Why Market Research is More Important in the Bank Business Plan for a New Business

Market research is the process of learning about the overall industry down to target markets. It includes identifying the real needs, desires, and preferences of your consumers. Or, in other words, making sure a customer exists for your product or service. Market Research is a key part of any business plan but, is especially important in a bank busines plan for a new business.

Generally speaking, bank business plans will place a greater emphasis on your financials than most other types of business plans. The reason for this is that a bank’s motivation is different than an investor or a potential partner. They are less concerned with the overall trajectory and potential of your business and more concerned with whether or not you will be able to make your monthly loan payment.

For this reason, the financials in the Bank Business Plan become the focus. Banks rely on prior actual performance, in conjunction with financial projections, to make their decision. However, if your business is yet to launch or is just starting out, you won’t have meaningful actual numbers. So, how do you lay a strong enough foundation that makes a bank or other lender feel confident your business will generate enough revenue to pay the bills? The answer: market research.

If your bank business plan doesn’t have actuals to rely on, it will be based almost solely on projections. Anyone can pull random numbers from the air to create financial projections but, they must be able to be substantiated. Market Research is the best way to convince the bank that the sales, and therefor cash flow, projections are realistic and likely to be achieved.

Market research validates that your assumptions can be achieved by providing important information like the total size of the market and that there is room in the market (in relation to competitors) for your business. It should also show that there is a real appetite from real consumers. This may be demonstrated by early adopters, or feedback from focus groups or surveys.

It’s important to note that a loan officer won’t just consider market research, financial projections, or any other aspect of the bank business plan when making their decision. It will also rely on your personal financials and credit. Again, this goes back to ensuring that the loan will be repaid. In many cases, you will be personally responsible for repaying the loan even if the business is unable to or it closes.

Given the importance that market research plays in the bank business plan, you may want to consider hiring a professional. Professional business plan writing firms tend to offer many related business planning services in addition to the writing plans themselves. This includes things like market research and Financial Modeling. Depending on your comfort level with finances, market research, or writing you may want to consider having them do your entire plan from start to finish.

However you prepare your plan, especially if you are a new business, make sure your market research is top notch. This will put your Bank Business Plan on the right track and increase your chances of approval.

How Financial Modeling and Financial Projections in a Business Plan are Different

 

People sometimes use the terms Financial Projections and financial modeling interchangeably. This is especially true when it comes to the business plan. However, there is actually a very distinct difference between financial modeling and financial projections in a business plan and in general.

Understanding the difference between financial projections and financial modeling begins by defining the two.

Financial projections – According to Entrepreneur the definition is “estimates of the future financial performance of a business.

Financial modeling – Investopedia defines Financial Modeling as “the process of creating a summary…in the form of a spreadsheet that can be used to calculate the impact of a future event or decision.”

Although the Investopedia definition doesn’t specifically apply to the business plan, the same principle applies.

The definition may not provide enough context to fully understand the difference. Here’s a basic example to illustrate:

You need to figure out your salary expenses for Year 1.

You know what positions you plan to have, you want them all to start on day 1, and you have an idea of what you’d like to pay each person.

You will lay all this information out into a spreadsheet, like Excel or Google Sheets. A common setup would list the names of the positions in column A and the salaries in column B. In the first empty row after the salaries, you will add a total. This total will become part of the projections in the business plan.

This is a very simplistic example, as financial modeling can be quite intricate, detailed, and complex. But, it helps to illustrate the difference so you begin to understand how financial modeling and Financial Projections Business Plan tie together but are distinct parts of the same equation.

In other words, your Financial Model, populated based on research or assumptions, produces an output. This output becomes (part of) your financial projections.

Financial modeling is not left out from the business plan, despite financial projections taking center stage. You may include a static view of a financial model in the appendix. Alternatively, you will give a brief overview about your research and assumptions the financial projection in your business plan but, you will not include views of the financial model.

