Fractional CFO Insights on Financial Modeling and Business Turnaround with Carl Seidman
In this episode, Paul Barnhurst, host of Financial Modeler’s Corner, is joined by Carl Seidman, an experienced financial consultant and financial modeling expert. Together, they explore the intricacies of financial modeling, discuss the art and strategy of dynamic cash flow modeling, and touch on the unique challenges and lessons Carl has gathered from his years in turnaround consulting. They also discuss the broader skills and mindset shifts required for modelers who aim to excel in the complex field of financial analysis and corporate finance.
Carl Seidman is the founder of Seidman Financial and a recognized expert in financial planning, forecasting, and modeling. With experience in turnaround consulting and as a fractional CFO, Carl has worked extensively with underperforming companies and complex restructuring cases. He brings an in-depth understanding of the strategic nuances in financial modeling and cash flow management, which he shares in this episode.
Key takeaways from this week's episode include:
The importance of long-term, flexible thinking in financial modeling and planning.
Carl’s top lesson learned from a modeling “horror story” and how it shaped his approach to dynamic modeling.
How dynamic arrays are transforming cash flow modeling and how to implement them.
Why operational knowledge is crucial for effective financial modeling in turnaround situations.
The value of networking and formal certifications in restructuring and financial advisory roles.
Here are a few quotes from Carl Seidman:
"Financial modeling in complex situations is about facilitating discussions, not just presenting numbers."
"A good model tells you the ‘what,’ but the analysis and conversations that follow tell you the ‘so what’ and ‘now what.’"
"It's important to know when to push the boundaries of what a model can do and when to keep things simple."
In this insightful episode, Carl Seidman leaves listeners with practical advice and a fresh perspective on financial modeling’s role in modern business. He highlights the value of flexibility, clear communication, and a long-term mindset, particularly in the complex terrain of turnaround consulting.
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In today’s episode:
[01:12] – Introduction to the episode and guest
[05:44] – Key Lessons in Modeling and Long-Term Strategy
[10:36] – From PwC to Turnaround Consulting
[16:02] – Certified Insolvency and Restructuring Advisor (CIRA)
[20:20] – Diagnosing Cash Flow Issues in Underperforming Companies
[28:52] – Embracing Dynamic Arrays for Efficient Cash Flow Modeling
[32:40] – Modeling Mindset: Curiosity and Continuous Improvement
[37:57] – Rapid-Fire Q&A: Financial Modeling Preferences
[41:59] – Advice for Aspiring Modelers: Practice and Experiment
[43:30] – Closing Remarks and Where to Connect
Full Show Transcript
[00:01:12] Host: Paul Barnhurst: Welcome to Financial Modelers Corner. I am your host, Paul Barnhurst. This is a podcast where we talk all about the art and science of financial modeling with distinguished financial modelers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling, and that is why I completed the Advanced Financial Modeler earlier this year. I'm thrilled to welcome Carl Seidman to the show. Carl, welcome.
[00:01:45] Guest: Carl Seidman: Thanks so much for having me, Paul. Good to see you again.
[00:01:48] Host: Paul Barnhurst: Yeah, good to see you again. Carl's been on my FP&A shows before, but this is the first time we get to talk a little more about technical modeling, if you want to call it that. And so Carl runs his own business, Seidman Financial. He worked in consulting, has an accounting degree. So he's given a Ted talk, and he's just a really smart guy. Did I miss anything?
[00:02:09] Guest: Carl Seidman: No. That's about all I have.
[00:02:12] Host: Paul Barnhurst: All right. So the first question I'm going to ask. We give everybody this one. Tell me that horror story. Worst financial model you've ever seen or had to work with?
[00:02:23] Guest: Carl Seidman: Well, I think that goes in a couple of ways is one is the worst financial model I've ever seen from somebody else. And then another one, maybe the worst I've ever created.
[00:02:31] Host: Paul Barnhurst: You can go either way. It's up to you. We get a lot of both.
[00:02:35] Guest: Carl Seidman: I'll give maybe answer here from my own perspective of one of the worst that I ever created, and this is one that I share. Often just the horror story of it is: I was working with a pretty high profile client several years back, I mean, quite some time ago, and I didn't really know the best ways to go about building. Recurring, Enduring, flexible models where new data is going to be coming in. I always assume that, oh, I just have to spend hours and hours updating formulas and updating ranges so that I get all the most recent information in. But I remember I was bringing a bunch of new data in month after month and thinking everything was fine, and that my analysis was reflecting all of this new information.
[00:03:18] Guest: Carl Seidman: And I got to a final presentation in front of the business owner and put that financial presentation in front of him. And he was like, this is wrong. And I was like, no, it's not. And he's like, yeah, it is. It's wrong. And I mean, this was in the first few minutes and I was like, no, this is your data. He's like, maybe it is, but it's wrong. And I said, okay, well, let me go through the presentation and then I'll go back, check my numbers. And he was right. The model was in fact wrong. And I had just not thought of more effective ways to create flexible ranges and lookups. And I had presented a deliverable that it wasn't necessarily wrong, it was just way outdated. Right. So it was like several months out of date and he was the one who caught it. So it was just the embarrassment of building something that I thought was right, that somebody else who'd never seen it before knows that it's wrong. That was perhaps one of the more traumatic horror stories of my whole career.
[00:04:14] Host: Paul Barnhurst: Yeah, I can imagine. I've had a few like that where you make a mistake, somebody looks at it and they call it out immediately. I had one where I spent this time on a model, totally new idea, so I really didn't know how to build it. Made my best assumptions. I'm in front of my boss, the CFO, and he's like, this model looks like it's good enough for government work, which was not a compliment from him. So you think about this, this, this and just, you know, kind of shredded it. And I had to go back and rebuild it. Yeah. It wasn't one of my finer moments. Like, I can relate. I think we've all been there in different ways.
