Can you apply for a Bank Loan with a Pitch Deck? Business Plan vs. Pitch Deck

 

When applying for a loan, it makes sense to present detailed documentation about your business, including all of its most important (financial) aspects of course. The purpose of these documents is to show your business’s prospects of repaying your debt. So it is understandable to submit the most thorough bank loan business plan you can formulate. However, you may be surprised to know that you can apply for a bank loan with a Pitch Deck just as well.

Namely, because loan officers can be overwhelmed with dozens of lengthy applications, having something compact that conveys the most important information will immediately stand out in the sea of Bank Business Plan pages. So here are some pros and cons, to help you choose the best application format.

Business plan - a comprehensive description

Business plans are a necessity for operating any business. Besides providing great guidelines that can help you make better business decisions, they are a detailed description of your business as well. This makes them extremely beneficial, especially if you wish to apply for a bank loan.

Bank loan business plans include your business’s past, present and even future finances, in addition to everything else that will convince loan officers just how successful your business is, and more importantly, will be. Lenders will be looking for all of the factors that show your business will keep producing a steady revenue: how it is organized, how it is operating, how skilled your personnel is, and how responsible you are with your finances.

• Dangers of TL;DR

Like mentioned before, keep in mind that long bank loan Business Plan can be an immense strain to the reader. Being bombarded with information can be tiresome, therefore, submitting lengthy documents can backfire on you. Loan officers can get lost in the array of data you have to offer about your business. The goal is not to make them yawn and want to skip to the next page (or worse - next business plan), but to keep them engaged and interested instead.

Pitch deck - when less is more

Applying for a loan with a mere presentation can seem unorthodox, but it surely has it’s benefits. Because you will be limited to a few slides, you will be forced to put only the most crucial information in them. Stripping your business to its bare bones will instantly show loan officers exactly what they are looking for. Skipping all the formalities, and getting straight to the point is surely a great way to grab someone’s attention. But not only that, having a limited number of slides will also force you to get creative, and find the best way to present your business’s heart and soul, leaving a lasting impression on your audience.

• Sometimes, less is just less

Making an attention grabbing Pitch Deck is definitely not as easy as it looks, because what seems to be its strength can also be its weakness. Since pitch decks are limited to only a few slides, you really need to make an impactful presentation, or things can easily go sour. You have a small window of opportunity to impress your audience, so make sure every slide counts and think carefully about how you will present your information to them.

Both Bank Business Plans and pitch decks have their good and bad qualities. When it comes to the battle of the formats there is just not a clear winner. But knowing all of the benefits and downfalls can definitely help you make the best decision. It all comes down to the individual case, so think long and hard what is best suited for you and your business. In either case, make sure your chosen format addresses a loan officers main concern: whether or not you’ll be able to repay your loan!

5 Common Market Research Mistakes when Writing a Bank Loan Business Plan

 

Market research is an important component for any business plan, but that can especially be said for a Bank Business Plan. Getting a bank loan is not easy, there are many requirements for getting a loan approved, one of them being a well composed business plan based on solid research. With such a huge emphasis on the research, it is important to do it right, so here are some common mistakes to avoid.

Not using all available information sources

The first step of any research is to gather all of the available and relevant information. In case of Market Research, this is done through surveys, questionnaires, test groups and interviews; in other words, data is collected directly from the customers themselves. This type of information would be considered primary data, and many make the mistake of using it as their only resource.

However, there is another way of collecting information, which is through secondary research. This includes all of the data and research collected and done prior to your own, such as news articles, government census, industry reports, studies, etc.

Overlooking the competition

Focusing on your brand is great, but you are not operating in a vacuum. There are other companies climbing the ladder of success, and you do not want to be at the bottom of it. Therefore, gather as much information as you can on your competition, so you can see how you are positioned on the market and how you can improve.

How you compare to your competition is an indicator of your business’s potential success. This is crucial information for loan officers, since it will give them an idea of your business’s value in the marketer and ability to repay your debt.

Thinking the market does not change

If you need market research for a bank business plan, don’t dust off your old research and use it again for a new document. The market is constantly changing and your Bank Business Plan will not benefit from outdated research. Doing regular research and keeping an eye on the market will show loan officers you are aware of any new market trends and are able to overcome or create opportunities from changes. This is valuable information for getting a loan approved since it shows you will be able to adjust to the market and keep producing a steady revenue.

