Your Spreadsheet Might Be Right. Your Decision Could Still Be Wrong.

Or as a friend and former co-worker told me an investor he worked with put it: “Numbers don’t lie…but sometimes they don’t tell the truth.” 

 That may sound strange coming from a CFO, but it happens more often than you might think.

Consider an owner or CEO evaluating an important decision: acquiring another company, opening a new location, making a major investment, hiring additional people, or entering a new market.

The financial analysis may say, “No.”

But the owner’s intuition says, “There’s something here. We should do it.”

What should the CEO do?

First, don’t simply ignore the spreadsheet. But don’t blindly trust it either.

A spreadsheet is only as good as the questions it is designed to answer and the assumptions behind it. Even if there are no mistakes in the formulas, the analysis may be based on assumptions that are uncertain—or simply wrong.

And there’s another issue that is easy to overlook: Who decided what questions the spreadsheet should answer in the first place?

The person requesting the analysis and the person building the model determine what gets included and what doesn’t. If something important is left out, the spreadsheet can produce a very precise answer to the wrong question.

That’s where good financial analysis—and good judgment—come together.

If the spreadsheet and your intuition disagree, go back to the assumptions. Are they reasonable? Is something important missing? Is there another question that needs to be answered?

But there is an important trap to avoid.

Don’t change the assumptions simply because you don’t like the answer.

If changing an assumption turns a “no” into a “go,” you need to ask yourself whether you have actually improved the analysis—or simply created the answer you wanted.

This is one reason I believe business owners and CEOs need someone who is willing to challenge their thinking.

As a fractional CFO, I don’t see my role as simply building spreadsheets or reporting financial results. I help owners and CEOs make better decisions by making sure the financial analysis addresses the right questions, challenging the assumptions behind it, and helping them understand what the numbers are really telling them.

And sometimes one perspective isn’t enough.

When an important decision would benefit from the experience and perspectives of several successful business leaders, that’s where I may recommend a Compass Advisory Council—a group of carefully selected business leaders who can challenge assumptions, bring different perspectives to the discussion, and help the owner or CEO think through important decisions.

The goal isn’t to replace the spreadsheet—or the CEO’s intuition.

 It’s to make sure both are informed by thoughtful questions, sound assumptions, and an independent perspective.

If you know an owner or CEO who is facing an important decision, struggling with the numbers, or simply wants someone who will challenge their thinking, I’d be happy to have a conversation.

Depending on what they need, that might mean working with me as a fractional CFO through CFO Options or bringing together a Compass Advisory Council.

And if someone comes to mind, an introduction would be very much appreciate