[00:04:41] Guest: Carl Seidman: Yeah. And I think that the expectations are different from, you know, the person who's actually building it and the person who might be using it or collaborating with you. So, you know, we use that statement too, of good enough for government work is, you know what, It's at par or it's just sub par. Yeah, maybe good enough to get by. But for what we're trying to do, it's just not that good. And sometimes you don't necessarily know what good is until you see what somebody else's work looks like. And it gives you an impression of what you didn't know.
[00:05:09] Host: Paul Barnhurst: Yeah, 100% agree. I think that's one of the most valuable things over the last few years, as I started to really see different ways people model, I never had taken a modeling course. I just, you know, you figured it out as you went. And I finally had one role where I worked with someone who'd been in investment banking, had built a ton of models and a boss. My modeling became much better. And then now doing this. And it's amazing when you start to learn from good examples and really see how flexible, how dynamic a model can be. You're like, wow, somebody told me what I made back then was good. What were they talking about?
[00:05:43] Guest: Carl Seidman: Yeah, yeah for sure.
[00:05:44] Host: Paul Barnhurst: Well, what was your key takeaway from that experience? If you had to list kind of one takeaway, what would it have been?
[00:05:50] Guest: Carl Seidman: I'm gonna give you one and a half takeaways. So one, always check your work. So don't trust that you've done it the right way. But to always try. And this is perhaps the most important, I think mindset that anybody can have is always try to think about where you're trying to go before you start to build, always trying to think about what are you trying to do? Where are you trying to go? What might this need to be a few months from now? And the reason why I say that is that oftentimes, you know, Paul, if you came to me with some mandate, I would say, okay, I'm going to get that across the finish line and I'm done. But if I'm not thinking about what you're trying to do, why you're trying to do it, what you might be asking for a few months down the road, that's going to give me a very different framework than Carl. I just need you to get this done in the next couple of days. And so to me, it's always been I mean, since that moment, I mean, that was probably, I don't know, 15 years ago. From that moment going forward, it's always, almost always about asking these clarifying questions of Paul. I've got. I understand what you're trying to do, but how does this fit into what you're trying to do in the long term? Or, you know, what's the business going through right now that I should be thinking about that maybe I'm not thinking about, as you've just asked me to do this project. So long term thinking like long term strategic thinking of where does this thing need to go is the biggest lesson of all.
[00:07:13] Host: Paul Barnhurst: You know, it's funny that I think that kind of goes back to a little bit of what we talked about. In fact, one of the most important skills, that ability to anticipate. Right. You're thinking long term, where could this go? What could they need? Yes. You can also ask them. But some of it is also your experience being able to say, I'm pretty sure this is where it's going to go. I'll make it flexible enough to manage that because sometimes they don't even know where it's going to go. You just know they're going to come back and ask more questions.
[00:07:37] Guest: Carl Seidman: That's right. And thinking about that, it might just be an answer of, oh, I need to make this thing flexible, or I need to be open minded about this, or I don't want to put a bow on this right now because it's going to evolve. Just that anticipation of where things might go or that things might change is super important.
[00:07:57] Host: Paul Barnhurst: Agreed. All right. So this next question is to have a little bit of fun because you provided a unique answer on Calendly. When I asked what I should know about this interview. You're having to look like you don't remember this.
[00:08:10] Guest: Carl Seidman: I don't remember.
[00:08:10] Host: Paul Barnhurst: Well, I asked the question. It says when you scheduled the meeting, one of the questions we ask on the forum was to share anything that would help prepare us for this meeting. You provided a one word response. Do you know what that word was? Donuts?
[00:08:24] Guest: Carl Seidman: No. Okay.
[00:08:25] Host: Paul Barnhurst: Do you care to elaborate on that with the audience in on this little secret of ours?
[00:08:30] Guest: Carl Seidman: Oh, yeah. I don't even know how this little inside joke started. I really don't even remember.
[00:08:34] Host: Paul Barnhurst: You told on LinkedIn the story when you were in high school.
[00:08:38] Guest: Carl Seidman: Oh, yeah.
[00:08:39] Host: Paul Barnhurst: How you were in a donut place. And then I did a LinkedIn post where I listed all the people that came up on my feed that are like you, and I put the word donuts. I said, lover of donuts. All right. I think we've kind of gone back and forth since then.
[00:08:53] Guest: Carl Seidman: Yeah. So where that all started from? So when I was 13 years old, turning 14, my parents lived just down the street. I mean, walking distance from a cider mill. And that cider mill was just very well known, very famous, extremely popular in the area. And people would go take their kids and get cider and donuts. And my very first job, when I turned 14, my dad was like, go get a job. And I was like, where am I supposed to go get a job? I don't have a car. He's like, where can you walk to? And so it was either a choice of going to work at the cider mill, or I think there was maybe a market a little bit further down the road, but I was like, okay, I guess I'll go there. And I went there and they were like, the only thing that we would ever hire you for is being a donut bagger. So we would put you in the basement with like, the sweltering hot steam and lard. And, I mean, it was not the most enjoyable experience. And yet friends and family members were like, oh, you get to be around all those delicious, you know, apple cinnamon donuts. And I'm like, yeah. And they're like, you must love those. And I was like, no, I won't eat them. And I didn't eat them for like 20 years after I got that job. So it was just kind of always been this, this running joke of, oh, these delicious donuts. And I wouldn't eat them for like, decades. But now, you know, I've gotten over that, that donut trauma. Maybe, perhaps the same way that I got over the lack of dynamic data trauma. You know, you learn your lessons, you move on, and you embrace the next chapter of your life. So I'm back to enjoying donuts again.
