Welcome to the Deep Wealth Podcast, where we uncover insights, strategies, and stories to assist business owners on their journey. The host of The Deep Wealth Podcast and post-exit entrepreneur Jeffrey Feldberg speaks with Chris Reilly, a finance wizard who has created a path from Lehman Brothers’ bankruptcy to founding Financial Modeling Education.
Chris Reilly’s career started during the storm of the 2008 financial crisis. He began working on the Lehman Brothers bankruptcy—a fiery entry into the world of finance. His journey led him through consulting and corporate finance roles, eventually finding his passion in private equity. But Chris is more than a finance guru; he’s an educator with 85,000-plus followers on LinkedIn and a founder who’s making financial modeling accessible.
You might wonder, “What’s the deal with financial modeling?” Simply put, Chris took a skill he discovered at work and built a business around it. He shares, “I suddenly was the best modeler at every company that I was at. I just had this interest in it.” His mission is clear: teach people to build financial models the right way.
Chris founded Financial Modeling Education to help others avoid the pitfalls he faced. Stressing the importance of well-crafted models, he mentions, “A lot of financial models are very poorly put together, and they’re error prone.”
Financial Modeling: Your Business GPS
Financial modeling isn’t just about crunching numbers. It’s your business GPS, helping you navigate through decisions and forecasting future performance. Chris explains, “A financial model is going to help you in that goal, it gives you an approximate glimpse into the future.”
His courses cover the essentials: cashflow forecasting, three-statement modeling, and more. Whether you’re a mid-career FP&A professional or a private equity analyst, there’s something to learn.
Chris has simple but profound advice: Focus on cash management. “Getting a sense of what your cash is going to do in the future is the number one thing to focus on.” He’s right. Companies of all sizes need to know their financial ins and outs to survive and thrive.
Chris believes that having a financial model is key for business success. “You need a way to keep score when it comes to finance,” he says. This isn’t just about looking back at what happened. It’s planning for the future. Businesses that track results and plan ahead do much better than those that don’t.
“Start with projecting when the cash is going to come in and out in the future,” Chris advises. This isn’t just important for big businesses. Even small ones should know their cash flow.
Now, let’s talk expenses. Chris is a big fan of keeping costs low. “You want to make sure that your revenue exceeds your expense,” he explains. This principle is especially important for startups and small businesses. Spending too much too fast can lead to trouble.
For companies looking to grow, Chris warns against letting hiring get ahead of revenue. A big gap between income and spending is bad news. Keeping expenses tight helps businesses thrive in tough times and in good times.
But what does strategic finance really mean? Chris simplifies it for us: “Let’s use the numbers and come up with a plan of what to do.” This means using financial data to make smart decisions. It’s about more than just recording what’s happened; it’s about using that information to guide where you’re going.
Planning for a Liquidity Event
Preparing for an exit or raising capital? Chris reminds us to be ready at any time. “You don’t have to sell, but you always want to be ready to sell.” The key here is preparation. Understand your business model, and streamline your due diligence processes.
One of Chris’s nuggets of wisdom is about being ready to sell your business at any time. “I think you don’t ever have to sell, but you always want to be ready to sell,” he says. Preparing for a potential sale or investment means getting your financial house in order now, so you’re not scrambling later.
What about companies that falter? Chris notes, “Cash was often the biggest issue for distressed companies.” Without a reliable forecast, it’s easy to run into problems. In a crisis, knowing when money comes in and goes out is crucial. And when potential investors look at your company, they want to see clean, accurate financials with no surprises.
AI, Technology, and The Future of Finance
Artificial Intelligence is here, and it’s transforming finance one step at a time. Chris is cautious but optimistic about AI, especially for big data analysis. “It can do a ton of analysis on that information and give you insight quickly.”
While AI is still learning the ropes, Chris’s models and courses offer a human touch—a nuanced understanding that machines are yet to fully replicate.
Bringing in financial experts, such as a CFO, can make all the difference. Chris shares, “It’s a hard position to be in, but you kind of have to go for it…you want somebody who can communicate simply what’s going on in your business.”
Chris sees artificial intelligence as a tool with potential. Today’s AI can help analyze big data sets quickly but is still learning how to handle more complex tasks. “It’s going to have a larger impact on larger companies,” he predicts, but expects it to grow in influence over time.
Final Thoughts: Lessons from the Past
As Chris reflects on his journey, he wishes he had learned about money earlier. “Money is really an exchange of value for the service we provide to the world,” he says. And that’s a lesson worth teaching: Understand your value, track your progress, and be ready for whatever the future holds.
Whether you’re a seasoned entrepreneur or just starting, embracing strategic finance can make or break your business. Let Reilly’s insights guide you towards making smart, informed financial decisions that set you on the path to success. Remember, understanding your cash flow and strategic finance is not just about keeping the lights on today. It’s about lighting the path for tomorrow.
In closing, remember this advice from Chris Reilly: “Start with building a short model of your personal life. It’s the easiest way to learn because there’s no learning curve.” A simple yet effective strategy to get your financial house in order—personal and professional—and hit the ground running.
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