The "Financial Models Are Useless" Crowd Is Missing Something Critical
You may hear this line "Financial models for startups are a waste of time. You can't predict the future anyway."
CFO Lauren Elizabeth Pearl has a brilliant take on what they're getting wrong...
"A financial model is useless as a forecast because it's not a forecast — it's not intended to predict what's gonna happen in the future."
So what is it then?
"A model for an early stage startup is actually a feasibility study."
Think of it as Lauren puts it: "It's meant as stupid idea filter."
You're not trying to predict exactly what will happen. You're testing whether your reasonable assumptions hold water. If your unit economics, growth rates, and hiring costs make sense together, then you've got something worth pursuing.
But here's the real magic...
"When a founder is in charge or heavily involved in building a model, they are actually getting to test drive the business."
You're literally connecting the dots between daily activities (getting customers, hiring people, buying equipment) and your bottom line.
Lauren explains it perfectly: "It gives them this opportunity to build a structure in their own head to connect the inputs of what they're actually gonna do on a day-to-day basis... to the financial statements."
This isn't just about numbers on a spreadsheet. It's about building financial intuition that "makes that founder a better CEO from day one."
Catch the full episode of FP&A Today with Glenn Hopper
Apple| Spotify| YouTube| Blog post and transcript
Don't forget to nominate someone special
Nominations for the Office of the CFO Awards 2025 are officially open! This year is bigger, bolder, and packed with new ways to celebrate innovative and brilliant financial leadership.
Nominate an exceptional CFO, controller, FP&A pro—or even yourself.
Award Categories:
CFO of the Year
Controller of the Year
FP&A Pro of the Year
Rising Star CFO Award
Impact Leader Award (For instance mentoring future leaders, volunteering in their communities, tutoring students in math, or championing social causes)
Nominations close September 15, and winners will be announced live on October 21. *There are no limits on how many submissions!
Meme of the Week
Credit to Soufyan Hamid
CFO & Strategic Advisor to Startups & Small Businesses | Cohost of "The Growth-Minded CFO Podcast", powered by Upflow | Author of "The Daily CFO" newsletter - subscribe below!👇
4wThank you so much for having me on the FP&A Today podcast, Datarails and Glenn Hopper! This was a great conversation that I hope will continue to evolve the narrative on financial models for early-stage startups!