[00:10:21] Host: Paul Barnhurst: Well, good. I'm glad you're enjoying donuts and thanks for sharing that story. I laughed when I looked at that. I saw that on there and I'm like, all right, how can I have fun with this? All right, we'll go back to our regularly scheduled program, so to speak, here. Well, one of the things you've worked with a lot, and I'd love to know why, I think some of it has to do with your consulting days, but I know you have a lot of experience. You've done some degrees in, you know, restructuring underperforming type companies, those that are in danger of going under. Why is that area interested you? Or how did you kind of develop a specialty? And having worked with a lot of businesses in that area?
[00:10:56] Guest: Carl Seidman: Sure. It started as a total fluke, but then it became something so much more. I started my career at PwC, but on the advisory side, on the consulting side. Yep. And it was a wonderful environment to be in. I learned so much, was surrounded by some of the smartest people ever. But then we hit the recession time back in 2007, 2008. And like so many other places, the economic upheaval just caused a lot of challenges. Sure, the work was not coming in, the quality of work was not as good, and I started to just not feel as thrilled about the work that I was doing. So I said, well, what's going to be busy in a recession? And it's not really something that I think your average finance accounting business person is going to say, because they're going to say, oh, the market's shrinking, all jobs are going to be gone. I'd better, you know, really put my nose down and work hard.
[00:11:49] Guest: Carl Seidman: But I was like, well, what's going to be really busy when times are bad? Turnaround, restructuring, distressed business consulting, bankruptcy. And so it was around that time that I started to say, well, that's going to be busy right now, even though everything else is going to start to dry up, I'm going to go in that direction. So I started to do interviews at a handful of the turnaround restructuring bankruptcy advisory firms took, the one that I thought was the best fit for me, and it was a boutique. So part of the interest that I had in working in a boutique is rather than be on an engagement with 50 people, it was me and one person or me and two people or just myself. And so I just got thrown into the deep end. And I sometimes used to make this analogy of it's like getting thrown into the deep end. You don't know how to swim, you have no life preserver. And by the way, the water is on fire because there's an oil slick on the top, so you better figure it out.
[00:12:43] Host: Paul Barnhurst: So you're saying that's a bad situation to be in?
[00:12:45] Guest: Carl Seidman: That would seemingly be a bad situation, but the silver lining of it is you have no choice but to learn how to swim and put out that fire. And so while a lot of people failed in that environment where they're like, there's just not the kind of support, there's not the kind of, you know, recipe that I just need to follow. And my colleagues were like, there is no recipe. You just have to figure this out. And so I remember going through that experience, and the very beginning was so uncomfortable where it was like, there's no answers, there's no guidance. Like you just have to figure it out. But then after months and years of doing it, I started to embrace that ambiguity, that uncertainty, that I mean, kind of like managed chaos and to say chaos. When I came out of PwC, I was within the umbrella of crisis management. So I was doing disputes, I was doing forensic fraud investigation. So everything was just always chaos all the time. And I kind of thrived in that environment. But then I started to realize, Paul, was that when you're working with a business that's in distress or in chaos, it's not remarkably different than a business that's doing well.
[00:13:57] Guest: Carl Seidman: It's the same skills, it's the same kind of support. It's just a totally different context of this. Business is failing. That business is doing fine. You're going to apply the same kind of advisory services, similar types of modeling, albeit not saying how do we wind the company down, but it's okay. We have to do cash flow because we're running out of cash. But then I and when I started my consulting business, I started working with these aggressively growing businesses, doing cash flow. Why? Because they're growing so much. They might run out of cash and they need to do some fundraising. And so again, a lot of the skills were very similar. I loved getting my, you know, teeth sharpened in that distressed environment. I think if I had done it the other way around, it would have been a lot more difficult, but getting the background in the chaos allowed me to address chaotic environments as well as normal environments, as well as aggressively growing environments.
[00:14:51] Host: Paul Barnhurst: That explains a lot. Chaotic environments, I got it. Yeah, I could totally relate to what you're saying. I've worked in some environments where you know when things are challenging, it often becomes more chaotic. Not that we are in risk or restructuring, you know, going bankrupt, that we needed to restructure. But we are a heavy debt from an elbow. We are combining 50 different companies trying to make it all one operational company. And what you usually do in a three year period and 18 months with the private equity, and it was just constant chaos, but at the same framework, same things applied. It wasn't all that different than other jobs I had been at. It was just more intense.
[00:15:25] Guest: Carl Seidman: Right. And I totally agree with that. Point is, you don't have to have a business that's failing. It's just difficult decisions that need to be made, people with different opinions that cannot agree, some heavy investment opportunities where there could be some major consequences if we get it wrong. So again, it doesn't have to be a company that's about to fail. Every company goes through challenges, disagreements, risk, uncertainty. And I think that that skill set, both on the modeling side as well as in the, you know, mindset side, is indispensable.
[00:16:01] Host: Paul Barnhurst: Totally agree with you. So one of the things I noticed you earned and I'm not familiar with this at all, so I'd love to learn a little bit about it. You did the Certified Insolvency and Restructuring Advisor program. So what did that consist of? How did that help you in, you know, working with these type of companies?
[00:16:19] Guest: Carl Seidman: Yeah, so in the environment of turnaround and restructuring, at least when I got that credential many years back, there were two main credentials. One was the Certified Turnaround Professional or the CTP, that was facilitated by the Turnaround Management Association. And then there was the Certified Insolvency and Restructuring Advisor, which was done by the American Institute of Restructuring Advisors. I think that was the name of the organization, and what was very tricky in that time was and it still exists now is it's such a specialized part of business consulting that it's like, you know, you don't go to college or grad school to learn how to do bankruptcy.