Part of the reason people so often confuse financial modeling and financial projections, especially when it comes to business plans, is because they are so intimately connected. They both play an important role in creating and presenting your business in numerical terms and the numbers create the foundation of your business.

Creating financial models is not a skill in everyone’s wheelhouse. If this is the case for you, consider hiring a professional. You may be able to use financial modeling on your own or figure it out if you put in a great deal of time but, this may just be one of the tasks to outsource to an expert. Inaccurate financial modeling leads to bad financial projections for your Business Plan. If you get the model wrong, everything could be wrong so, it’s important to treat your financial modeling with the care it warrants. If you do that, you will have a business plan that not only impresses potential investors or loan officers but, actually steers your business in the right direction.

Why Professional Business Plan Writers are the Best People to Alleviate the Information Memorandum Bottleneck

When considering selling a business – whether you are the business owner, an M&A firm, or other professional handling the sale – creating the information memorandum stands between you and making a sale. Professional business plan writers are well equipped to turn around stunning, engaging Information Memorandums that help you sell your business for a great price quickly.

There are many reasons that professional business plan writers are so well-equipped to write the information memorandum.

Requires the same expertise – The information memorandum may go by a different name and serve a slightly different purpose but, it is essentially a business plan. It has many of the same components, tells the story of your business, showcases its potential, and is made with the purpose of eliciting an action/reaction from a particular type of person. Professional Business Plan Writers address all of these issues on a daily basis and have done it successfully time and time again. That expertise transfers effortlessly to the information memorandum.

Used to writing with audience in mind – When writing a business plan, professional business plan writers are always writing with audience in mind. They tailor certain elements of the plan and make sure they are emphasizing the most important points. This translates nicely to the information memorandum. It not just an overview of the business, it’s a sales pitch. Often times, you are appealing to investors, an audience that professional business plan writers will already know a great deal about. They know how much information is just enough and they know how to persuade them that this business is a great business opportunity for them.

Professional output – The main purpose of the information memorandum is, at the end of the day, to sell the business for the best price possible. This means making the strongest case possible. The first impression of a business for sale comes from the information memorandum and we all know first impressions matter! The best way to make a good impression is with an information memorandum written by professional Business Plan writers. Professional is in their name for a reason. Not only will the written content be compelling but, it will look good too and visual appeal can make a big difference.

They’re fast – Professional business plan writers, if solo, tend to have a network of other professional business plan writers. Many have created firms and now mentor and oversee other professional business plan writers. Why does this matter? Because it means they have the resources to turn around your information memorandum quickly, likely much quicker than handling it yourself.

There are many advantages to hiring professional Business Plan Writers. If you’re attempting to sell a business on your own, it’s one less thing to worry about, allows you to get ready to sell much quicker, and ensures you will have a buyer-ready, professional plan that makes a great first impression. As an M&A firm, you are freed up to focus on landing more clients and closing more deals. Either way, professional business plan writers will bring tremendous benefit to your sale(s).

5 Tips to Improve Any Business Plan or Pitch Deck

 

When you are creating a business plan or Pitch Deck for an outside audience, there are many things to consider. At the forefront, of course, is making sure you have a sound business idea. Whether you can convince an outside party such as a loan officer, potential investor, or sought-after partner of this will rely almost entirely on your business plan or pitch deck. It is important that these documents be the best representation of your business possible. The following tips will help you take your business document to the next level.

1. Visual Appeal Matters

It’s probably obvious that visuals matter in the pitch deck but, they are important in the business plan too. In your pitch deck, it’s all about keeping eyes on the presentation. In the business plan, visuals should be used more sparingly but, they should be used. They help illustrate important aspects such as key financials, product images, and you should always include company brand colors, style and logo throughout.