Cherry picking information

The reason you are conducting market research may be for your bank business plan, with an overall goal to get a loan approved, but that should not be your research objective. The desire to make an impeccable business plan, can make people cherry pick information for their research, sometimes without even realizing it. The result of this may be a seemingly bulletproof business plan, but in reality it is flawed.

Therefore, you need to have a scientific approach to your research, which means that it needs to be:

systematic - following a clear plan and path; using good methods and research techniques

and objective - not being biased in your research is crucial. If you only make it your goal to get approved for a loan, you might lose your perspective. Your objective with market research is to present reality as it is.

Presenting an unreadable paper

Do not oversaturate your findings with charts and graphs. By all means, use them, you need to after all, but know that you should tell a story. Your research should be easy to follow, read and understand. Knowing how to present your findings is crucial. And keep in mind that your readers may not be as knowledgeable of your industry as you may think, so avoid using industry jargon as well.

The scope of market research can be intense, which leaves a lot of room for mistakes. So, avoid the mistakes others make and base your bank business plan on the most accurate research you can do. If you find the Market Research portion of business planning difficult, consult experts that can do it for you. This will mitigate the chance of being biased in your findings as well.

How to do Financial Modeling for a Pitch Deck

 

Financial Modeling may be the deciding factor in gaining investment for your business. It is certainly what investors are the most interested in when you are pitching your business idea to them. That is why having an outstanding pitch deck is so important. But, fitting your financial model on a few slides can be a challenge, so here is the best way to do it.

Financial modeling in 4 simple steps

Before you even make your Pitch Deck, first make sure your financial model is complete and accurate. It is a number crunching process, but to make the whole experience a bit easier, it can be broken down into four steps:

1. Collecting data - Start by gathering all of the necessary information you can find. Look into your business’s history in sales, get data from doing market research, anything and everything you can get your hands on. The more the better.

2. Making assumptions - After getting every piece of information you can find, proceed by making a list of assumptions. This step should be taken very seriously, since the rest of the model will be based on it.

3. Forecast the 3 statement model

The three statement model consists of income statement, cash flow statement and balance sheet.

4. Income statement will show your income and expenses for a certain period.

5. Cash flow statement shows how much money is entering and leaving your business, or how much money your business has at hand for a specific time frame.

6. Balance sheet shows how much your business owns in assets, liabilities and shareholder’s equities for a given period.

7. Risk assessment and sensitivity analysis - financial modeling is not complete without testing your model first. By doing assessments and analysis you are checking for any discrepancies in your model, checking to see if it will hold up, and understanding where you may fall within a realistic range.

Organizing your financial model on slides

After you’re done with financial modeling, the next challenge is trying to figure out how to present it in your Pitch Deck. This is by no means an easy task, and there are a few things to consider:

• Consider the number of slides

The whole pitch deck should not contain too many slides. Opinions on the slide number can vary. Some say no more than about 20 slides are necessary, but recently the trend is to keep your presentation down to only 10 slides. Keep in mind that only a fraction of those will be intended for your business’s finances, so your financial model may take up only about one or two slides.

• Consider the visuals

Having only a couple of slides for your financial model will force you to get creative when presenting your numbers. The best way is to use visuals to convey information such as graphs and charts. But think about their design as well. It is not just about having an aesthetically pleasing slide, but it should be easy to read. Think about using adequate font and font size, and do not forget about having enough negative space, meaning do not cram your slide with too much text and visuals.

Preparing a presentation is not easy, especially if you have a lot of material to work with. A challenge with pitch decks has always been how to present all of your business’s aspects in a limited number of slides, and having to incorporate Financial Modeling into them does not make things easier. Luckily, using the aid of compelling visuals will get the job done every time.

4 Common Financial Projection Mistakes when Writing an Information Memorandum

 

If you wish to sell your business or to do a merger, you – or an M&A advisor - might already be busy writing your Information Memorandum. By now, you might have noticed that it is not as easy to write it as initially seemed, especially when it came to making financial projections. Making projections is a long and complicated process and it is understandable that you are having trouble writing them. People usually make the same mistakes when projecting their finances for any business plan, and the same can be said for information memorandums. So here are a few common mistakes to avoid.

