# Modeling (in Excel)

**Published by:** [Continuations](https://continuations.com/)
**Published on:** 2010-11-11
**Categories:** models, mistakes, excel
**URL:** https://continuations.com/modeling-in-excel

## Content

I am going to spend the better part of today building some models in Excel. Much as I love Google Docs, for any serious model I still go back to Excel without regrets. It is fast and versatile and I know it extremely well. I see a fair number of business budgets and financial models built in Excel. Many suffer from the same set of problems:Artificial precision: often there is an attempt to capture every line item down to office supplies – but those generally won’t make or break a business (unless you are in the office supplies business that is).Key assumptions not easily visible: the cells which contain the key assumptions (e.g. about drivers of revenue growth) should be clearly highlighted and/or gathered up in one place.Circular references: sometimes you can’t avoid having to do a “goal seek” but many models contain gratuitous circular references. For instance, if you want to target a particular post investment option pool size, you can do that with a simple formula. No circular reference required. Lack of sensitivities: no attempt to analyze how a small change in one of the key assumptions will impact outcomes.Deterministic: this is my biggest pet peeve. It’s OK for something like a cap table for a specific round of financing. But for any kind of projection you really want to look at a distribution of outcomes.Now off to actually putting my models together!

## Publication Information

- [Continuations](https://continuations.com/): Publication homepage
- [All Posts](https://continuations.com/): More posts from this publication
- [RSS Feed](https://api.paragraph.com/blogs/rss/@continuations): Subscribe to updates
- [Twitter](https://twitter.com/albertwenger): Follow on Twitter

## Optional

- [Collect as NFT](https://continuations.com/modeling-in-excel): Support the author by collecting this post
- [View Collectors](https://continuations.com/modeling-in-excel/collectors): See who has collected this post