Categories

Businesses typically have a lot of structure to them:

• Revenue might be generated in 3 different countries, across 5 different products, and 3 different marketing channels
• Payroll expenses might be incurred across 25 employees, grouped into 6 different departments and 2 different countries

Since traditional spreadsheets are an unstructured grid of rows and columns, building this structure in involves a lot of manual work through duplication of formulas and VLOOKUPs (or INDEX MATCH / XLOOKUP / etc).

This is the motivation behind Categories in Causal: they allow you to build your business’ structure directly into your financial models, removing the need for formula duplication and lookups.

With Categories, you can

• Reduce the number of formulas in your models by 100x or more
• Make it much easier to maintain and develop your models over time
• Significantly reduce the chance of human error when working with formulas
• Make it much easier to connect to historical data
• Make it much easier to visualise and pivot data from your models

This guide conceptually explains Categories so that you can use them in your models.

1. A Category is basically a list

Suppose you’re building a financial model for your online coffee business. You sell 10 different products (”SKUs”), each with a different price.

In Causal, you can create a category called “SKU” with each product as its own item:

2. Categories let you break your variables down

In a spreadsheet you’d create a row for each product, and a column for “Price”:

In Causal, you can create a single “Price” variable, broken down by your “SKU” category:

3. Categories flow through your formulas

This is where the magic starts to happen:

Suppose that you have to pay 20% in taxes on each sale, and you want to calculate your post-tax revenue for each product.

In a spreadsheet, you’d have to create 10 new rows and do a separate calculation for each product.

In Causal, you can simply do the calculation once, and Causal will automatically calculate it for each category item separately.

4. Categories can be modified on-the-fly

Suppose that you add a new product to your offering.

In a spreadsheet you’d have to find every instance of your product list in your model, insert a new row in the right place, and then fill in the correct formula for it.

In Causal, you can simply add your new product to your “SKU” category, and Causal will automatically include it wherever the SKU category is used.

5. Categories can be linked to each other

You think about your products falling into 2 different groups: “coffee beans” and “coffee equipment”.

In Causal, you can create a category called “Product Group”, link it to the “SKU” category, and then assign each SKU to a Product Group:

6. Categories facilitate “lookup” operations

Suppose that your taxes aren’t just 20% across all products, but that there’s a different tax payable on food (e.g. coffee beans) versus coffee equipment.

In a spreadsheet, you’d do a few things:

1. Set up a lookup table between SKU and Product Group
2. Break your tax assumption out into separate values for each Product Group
3. Replace your tax calculation formulas with VLOOKUPs (or similar) to use the correct tax amount for each product

In Causal, you can simply apply the Product Group breakdown to your Tax variable, and Causal will automatically use the correct tax amount for each product in your downstream calculations.

7. Categories let you slice and dice easily in charts and tables

Suppose that you have your monthly revenue broken down by SKU and want to create a stacked bar chart showing your monthly revenue broken down by Product Group.

In a spreadsheet, you’d have to first “pivot” your data (using formulas/copy-pasting) and then chart the pivoted version of the data.

In Causal, you can simply create a chart of your “Revenue” variable, and then pivot the data directly on the chart without any setup.

8. Category values can be overridden

Every business is messy, and sometimes you'll need to hardcode certain values or set different formulas for different periods.

You can override any category value by simply clicking and typing into the relevant cell. This is a useful 'escape hatch', but should be used sparingly!