[00:17:02] Guest: Carl Seidman: You don't go to, you know, college or grad school to learn how to liquidate a company or how to turn around a company. And so in the lack of education that was out there, just in terms of formal educational institutions, if you're finding yourself in that kind of a situation, you're having to get thrown into the deep end without a life preserver, without having to know how to swim, and an oil slick on the surface where the water is on fire. And so what these two organizations really did was they said, well, let's put that education into this space. Let's teach these people how to do this better, and it's really in the service of everyone. So for you, Paul, if you were to get the Sierra, you say, well, now I'm going to get more acclimated and familiar with insolvency, restructuring, bankruptcy, understanding, you know, the signals, understanding the plan of reorganization, understanding what the whole bankruptcy process is about.
[00:17:57] Guest: Carl Seidman: That's going to help you. But then it's also clearly going to help your clients because your clients are going to say, oh, we've got Paul who's got this background in this education versus and I'm not saying this to be offensive in any way to Paul. He's a really good modeler, but he doesn't have experience in distress situations. Okay. And so it gives us that extra layer of it's not the feather in the cap of, oh, you got a certification. Wonderful. It's more of you've just gone through a very comprehensive education and training over many months to say, now you know how to do this. Oh, and by the way, in the process you're sitting beside 35 peers who are not at your company but are at peer companies, and these people can become part of your network. There was a young woman who I met, I think in the second part of that certification, I still keep in touch with her, you know, 15, 20 years later. Yeah. So even though, you know, people love the certification, it's more really about the education and the network that you get.
[00:18:58] Host: Paul Barnhurst: Oh, you know, like MBA schools. I tell people if you're going to go to school full time, no, it's about the network. You can get the same education in an evening or a lesser known school. So it's about name and network. Mhm. That's really what I came to realize. I remember when I applied to all the grad schools, I'm like, wow, this really is a business. You know they're competing for you and different things. I'd never experienced it like that. I didn't realize. And then, you know, you go to grad school like okay, I get this similar type thing.
[00:19:23] Guest: Carl Seidman: Yeah. And especially with education now being largely digital, I mean, you can take that from home. But the value, I think, and maybe this is a little old school is I think the value is going in person and meeting people and hearing their war stories too. So it helps enrich your experience, your familiarity, and helps you build your network.
[00:19:44] Host: Paul Barnhurst: Yeah, I know when I'm telling people comparing different programs all the time, I'll say this one is a cohort style. It's not in person, but you're going to build more of a network. This is just you study and take the test. Now what? What's going to work better for you? Not one's not necessarily better than the other, but there are benefits. I totally understand what you're saying. I mean, there's some real value in having that network because where do we turn when we need help? We generally turn to our network. Next time I need to know about donuts or restructuring, I'll turn to Carl.
[00:20:15] Guest: Carl Seidman: Depends. Not apple cider donuts.
[00:20:18] Host: Paul Barnhurst: All right. Fine. Not apple cider, but others. All right, so when you're going into an underperforming company when it comes to modeling, are you typically starting with cash flow? I'm assuming that's one of the big issues. Or how do you go in and do an assessment. And what's typically how you think about when you're modeling? Is there an area you typically start with?
[00:20:36] Guest: Carl Seidman: It depends on who's bringing me in. So in my work 20 years ago, the way that turnaround, restructuring, bankruptcy work works in larger companies and more complex environments is oftentimes it's a breach of a bank covenant or there's a default on a loan or something really went wrong. And it wasn't I hate to say this, it's actually not the company that's sounding the alarm. It's the bank or it's a private equity firm.
[00:21:05] Host: Paul Barnhurst: It's somebody who wants their money out.
[00:21:06] Guest: Carl Seidman: It's somebody who has some skin in the game and they say, I don't like what's going on. I need your help. And so that would sometimes dictate what the path of the engagement would need to look like. If it's a bank, I have to represent the bank. If it's an investor, I have to represent the interests of the investor. Now, do recognize that in a pie you have slices. And if the pie gets smaller, all of those slices also get smaller, but you also just need to think about who's hiring you. Who are you reporting to? Since that time, I mean, since I started my business over a decade ago, I rarely get brought in by a bank. I am getting brought in either by a private equity firm or an investor, or an investor or the company itself. And what makes I think this a lot more fun is when the company says, you know, we're in some trouble, Paul. They know what their trouble is, and it's not a bank saying, we don't know what's going on. We don't know why this is happening. We need you to go in and figure it out. The company says, yeah, we are eroding profit. We don't have the cash. We need some help. People are leaving. We need your help. So what this ended up doing, which I thought was pretty neat, I didn't realize it early on, was when I went from formal turnaround, restructuring and bankruptcy work in a firm to starting my own business.
[00:22:28] Guest: Carl Seidman: A lot of these businesses were not like, we just need a finance guy to do cash flow. It was like, we need a really smart business operator who knows operations, finance, sales, procurement, everything. And so I came in and even though the term was not really fractional CFO back then, my clients would call me an executive coach and they would say, yeah, we need you to come in and help run our finance function. Oh yeah. But while you're at it, we need you with sales forecasting. Oh, yeah. Well, while you're at it, we need you to have discussions with the bank. Oh, yeah. While you're at it, we need you to help with purchasing. And so, Paul would it often start with: we have pain. We know we have pain. We don't know how to deal with it. It often does start with cash flow. But then once you put together a cash flow, it's not like all right, here's the cash flow. We're done. Hand it off and you have a model. It's well the cash flow is problematic because of this and this and this and this and this. The cash flow almost becomes a barometer.
[00:23:29] Host: Paul Barnhurst: Yeah.
[00:23:30] Guest: Carl Seidman: All of these other driving issues. And then it just opens up this Pandora's box of these other problems. And then to fix the cash flow, it's not a wave, a magic wand and change some numbers around. It's how do we improve sales, how do we improve margin? How do we get better terms? How do we hate to say it lay some people off. So all of that comes into play. But it often starts with an analysis of cash flow.