2. Be Creative Yet Predictable

You want to have visual appeal and for your Business Plan to be creative. After all, it should be a unique representation of your business concept. However, you shouldn’t reinvent the wheel. You will cover the same main aspects in roughly the same order as millions of other business plans or pitch decks. Let the business idea itself - paired with relevant visuals - be the creative and special features of your business plan. Beyond that, it should be fairly predictable.

3. Remember Your Purpose

People have a tendency to make business plans and pitch decks too long. Don’t get caught up in every detail. Rather, you should ask yourself what the intended audience of your pitch deck or business plan really wants and needs to know. Only elaborate where it is truly necessary and remember who you are presenting to and why.

4. Hire a Professional

Depending on your audience, you may want to have a professional handle creating your business plan and/or pitch deck. If you’re satisfied with your writing and organization skills, hire a graphic designer to finalize the pitch deck or business plan. If you’re great with design but need some help with the formal language of a business plan, hire a professional business plan writer. Professional Business Plan Writers, like Joorney, can handle the entire process for you if you prefer.

5. Make Additional Information Accessible

Few things kill the excitement over an idea faster than letting time elapse. You want to “strike while the iron is hot” so to speak. As that applies to your pitch deck or business plan, it means having as much information as possible at the ready and well organized so you can answer their questions while you are still in their presence or within hours of a meeting.

There is a lot that goes into a good Pitch Deck or business plan. After you build the foundation, you should polish it with the tips above. It can be the difference between your business plan achieving your desired goal and having to go back to the drawing board.

The Role of Market Research in the Information Memorandum

 

When planning to sell a business you will need to prepare an Information Memorandum. This document is similar to a business plan. It is meant to provide an overview of the business and insight into the company’s value in order to entice prospective buyers. A lot of what buyers are looking for is potential. The section that helps inform a great deal of this potential is the market overview, which should be based on current market research.

Market research is the process of identifying consumer needs and preferences. It also involves identifying the total size of the industry and the customer base. When it comes to your information memorandum, the more thorough the Market Research the more you’ll be able to justify other sections of the plan.

Thorough market research will allow you to:

 

Demonstrate market share

You can’t demonstrate your company’s place in the market without describing the overall market. If you’ve been busy working in your business, things around you may have changed without you realizing it. When you do market research, you get to see the real picture. You will also be able to identify what percent of the total market you are capturing. This is of particular interest to competitors who may buy your business simply to expand their market share.

Justify financial projections

In the financial section of the information memorandum, you will report historic information as well as projections for the future. When creating the projections, this should not only be based on your company’s financial trends but, overall market trends as well. It gives more validity to your numbers.

Show future potential.

As already mentioned, one of the most important parts of the business plan is the market overview. Even if your business is under-performing now, market research shows the future potential, making it far more appealing to buyers. Plenty of companies will purchase failing businesses if they know there is an upside. Market Research is where this can become evident.

Receive top dollar.

Ultimately, the reason it is so important to use market research in the information memorandum is because your goal is most likely to sell the business for as much money as possible. It doesn’t matter if your business is succeeding right now or not, if there is a reasonable potential for it to perform well you can receive top dollar. Business values are subjective and acquisition prices can come down to the highest bidder. The more people you have interested in your business, the higher the final offer.

Since information memorandums are so similar to business plans, business planning professionals can help you. They will be able to complete the information memorandum with buyers in mind. Business plan writers and other similar professionals are accustomed to creating documents that “sell” the business. Ideally, you’ll be using a mergers & acquisitions (M&A) firm to handle your business sale. Even they often outsource the creation of the information memorandum - or at the very least market research - to streamline their businesses. Regardless your situation, hiring professionals can ensure you get the market research and the Information Memorandum that best represents your business.

 

Why Your Approach to Financial Modeling Matters in the Bank Business Plan

 

When creating your Bank Business Plan, every section and aspect of your plan matters.  It all needs to tie together to create one cohesive and convincing representation of your business.  However, potential lenders are more interested in some sections than others.  One of the sections that will matter most is your financials.  You will (or should) use financial modeling to arrive at your financial projections.