1. Making incomplete projections

When doing mergers and acquisitions it is logical to want to present your business in the best light possible. Information memorandum is a way to introduce your business to potential buyers, and it is therefore imperative to leave a good impression on them. However, for exactly this reason many people fall into a trap. They present only the good side of their business, while hiding the ugly. When presenting your projections it is imperative to be honest and show the whole picture, even if it is not favorable. But, fear not, a good strategy in this case, would be to include solutions to any future problem you may predict. After all, that is what Financial Projections are for anyway.

2. Not making enough assumptions

Another way people make incomplete financial projections is by making their list of assumptions too short. Making assumptions is a basic step in writing your projections, and maybe one of the most important ones. All of your projections will be based on these assumptions, therefore you should make as long a list as you can, in order to be able to make the most accurate projections.

3. Not doing market research

Entrepreneurs who underestimate market research, are missing out on all of the benefits it can bring to their business, especially when it comes to making financial projections. Having a good grasp of the market and its trends can be of great help when making your projections. All the data collected through Market Research can help you make your list of assumptions. Knowing all the changes the market is undergoing, or the ones that are about to happen, is a sure way to make the most precise financial predictions for your business.

4. Not basing your claims on data

Your Information Memorandum has to be based on facts about your business. So, when casting your projections, do not make your assumptions out of thin air, they have to come from somewhere. Just because you experienced a steady revenue growth for the past couple of years, does not mean it will continue into the next one. There are many contributing factors that can change the course of your business operations. That is why gathering all the information you can get your hands on and making your assumptions on actual data is what will make your financial projections credible, and consequently your information memorandum.

Avoiding these common mistakes will help you make the most realistic and accurate Financial Projections and a well formulated and well written information memorandum. Both of them are needed for a smooth merger and acquisition process, since they may be the biggest contributing factor for a successful transaction.

Why You Should Get a Professional Business Plan Writer to Write your Financial Projection

When running your small business, cutting out the middleman may seem like a good way of decreasing your costs and expenses. But a lot of the time this kind of business strategy leads to a DIY mentality that can, quite frankly, be detrimental to your bottom line. Sure, if you are capable and know what you are doing then go for it. Just be aware of the toll that it can take on you and your business. Be aware of your limitations. Taking on more than you can handle can have serious consequences. So if you need to write your financial projection, consider hiring a Professional Business Plan Writer, and here is why.

Experience is everything

Having expertise means you’ve seen it all. It means you’ve been through enough to know what works and what doesn't. But can you really say that for writing financial projections yourself? Well, professional business plan writers can. They know the ins and outs of writing them and know all the tips and tricks.

Writing projections is definitely no easy task. It involves complex calculations, tests and analysis. Not to mention the various steps needed to complete them. It can definitely be an overwhelming task for a novice, but a walk in the park for someone with experience in this field.

It's all about getting the job done

Let's face it, a lot is hanging on the line when it comes to writing Financial Projections, the success of your business to be more exact. Writing them properly and diligently is a necessity and something to be taken very seriously.

Most of the time projections are used to gain investments or loans, or even just for organizing and managing a company. Therefore, when your reason for writing them is so immensely important, then half baked projections will not get the job done. Investors and loan officers will not take them nor your business seriously and brush them off immediately. But, professional Business Plan Writers know how to make the most complete and accurate projections. So do not take for granted the quality work they can provide you, especially when the stakes are so high.

Better task management

Like mentioned before, doing everything yourself may seem tempting but it is definitely not necessary. Multitasking may seem like a useful skill, but it can result in jobs half done, which is not something you want for operating a successful business. When running your business there are a lot of things to do and take care of. It is hard work to stay afloat or maintain growth, so why burden yourself unnecessarily? Outsourcing your Financial Projection writing to experts, can free your hands, and let you focus on other aspects of your business.

Having a professional business plan writer write your projections for you is not only freeing your hands, but mind also. Making projections is a long number crunching process and being free from it will give you an opportunity to set your mind on other projects. This way you will have better focus for your tasks and therefore, better outcomes for your business.

Do not take writing financial projections for granted. It is not an easy process and it most definitely needs to be done properly. The success of your business depends on it. So having Professional Business Plan Writers make them for you will save you a lot of headache in the long run. Rest assured that they can provide you with the best possible projections for the best possible achievements. So next time, think about hiring one when you’re in need of financial projections.