[00:23:57] Host: Paul Barnhurst: FP&A Guy here and as you know, I am very passionate about financial modeling and the Financial Modeling Institute's mission. I have been a huge fan of the FMI for years, and I was super excited when they decided to sponsor the Financial Modelers Corner. I recently completed the Advanced Financial Modeler certification and love the entire experience. It was top notch from start to finish. I am a better modeler today for having completed the certification. I strongly believe every modeler needs to demonstrate they are a qualified financial modeler, and one of the best ways to do that is through the FMI's program. Earning the accreditation will demonstrate to your current and future employers that you are serious about financial modeling. What are you waiting for? Visit www.fminstitute.com/podcast and use Code Podcast to save 15% when you enroll in an accreditation today.
[00:25:03] Host: Paul Barnhurst: Sure, you're looking at the cash saying, okay, if we don't change something, we run out in six months. What are the levers we have? Where's the issues? And then I would imagine talking to people to really understand the operations, to see what can be done, because yeah, you could see an issue on the piece of paper. Okay. Well, we don't have enough revenue. We're spending too much on Cogs or we have headcounts upside down, whatever it might be. But then to understand why, you usually need to know the operations and dig into the business and talk. Yes, the spreadsheet is going to alert you to problems, but it's not going to help you with that. As I like to say, the kind of the so what? And now what? It just tells you the what? Okay, well, I got a house on fire. How do I put it out?
[00:25:42] Guest: Carl Seidman: Yeah, that's very true. And where some advisors come to me and they say, I had a call yesterday, quite literally on my way to the airport yesterday. And this is a fractional CFO I've had a relationship with for a year. And he's like, Carl, I've, I've never done the work that I'm being asked to do. What do I do? And I'm like, well, you have to ask yourself some questions. I would say, do you have to know the ins and outs of everything that you're doing in order to say yes and move forward? Can you learn how to do it? If the answer to that is yes. But here's the thing, Paul. And this is really uncomfortable for lots of people. I know a lot, but there's a whole lot more that I do not know.
[00:26:22] Host: Paul Barnhurst: You know enough to know when you don't know.
[00:26:24] Guest: Carl Seidman: What we have to be able to do is to know where our blind spots are and know how to ask really smart questions of the people who are smarter than we are. And so, Paul, you know, certain industries that I probably know nothing about, but I can go into a company and say, all right, the cash flow is showing me these kinds of problems. I might not have familiarity with this industry, but I can ask. I can ask you intelligent questions and you can help give me the answers. So oftentimes think about finance as we are coordinators, we are facilitators. We are not necessarily the end all be all expert of everything that we might ever need to touch. I don't think that that's possible.
[00:27:05] Host: Paul Barnhurst: No, I would fully agree with you. It's not. I mean, yeah, is it great when you know the business well? Sure. Does it help? Of course. And you do need to get to know some things. But you got to rely on experts. It's as much as knowing about asking the right questions and being curious. Because, like you said, none of us know everything. Like, let's take Excel. Somebody tells me they know everything about Excel. I'm not listening to them like, because I just know they're full of it. I'll give you an example. You'll laugh at this. I had an interview with a candidate for a job, and I asked him to rank how good they are at Excel, and then we dig into it. He's like, I'm a ten. And I go, well, you know, explain to me why you're ten. He goes through and I'm like, have you ever heard of this formula? No. Have you ever heard of this formula? No. Do you know about dynamic? This is when they first come out. No. Go. Would you like to change your answer? He looked at me very begrudgingly. He goes, fine, I'll change it to a nine. It's like, all right, it's clear this guy does not is not humble at all.
[00:27:56] Guest: Carl Seidman: I would have felt really bad, Paul, if he was like, you're right, I'm a two. You put me in my place.
[00:28:02] Host: Paul Barnhurst: It would have been like, all right, good. I know not to hire you. Yeah, he said, I'm a nine. And he actually. It's funny, I had one other person interview him. They're like, probably do the job well, but you really want to work with somebody that's that arrogant, was the comment back to me and I'm like, no.
[00:28:17] Guest: Carl Seidman: I'll tell you what, Paul, if you ask me, I wouldn't tell you I'm a ten. Because I sometimes will go through, you know, groups that I'm with. I'll go through like a whole listing of things and I'm like, I have no idea what any of these things do. You know, there's always like.
[00:28:28] Host: Paul Barnhurst: I see some of the stuff on LinkedIn and I'm like, I don't know if you've ever seen like, Dermot Earley and some of those guys that they're doing programing. Right? They have these super long answers like take and scan and map and lambda and I'm like, all right, I'm out. I don't even know where to start on that thing unless you're going to walk me through it.
[00:28:47] Guest: Carl Seidman: So it's a spectrum. It's an array I guess. Pun intended. It's an array.
[00:28:51] Host: Paul Barnhurst: Well done. Good. Good pun. Speaking of arrays, you know, we've talked a little bit about cash flow modeling. You recently ran a webinar talking about building dynamic cash flows using dynamic arrays. What do you see as the benefits of that in cash flow modeling? Kind of how did you end up deciding to have a court or at least a webinar on that?
[00:29:10] Guest: Carl Seidman: Well, how much time do we have? Paul? No, all joking aside, I mean, so what's been interesting is a number of years back as, as you and I and many both know, dynamic arrays came out. Yep. And the question that I first had when it came out was, well, what are these? What do they do? And to me, it's one thing to understand what the Excel functionality is, but then it's something totally different to say. How does this apply within the context of my work or the work of people who I'm partnering with? And so I remember when they first came out and it was like, big deal. There's, okay, this is interesting, but I don't see the use cases. And one of the use cases that I first saw just from a data and Excel standpoint, was on the unique function.
