up that's not intuitive right how often

you yes a look up inside of a look up not really but knowing you could do it is helpful because I

the the x lookups just have a lot of functionality that I like so that's great yeah and x match has

some of that functionality the smaller and larger in the search first to last that's why I like the

x look up over the match is if you go the index route it gives you a lot more flexibility 99%

of the time you don't need it but it's really nice for those occasional where it matters

yeah there's our tutorial for the day that will be $59.99 for my excel course of skin yeah click

the link of my bio all right there we go last question for you as we wrap up here the audience

wants to learn more about you you know kind of the services you offer or get in touch with you what's

the best way for them to do that I personally love LinkedIn but Amber Johnson is a pretty

unsearchable name so if you look up feature profitability or Amber Johnson Western Michigan

University but regardless youtube.com slash m jambore is where I'm currently hosted at eventually

feature profitability will have its own youtube but that's where I do the weekly live streams

and I'm like continuing the conversation around like technology and continuous improvement so

between LinkedIn and youtube you can get what you need or crazy idea peachy profitability.com there

is a context form there so whatever really brave just try searching amber Johnson good luck

yeah and it could be one of a billion different other people usually it's obituaries and

arrests so I'm like I swear I have that idea and I have not gone to jail so probably not me

well on that note now that we've covered death jail bias excel forecasting therapy depression

and anxiety and peachy we'll call it a wrap thank you for joining me Amber enjoyed chatting

with you today and I hope you enjoyed this and I know our audience will enjoy it as well good I hope

so thanks financial modelers corner was brought to you by the financial modeling institute this year

I completed the advanced financial modeler certification and it made me a better financial

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