How you approach your financial modeling will determine how your bank business plan is perceived by the loan officer or other bank officials.

What is Financial Modeling?

Understanding how Financial Modeling will impact your bank business plan begins with understanding financial models.  According to Corporate Finance Institute, “A financial model is the summary of a company’s performance, based on certain variables, that helps the business forecast future financial performance. In other words, it helps a company see the likely financial results of a decision in quantitative terms. The measurements and skills used to construct the model include knowledge of the company’s operations, accounting, corporate finance, and Excel spreadsheets.”

To summarize this definition, financial modeling is the process of plugging in variables to a spreadsheet to see how it will impact financial outcomes or, in the case of the bank business plan, financial projections.

Financial Modeling Approach

Since financial modeling is based on variables that you plug in, your approach comes down to how you determine what variables to use.  If your business has already been in existence, you will rely on actual financial results.  The more actual financial history you have, the more reliable – and provable – the assumptions (aka variables).  A couple months of financials is not enough to justify assumptions.  They should also be supported with Market Research and other types of research such as getting price quotes for certain supplies or services you will need to run your business.

Further, when it comes to your financial modeling, you need to be able to show your work to an extent.  It’s not enough to show the final financial projections, you must explain how you arrived at them.  Think back to math class, you couldn’t simply write down the answer, you had to show your work.  In the bank business plan, you show your work in an appendix.

Financial modeling often results in lengthy, complicated spreadsheets which are not suitable to be printed.  In most cases, you won’t show the entire model but, rather explain how you chose the key assumptions or variables that fed the model.

Here’s an example:

You estimate payroll costs for the first year at $250,000.  In your Financial Modeling work, you will have arrived at that by taking into account your hiring plan.  You’ll have listed each position and it’s expected salary for the year.  Then, you will research average benefit costs.  This may be a simple % based on industry standards or, if you have already started pricing out health plans, retirement plans, etc. it will be based on real figures.  You want to use whatever figures most accurately reflect reality, the more accurate and “real” the numbers and assumptions, the better.

In a bank Business Plan, your financial projections, and therefor financial modeling, will likely be scrutinized more closely than in any other type of business plan.  Why?  Because a loan officer’s main concern is whether or not you can repay the loan.  They need to know you have a realistic expectation for revenue and expenses and have a solid cash flow management plan.  Sound financial modeling and financial projections is the best way to demonstrate this.

9 Reasons to Use Professional Business Plan Writers for Your Pitch Deck

If you’re seeking an investment in your business, you will need to prepare a pitch deck to get potential investors to read your business plan.  You can prepare a pitch deck on your own but given the importance, unless you have experience, this may be better suited for a professional.  There are exclusive pitch deck writers out there but, there are many reasons why Professional Business Plan Writers are well suited to prepare your pitch deck.

1.       Keeping Audience in Mind – Professional business plan writers are accustomed to writing with appropriate structure, tone, and level of detail to appeal to the correct audience.

2.       Knowing What Matters to Investors – Beyond just writing for the right audience, professional business plan writers really understand investors since the majority of business plans are created to pursue investments or a bank loan.  This understanding of how investors think and what matters to them most translates well to preparing the Pitch Deck.

3.       Having a Sales Mentality – When it comes down to it, your pitch deck is a sales pitch.  You want investors to buy in to your business plan, usually in a big way, and that starts with getting them to read it.  Professional business plan writers know how to entice them both through the pitch deck and the business plan.

4.       Making it Look Good – Business plans aren’t just words.  You also have to worry about the look and feel.  The business plan isn’t heavy on visuals like the pitch deck may be, but professional business plan writers are accustomed to knowing how to use a good visual to enhance a specific point.

5.       Appropriate Level of Detail – The business plan may be in-depth but, professional Business Plan Writers know how to make it concise.  This same ability translates well into the even more condensed version of your business plan presented in the pitch deck.