[00:29:55] Guest: Carl Seidman: And I was like, oh, this is a game changer because I've been doing all kinds of goofy workarounds that are not good workarounds. So that was helpful. But then I was like, well, wait a second. The more that I start working with these, I started to bring them into my consulting engagements and I was like, wait a second. And Paul, this even goes back to what we were talking about a little bit earlier in this in this discussion is I had a model from many, many years ago where I had to manually update ranges and data sets to make sure that I didn't make a goof and give an outdated presentation in front of a client.
[00:30:31] Guest: Carl Seidman: Which of course it did. And so I was like, well, hold on a second. If I don't have to worry about this being outdated and I don't have to make a checklist of, oh, I need to change these things around, that's really a game changer. And so what I've been doing over these last handful of years is, I mean, it's just always use cases of how can I take something that I'm currently doing or that I've been doing for years and make it cleaner, easier, more efficient, and ideally, best of all, foolproof? Not just foolproof for me, but foolproof for anybody that I'm ever handing this off to. And so I asked myself, I said, is there a way that I can start using dynamic arrays in cash flow modeling so that every week that goes by, say, in a distressed company where I'm spending, you know, a couple hours a week updating it, could I get that down to ten minutes? And so I started to put together some admittedly fairly robust and complex formulas to say, could I just simply copy and paste this forward and everything automatically updates? It took me some time to get it right, but eventually I did, and I figured out ways to put together a robust, dynamic, array driven weekly cash flow model that quite literally, you could update in a couple of minutes instead of hours.
[00:31:48] Host: Paul Barnhurst: It's amazing when you tap into those type of things, whether it's dynamic arrays, whether it's Power Query, whatever it might be. When you start to figure out, wow, I can take this from 3 hours to 15 minutes. It's pretty amazing and dynamic.
[00:32:03] Guest: Carl Seidman: It's incredible. Yeah. And I think what makes it neat, too, and I know that you and I perhaps share some, some similar brain functionality in that, you know, I think there also becomes this, this thirst and this curiosity of, well, what else can this do? You know, what else would I be able to do here? And so it's not just like a problem solving of, oh, I have an issue. How do I solve it? I have a challenge. How do I make this better? And I think that that's just always this, this thirst of there's always something that you can do to get it better. It's just a question of what that is and having the time to figure it out.
[00:32:40] Host: Paul Barnhurst: Yeah. And I'll share kind of a funny story, I think you'll appreciate. I don't think I've ever shared this one, at least on the show before, but about five years ago now, when dynamic Arrays had first come out, it's weird to think it's that long ago. I was playing with them and the guy was kind of cool, and I decided to build this sensitivity thing we were doing that was fully dynamic and showing it off to my boss. Of course, it totally broke and stopped working because I didn't think about, you know, some of the different things. And for me, it was my moment to show off. And he's just looking at me like, yeah, we had a really good relationship, so it didn't damage it. And he knew I'd been trying some new things, but I was like, all right, don't do that next time.
[00:33:16] Guest: Carl Seidman: Well, that's important to think about. And I would say to anybody who's listening to this is, you know, you have to come up with that, that appropriate balance of we know that this works over here. It might not be the most robust, most efficient, but we know that it works. And we could take it a step further and do something that's a little bit more, you know, beta and maybe it works, maybe it doesn't. But I think that it takes a lot of self-awareness and environmental awareness to say, all right, if we have this, is this good enough for now or do we need to really push this further? I had a call maybe about 3 or 4 weeks ago with someone senior, you know, very senior financial director at a consulting firm. And he was like, Carl, I don't want fancy stuff. I need to be able to audit this. And I have a lot of young staff who are like getting really into these dynamic array, whatever you call those formulas. He's like, I need to be able to audit. And so again, you've got to understand who you are, who your boss is, what environment you're in. And even though you and I might say, let's push for something a little bit more robust and efficient, you might have somebody who says, I don't want that. I want something that's cleaner, easier for me to follow.
[00:34:25] Host: Paul Barnhurst: Yeah. And I've had times where I've had to go the other route, where I've had to come up with really complex formulas to make it super simple for them to do something because, you know, they can't build any of the formulas themselves. They can't. Well, there's that too. Yeah. And I've had to do that before where it's like, okay, you basically just got to do this. It's like, I could have done this in 30 minutes if you had the knowledge. Instead, I spent six hours. So you can do this and hope it doesn't break, because then I know I'll have to rebuild it.
[00:34:50] Guest: Carl Seidman: Right. Right there. That's true too.
[00:34:53] Host: Paul Barnhurst: So I think there's the two extremes, and you have to know when to use them. I mean, we always say keep it simple and that's the goal. But you know, there's different levels of simple and complex for sure. All right. We're going to move in a little bit more of kind of our standard. We have some fun questions section. First one favorite Excel shortcut.
[00:35:12] Guest: Carl Seidman: Like a keyboard shortcut.
[00:35:15] Host: Paul Barnhurst: Whatever kind of shortcut you want. Usually people go with keyboard.
[00:35:19] Guest: Carl Seidman: I feel like every time I get this question, my answer changes. I'm looking at my keyboard. I might just say F4. So cycling between relative and absolute and mixed references, instead of having to put my mouse cursor in and type in a dollar sign just quick and easy.
[00:35:35] Host: Paul Barnhurst: Yeah, that's the one we get quite a bit. That is a favorite. All right. What's the most unique, funniest fun thing you've built in your personal life in Excel.
[00:35:44] Guest: Carl Seidman: So a number of years ago I've always had this curiosity and I decided to put it into a model was a doggy daycare. So I've had dogs my whole life. And you know, with our dog we sometimes have to take them to daycare and boarding. And years ago I was like, I don't understand what the revenue model is for these places. And so I was just like, I want to see what this is. And so I went around to a bunch of doggy daycares and I grabbed like brochures. And even in the one we go to, there's like a flat screen TV that shows like all the different rates for like boarding, daycare, bathing, grooming, training, whatever it is. And so I started to like write down all of these data points. All these people probably thought that I was a spy from a competitor. And if they had known, I'm like, no, I'm just putting this into an Excel model. I just want to see how you make money.
