For many, the most challenging segment of any business plan is the financial projections. Even for those that deeply hold the vision of the company and have strategic foresight, quantifying it in a manner that is compliant with account standards can be a challenge. Pro Business Plans has worked with many entrepreneurs and growing companies to create a finance plan in business plan that considers several scenarios and leverages unbiased third-party market research.
Many investors will request either three or five year projections to determine the future performance of your company. Having a professional financial model that is in compliance with accounting standards will not only help you to appear more professional, but help both financiers and your management team form more logical decisions. A comprehensive finance plan in business plan is designed to not only organize and present these financial statements, but form conclusions about the valuation of a company and its intended exit strategy. The following section outlines what is included and how Pro Business Plans works with its clients to ensure that the outputs are professional and accurate as possible.
The financial projections are the basis for the entire finance plan in business plan. Pro Business Plans completes the entire financial statements through its financial projections service. The financial statements include any statements that third parties may request over a three or five-year time frame. The same financial forecasting techniques are applied as those used at top investment banks and venture firms, as most of the professionals working for Pro Business Plans have prior experience working for such companies.
The valuation of a company depends upon several factors; as publicly traded companies are valued differently than Startups with no operating history. Pro Business Plans applies the valuation methodology that most applies to the age and industry of your company, but applies the same valuation techniques as the most established private equity firms. It provides a separate company valuation service that is included in the finance plan.
The exit strategy of any company is very important, as all partners and investors must agree about where at what point the company will be sold. Some owners would prefer for the company to remain private and pass it down after retirement to the family, which may present a clear problem to some financiers that would rather have a quick sale of the entity to a private equity group. In other instances, investors may want to pursue an initial public offering, while you desperately want to rapidly sell the entity to a larger firm. Communicating the exit strategy that genuinely reflects your motives is vital to finding investors and partners with common goals, otherwise a misalignment will begin to only exacerbate in the future.
This section of the finance plan is designed to help your company better determine the cost of capital and communicate where the initial funds will be allocated. If the finance plan is being compiled before your company raises funds from third parties, it will help to better understand how different financing terms or equity structures will impact your personal profits and company risk level. Most investment companies will also require a detailed breakdown of where the finances will be used, as some financiers have special stipulations about the use of funds. For instance, some government subsidized bank loans only support the acquisition of assets whereas others may fund working capital with the exception of payroll fees. Communicating that the company has no intention to misappropriate funds is a critical part of the finance plan in business plan.
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