There’s nothing quite like experience to really hone and sharpen your Excel modelling skills. Every hour that you spend nutting through a problem on the job means that the next time you come across a similar problem, you’ll solve it in a matter of minutes, not hours. This is especially true for creating complicated Excel formulas, or for model design and layout. So often I come across a problem when building a modelling solution for a client and I know I’ve seen this problem before.  Whilst it might have taken me half an hour to model it out the first time, often using trial and error but the next time it’ll only take a few minutes. The more experience you’ve got, the quicker and better modeller you’ll be.

Build Muscle Memory

When you first start using Excel to solve business problems, you’ll probably start pretty simply and you’ll need to think through the build of very basic formulas. As time goes by, and you’re performing similar tasks over and over, certain functions and shortcuts become part of “muscle memory” so that, like playing the piano, or driving a car it becomes second nature.  By performing repetitive tasks over and over and over again, the solution will be singed into your memory and you’ll never forget it. This experience will help you to diagnose and solve future problems. You’ve seen this somewhere before and the solution can be found by using your well-honed judgement. That’s why taking every opportunity (like competing in the Financial Modeling World Cup) and exposing yourself to different Excel modelling problems is going to  make you a far better financial modeller.

Let me give you another example.  It’s somewhat embarrassing, but I’m sure everyone has had a similar experience.  When I started using Excel for the first time at an investment bank in London, I can remember one of my very first tasks was to calculate work in progress for a weekly report.  There was a list of asset codes on one page, and I needed to add the asset description onto the report, so I spent a happy hour or so copying and pasting the project names from one sheet to another.  This was fine and my boss was happy.  The next week she asked me to do it again, so off I went, copying and pasting to my heart’s content.  By the third week I was getting pretty fast at it but I started to get that niggling feeling that I wasn’t making the best use of my time.  I’m sure you’ve had this feeling before, and I’ve learnt over the years not to ignore it.  If you feel as though there’s an easier way of doing things – there probably is.  So I asked around (there wasn’t any Google in those days) and someone showed me a VLOOKUP.  Bingo! My life was changed forever, and I never forgot it.  Would I have remembered a VLOOKUP if I hadn’t gone through the pain of doing it manually?  Probably, but it was burnt into my memory and was my “go to” function for quite a while (until I discovered an INDEX / MATCH and more recently the XLOOKUP!)

The Role of Training in Developing your Skills

So does that mean that on the job experience is everything and you shouldn’t come on a training course?  Not at all.  Training is great for accelerating your learning and exposing you to ideas and solutions you would not otherwise come across.  But training alone won’t make you a good financial modeller. This is why in my training courses I have such a hands-on component, and students are expected to work through the solutions for themselves. Those who attend come away with a download of knowledge, templates, resources as well as a copy of my book, but if they don’t actually apply their newly acquired skills, it’s all for nothing.  Use it or lose it! A good financial modeller is constantly learning new tools and techniques and then applying those newly acquired skills to their work to really cement the knowledge.  You might know lots and lots of Excel formulas, but knowing exactly where and when to use them is where your real skill lies. Constantly look for opportunities to apply your modelling skills in the workplace. Technical skills coupled with experience are what employers are looking for and you’re going to become a better financial modeller by actually applying your knowledge, not memorising functions. (That’s what Google is for.)