[00:36:34] Host: Paul Barnhurst: I'm just a nerd. Don't pay attention.
[00:36:36] Guest: Carl Seidman: Yeah, just a nerd. This is just what I do in my spare time for fun. So I did that. I just created a financial model based upon a doggy daycare. And what I came to realize was that the small doggy daycares that are just really small kind of backyard places can't make much money at all. But the ones that really are, they've got all the machinery in place. They are big venues or I shouldn't say venue, big, big facilities. Those places can do very, very well. A lot of this is a volume play. It's not anything more than that.
[00:37:08] Host: Paul Barnhurst: Interesting. Yeah, I think there's a lot of industries where it's become a volume play. That's interesting. I wouldn't have thought about that because I'm not a dog person. And yeah, also, I've never really thought of the economics of a doggy daycare, but it makes sense. Yeah, you still have the model.
[00:37:23] Guest: Carl Seidman: It's probably somewhere I have no idea where it would be, but I'm sure I'm sure that's with lots of people. It's like, I know I built that somewhere. Somewhere on my hard drive or on my flash drive, and I know that it's there because I never deleted it. I just have not opened.
[00:37:35] Host: Paul Barnhurst: I'm hoping that resurfaces one day on LinkedIn.
[00:37:39] Guest: Carl Seidman: Maybe. Or you talk to me in like ten years, you'd be like, what's new with you, Carl? I'm like, you know that doggy daycare model? I actually decided to open one.
[00:37:46] Host: Paul Barnhurst: Yeah, I was going to say, and I go for volume, I bought it.
[00:37:48] Guest: Carl Seidman: And I go for volume. I have 600 dogs and you're like, well, what's the quality of that? I'm like, not very good.
[00:37:53] Host: Paul Barnhurst: Quality. Who needs it? Oh wait, did I say that? All right. So we're going to move into our rapid fire section here. How this works. You get no more than 10s. To answer each question you have to take one side or the other. Then at the end you can elaborate on 1 or 2 that you're like, but there's all this nuance. That work for you.
[00:38:15] Guest: Carl Seidman: Okay. All right, we'll try that.
[00:38:16] Host: Paul Barnhurst: Here we go. Yeah, it's hard sometimes, especially if you've been a consultant, I get it. Circular references. Yes or no? No. Vba yes or no?
[00:38:24] Guest: Carl Seidman: No.
[00:38:25] Host: Paul Barnhurst: Do you prefer a horizontal or vertical model?
[00:38:27] Guest: Carl Seidman: Horizontal.
[00:38:28] Host: Paul Barnhurst: Excel. Dynamic arrays. Yes or no?
[00:38:31] Guest: Carl Seidman: Yes.
[00:38:31] Host: Paul Barnhurst: Fully dynamic models. Yes or no? No. External workbook links. Yes or no? No. Okay, good. I don't have to throw you off the show.
[00:38:42] Guest: Carl Seidman: That was easier than I thought it was going to be.
[00:38:45] Host: Paul Barnhurst: I'm not Done yet. I got a few more.
[00:38:45] Guest: Carl Seidman: Okay, okay.
[00:38:47] Host: Paul Barnhurst: I just had to respond to the workbook. Just that one. Yes. You know, almost nobody says yes. Should financial modelers learn Python in Excel?
[00:38:55] Guest: Carl Seidman: I'm not going to say it depends. I'm going to say no.
[00:38:57] Host: Paul Barnhurst: Okay. Should financial modelers learn Power Query?
[00:39:00] Guest: Carl Seidman: Yes.
[00:39:01] Host: Paul Barnhurst: Should they learn power BI?
[00:39:03] Guest: Carl Seidman: No.
[00:39:06] Host: Paul Barnhurst: Okay. Named ranges in your model. Yes or no?
[00:39:08] Guest: Carl Seidman: Yes.
[00:39:09] Host: Paul Barnhurst: Do you follow a formal standards board like fast or smart when building your models? No. Will excel ever die?
[00:39:18] Guest: Carl Seidman: Not in my lifetime.
[00:39:19] Host: Paul Barnhurst: That's a common answer. Will AI build the models for us in the future?
[00:39:23] Guest: Carl Seidman: One day? Yes.
[00:39:24] Host: Paul Barnhurst: Should you use Excel protection in your model? Yes or no?
[00:39:28] Guest: Carl Seidman: Generally, no.
[00:39:29] Host: Paul Barnhurst: Okay. Do you believe financial models are the number one corporate decision making tool? No. Then what is.
[00:39:36] Guest: Carl Seidman: Discussions.
[00:39:38] Host: Paul Barnhurst: Okay. And what is your lookup function of choice?
[00:39:41] Guest: Carl Seidman: Index. Match.
[00:39:43] Host: Paul Barnhurst: All right. That wasn't too painful, was it?
[00:39:46] Guest: Carl Seidman: No it wasn't, but I want to have an hour now to, like, explain my answers.
[00:39:51] Host: Paul Barnhurst: All right, well, go ahead and elaborate on 1 or 2 that you're most passionate about.
[00:39:54] Guest: Carl Seidman: Oh my goodness. So a lot of those were very great questions. And you could probably sense my, my, my hesitation in some of these answers because I think that, you know, when I think about financial modeling. I think about the who. I think about who's building it and who is it for. And if you and I were building something for each other, I think my answers would have been very different versus if I am going into a generic company and working with an average person. So, you know, is Python great? Yeah. It can for certain use cases, power Query. Yeah. For certain use cases, named ranges for certain use cases. So I think all of my answers could have been yes in certain circumstances. But I think just generically across the board, if you were to say, Carl, I'm going to blindfold you, I'm going to put you into a random company with random people. What would your answers be? Those the answers I gave to you would have been my answers.
