Why Financial Modellers Should Learn From Barber Shops

Some years ago, I grew my beard.

At first, I tried to trim my beard on my own, as my father did. Unfortunately, I am not as talented as my father, or perhaps I don’t have as much patience as he did. My beard trimming skills suck.

After a while trying to improve but getting frustrated with the results, I decided to delegate the task and became a customer of barber shops.

I have visited many barber shops. I have had my beard trimmed in barber shops in Spain, the USA, Argentina, Panama, and El Salvador.

All barber shops have many things in common.

It doesn’t matter whether you enter a barber shop at 9am or 9pm, you’re offered a beer. Not coffee or tea. A beer.

The atmosphere in barber shops is standard. From the rockabilly music from the '50s, to the usual collection of photos of gangsters, tough guys, guns, manly movies, and pin-up girls hanging on the walls. You can expect a similar decoration in every barber shop.

You are greeted with a firm handshake from the barber. The barber usually sports a beard, a stylish haircut, some tattoos, and a few piercings. Even the first time you meet him, he addresses you as if you were old friends.

The look and feel of barber shops are standardized across cities and countries.

Financial models are different.

Financial models are like a box of chocolates. You never know what you're going to get.

The logic, the structure, the templates, the formats, the inputs, the calculation blocks, the results tab... each financial model is a surprise.

That's why standardization in financial modeling is so important.

Financial modelers should learn a few things from barber shops.

When you set foot in a barber shop, you know what to expect.

When you open a financial model, you should know what to expect.

Fortunately, financial modeling standards have come to the rescue. There are numerous financial modeling standards to choose from. The most prominent ones are SMART, FAST, and BPM.

Each financial modeling standard is unique. Each has its own set of advantages and disadvantages.

But regardless, choose 1 standard for your financial model and stick to it.

Remember barber shops when you build your model. Follow financial modeling standards.

The users of your financial models will be grateful.

Are you in need of financial model trimming but lack the patience or the skills?

Welcome to your barber shop for financial models. Grab a beer and leave the trimming to me.

Financial modeling services.

P.S. Links to the most relevant financial modelling standards below:

• BPM

• FAST

• SMART

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