|Image Credit: CraigMoulding|
Put another way, if you live by the spreadsheet, be ready to die by the spreadsheet. I've long contended that almost all projections are wrong, but I'd like add my own aphorism: the more complicated the Excel sheet the more likely it is that it contains errors. I'm specifically thinking about the work Libby Kimzey (VP of Coaching & Systems) and I are doing to determine at what point we can become profitable. To do this, we have built a fairly large (and pretty!) Excel file containing all manner of assumptions about, among other things, average loan size, number of loans per loan officer, repayment rates, and customer acquisition costs.
Nothing speaks to the title of this post more than this: over the past few days, our moods have waxed and waned, driven not by the gravitational pull of the moon but rather the numbers appearing on our monitors. On Friday, it seemed that profitability could come in five years...until we spotted an error in one of the fields. This morning, it looked like the model wouldn't work, no matter what we did...until Libby dug into the numbers and found another error. We are now reasonably confident that it CAN work, but we are triple-checking before we get too excited...Ah, the vicissitudes of the digital life!
The takeaway? Be careful. Reality isn't as neat and clean as "Income = (E57/E30) * B5." Just as a menu isn't a meal and the finger pointing at the Moon isn't the Moon, the spreadsheet is but a tool...a tool that is only as useful as the materials from which it is made and the manner in which it is used. Now if you'll excuse me, I'd like to go back and play with some numbers!