Why You Should Research your Market and Industry for an Information Memorandum

 

When doing mergers and acquisitions it is necessary to provide the most accurate information about your business, but also be persuasive and convincing. So if you're wondering what to include in your Information Memorandum, a first step would be to collect all the relevant data you can find. While gathering statistics and figures from your own busines’s archives is a good way to start, there is much more to consider. Namely, one of the most important aspects of your business is how it fares on the market, which is exactly what the buyers are looking for. So market research helps you paint the whole picture of your business in a few ways:

• It helps you estimate your potential sales volume

Understanding the market and it’s needs is key for running a successful business. Market Research can show you if there is a need for your products in the market, and how much do the customers value them. The math is simple, if there is a demand for your products or services and room for you in the market, your business is more likely to have higher sales. Knowing this in advance is of great benefit.

The merger and acquisition process will go smoothly if the buyers know that your business will be able to make a considerable profit. If the research is in your favour, it will be easy to convince potential buyers your business is a good investment. If not, well, at the very least you’ll know exactly which areas of your business need improving. Therefore, you’ll have a chance to work on them before you put everything in your information memorandum.

Additionally, data collected through market research is crucial for writing other documents included in an Information Memorandum like financial projections. They are of great interest to any potential buyer in mergers and acquisitions, since they predict your business future financial state.

• It helps you find your place in the industry

Another benefit of market research is getting to know your competition. It is not enough to just offer products that are desired in the market, because they will not fare well if you are outperformed by your competition. If your competitors cast a shadow on your business, you will not be able to stay afloat. Therefore, including in your information memorandum how your business compares to others in the industry is important. Potential buyers will want to know if your business will be able to outrank the competition. Moreover, having a watchful eye on your competitors will help you make business decisions that will keep you in the race.

• It helps you stay on top of the market trends

In the ever-changing market it is important to do regular market research. This way nothing will pass you by unnoticed. Regularly tracking market trends is crucial for running your business. This way you are making sure there are no surprises. Being prepared for any curve ball thrown your way is important for maintaining a successful business. By doing research repeatedly you are keeping a close eye on any new laws and regulation or changes in customer preferences that can affect your business. This way you are making sure you are not including outdated data in your information memorandum. Moreover, it reassures your buyers that you have done your homework, and are prepared for anything.

All in all, Market Research is a great asset to any information memorandum. It provides crucial and complete information to potential buyers. They will know just what is the value of your business in the market and how it is able to compete in it.

The Necessity and Benefits of Financial Modeling in a Business Plan

 

A business plan is an extremely useful document that can serve a few purposes: as a detailed step-by-step road map to follow, a document to make business decisions and track progress, and a tool for gaining investments and loans. But no matter its intent, its components are universal, one of them being your business’s finances. And what better way to present your business’s finances than through Financial Modeling, a process in which all of a business's earnings and expenses are put through a mathematical equation, designed to test multiple different scenarios and predict future financial outcomes?

There are a few reasons why financial models are a necessity for any business plan.

Making financial projections

Financial models are used to cast predictions on a business’s future performance, in other words making Financial Projections. Making models is a long number crunching process but to put it simply, models are made by making various assumptions, based on which numerous scenarios can be made to calculate multiple possible outcomes.

Having several scenarios (or financial projections) for your business is very beneficial, as it will show you the full spectrum of possibilities for your business. Making the most realistic, the best and the worst scenarios will show you what to expect, what you can aim for, but also what to be on the lookout for. Seeing exactly where your business might be headed can help you make decisions early on, that can prevent disasters, or at the very least, help you make a plan b.

Gaining funds for your business

Furthermore, financial projections are one of the most important aspects of your business plan, since many investors or lenders will be interested to see if your business will be able to make a profit in the future. Investors are looking for an ROI, and lenders will want to make sure you can repay your debt. So if your goal is to get investments or lonas, doing financial modeling for your Business Plan, you will greatly increase your chances for success.

Making decisions

One of the biggest benefits of financial modeling is just how great of a decision making tool it is:

• It is a great way for planning projects and deciding on their budgets. For a successful project, good planning is needed from the start. Financial modeling can provide a perfect overview of the funds needed for the project and whether they can fit in your budget. But, it can also predict the losses in the event that the project fails. Having all of the possibilities displayed can help you make the best possible decision.

• Models can show whether there is excessive spending in certain areas of the company or if others are lacking resources, showing ideal opportunities for better allocation of funds, and making your business operate more smoothly and efficiently.

To make a long story short, Financial Modeling is necessary for any decision making process in a business, but also for gaining funds and investments. It is not only necessary for making the most optimal business plan, but it is of great benefit when aiming for success.