[00:40:50] Host: Paul Barnhurst: I totally get it. And I could tell you struggled with a few. And that's normal. And you'll appreciate this. I recently commented, somebody says you need to get people that have different answers that were very strong on one answer or another on a show. So I asked a bunch of former guests who wanted to come on, and I got about 15 of them that. Oh yeah, I'll come debate now. I'm like, okay, how do I split that out into a group and find the questions where they disagree. And we're going to do, I called it Whose Line is it anyway style, where the points will be made up, and I just get to be the dictator on who won.
[00:41:21] Guest: Carl Seidman: Yeah. Well, that's probably the best position.
[00:41:23] Host: Paul Barnhurst: We're gonna have a little battle with everybody on these different ones and make them take whatever side they took. They have to argue that. And between the audience and myself will decide who the winner is.
[00:41:32] Guest: Carl Seidman: Yeah, well, I mean, I think that that's really hard because, again, you told me I couldn't say it depends, but it almost always depends. And you could have two extremely strong arguments on polar opposite sides of, of that, of that question.
[00:41:44] Host: Paul Barnhurst: Totally agree. And if you say it depends to everyone, does that make for good listening.
[00:41:49] Guest: Carl Seidman: No. That just makes somebody who seems that they're very disagreeable. But that's how I sometimes have to come across, because I don't want people to think in terms of recipes.
[00:41:57] Host: Paul Barnhurst: I was going to make a comment, but I won't. All right. If you could share one piece of advice with our audience to be a better financial modeler, what would it be?
[00:42:07] Guest: Carl Seidman: Put in the reps. I say this to people all the time, I said this yesterday to a group. I was like, look, I'm no smarter than you. I just have put in a lot more reps than you have. And if you practice, if you put in the reps, if you grab a bunch of fake data, if you do, you know the model that you have, but come up with new, creative, innovative ways of doing it. Those all count. That's all practice. That's all self-training. Those are all reps. So to anybody who wants to get better, yeah, you can learn Excel and Google Sheets inside and out. That's wonderful. But you got to put in the practice. You got to come up with that creativity and come up with new ways of going about your work. You're not going to learn as much from me or you, Paul, as you would just from yourself and experimenting a lot.
[00:42:46] Host: Paul Barnhurst: Truth to that. Be willing to just roll up your sleeves and try something. It may end up terrible. It probably will be the first few times. It's like content creation, as I tell people, just go ahead and give it a try. It will probably suck. The good news is nobody will be reading it when you start. You'll get better over time.
[00:43:03] Guest: Carl Seidman: Except with the model. Hopefully somebody will be looking at it.
[00:43:06] Host: Paul Barnhurst: Yes. Don't. Don't turn the terrible model to your boss.
[00:43:10] Guest: Carl Seidman: Yeah, but no, I agree with you. It's like rather than come to, you know, prime time, put your model in front of a client, make your mistakes, practice on the back end, come up with what makes sense when you're in your office, at your desk, and then you come up with the best solution that you've arrived at when it's ready for prime time.
[00:43:29] Host: Paul Barnhurst: Totally agree. Can you share a little bit about the services you offer, maybe some of the trainings, and just anything you want to share about your business and what you do?
[00:43:36] Guest: Carl Seidman: Yeah. So if you'd like to follow what I do, you can follow me at Seidman Financial. Com also like Paul fairly active on LinkedIn. You're welcome to follow me there where I know we both share a lot of tips, tricks, techniques, content all the time. I do a lot of different training development, learning experiences. I have more than a dozen different learning experiences across financial and business modeling. One actually starting tomorrow. FP&A. Cash flow modeling. Excel. Fractional CFO services. And then I also work with companies on an advisory basis, helping them get to the next level of their chapter of their business. So helping controllers, FP&A professionals and CFOs get to where they want to go.
[00:44:15] Host: Paul Barnhurst: And so when do you sleep again, Carl?
[00:44:17] Guest: Carl Seidman: Never.
[00:44:18] Host: Paul Barnhurst: I know that the two young twins. Yeah.
[00:44:21] Guest: Carl Seidman: Young twins travel a lot, work all the time. It's been a very, very busy six months. But, you know, I like it. It's fun. And I wouldn't rather be doing anything else.
[00:44:30] Host: Paul Barnhurst: And that's great. I love that you love it. I mean, I love what I do and that's really important, especially if you have to work a lot. Last thing you want is something you hate doing and then add. That's right. The travel and everything on top of it. You just become a miserable person pretty quickly. At least I do.
[00:44:45] Guest: Carl Seidman: That's right. And I think that that's true of financial modeling, too. Do the things you love to do incorporate the approaches you love. When it's less frustrating to do your work, it becomes something that you're a lot more passionate, enthusiastic about.
[00:44:56] Host: Paul Barnhurst: Yeah, I tried basketball, but I didn't have the height, the skills or the dribbling, so I gave that up.
[00:45:02] Guest: Carl Seidman: I tried donuts, I just didn't have, just didn't have the stamina.
[00:45:06] Host: Paul Barnhurst: Yeah, I get it.
[00:45:07] Host: Paul Barnhurst: All right, well, thank you for joining me. Carl, it's been a pleasure chatting with you, and I hope our audience enjoys it as much as I enjoyed chatting with you. Despite a few inside jokes and a little bit of humor here and there, it was a lot of fun.
[00:45:18] Guest: Carl Seidman: Likewise, Paul. Thanks for having me. All right.
[00:45:20] Host: Paul Barnhurst: 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 modeler. What are you waiting for? Visit FMI at www.fminstitute.com/podcast and use Code Podcast to save 15% when you enroll in one of the accreditations today.