6.       Complete Understanding of Your Business – If you utilize professional business plan writers to write your business plan, they will already have an intimate understanding of your business and your goals.  Perhaps more importantly, they will have gotten to know you a little bit.  This understanding allows them to make sure your passion and vision truly shines through.

7.       Business Expertise – All the experience professional Business Plan writers have means they have seen the best and worst of business concepts and plans.  They know what works and what doesn’t.  They will be able to make suggestions based on this experience that will help improve not only your business plan but your pitch deck as well.

8.       Support of a Team – There are independent professional business plan writers but, many work for a firm that allows them to tap into other professionals such as graphic designers and finance experts.  Even those that do work alone often know other types of professionals they will rely on for advice when needed.

9.       Exuding Professionalism – Investors see dozens or more pitch decks per week.  You need yours to stand out.  Professional Business Plan Writers create professional documents, and that includes the pitch deck.  This can give it an edge and get it noticed over the countless others that will come across investors’ desks.

A Brief Overview of 5 Types of Financial Projections in Your Business Plan

 

The Financial Projections Business Plan are arguably one of the most important aspects of the business planning process.  Businesses serve many purposes, but they all run on money.  Assets and expenses are essentially the gears of your business.  As such, it is imperative to understand how they work.  That is what creating financial projections for your business plan allow you to do.

Most of the financial projections, as well as other aspects of the business plan, will be presented with both short- and long-term goals.  Short-term projections account for the next year and will be broken down by month.  Long-term financial projections on the other hand, are typically for three or five years, broken down into year.

Sales Forecast

When coming up with a business idea and creating a business plan, your very first consideration is your product or services.  What is your business going to sell?  This question leads to determining how much you can – and need to - sell.  This becomes your sales forecast which is one of the first financial projections in your business plan.  As your company begins, this will be based off market research and assumptions.  After you have been in business, this will also be based on your actual performance.  It will also be impacted by your expense budget.

Expense Budget

Your expense budget helps in determining your sales forecast by informing you how much you need to sell.  The expense budget will be a detailed breakdown of how much it will cost you to run your business.  Expenses add up quickly and is that is why it is so important to get them down on paper so you can manage them.  It is only once you understand your expense budget and sales forecast that you can dig into the other financials of your business plan.

Income (Profit & Loss) Statement

Businesses like to understand their margins and other key business ratios to make informed decisions.  One of the financial projections the sales forecast and expense budget facilitate is the profit and loss (p&l) statement, also commonly referred to as the income statement.  This is one of the key financial statements of the business and how you will likely synthesize your actual financial performance on a monthly basis.  Creating this projection also creates the benchmarks for how your business should ultimately run.

Statement of Cash Flow

It is just as important to consider when you will generate revenue and incur expenses as it is to know how much you’re going to make or spend.  This allows you to manage your cash appropriately.  The way you will understand this is through creating the statement of cash flow.  Outside of the Business Plan, in day-to-day operations, you may even have a daily cash flow projection.  It is arguably one of the more useful financial projections in the business plan, though they all play their part and provide different insights.

Balance Sheet

Last by not least of the financial projections in your business plan is the balance sheet.  The balance sheet is like the report card for your business.  It allows you to understand where your assets and liabilities are, which gives you all sorts of vital information such as how liquid your business is.  It is a brief overview of your total financial health.

You may find other financial projections in a business plan but, these are the main ones.  They all give a different view and understanding of how your business is performing.  Combined, they give you a complete picture.

 

How Financial Modeling should be applied to Your Bank Business Plan

 

The practice and exercise of Financial Modeling will play a large role in any business plan, especially a bank business plan.  Every business plan should be written with the audience in mind.  When it comes to the bank business plan, the audience will be more critical of your financial modeling techniques and ensuring that your numbers are reasonable than in other types of business plans.  Due to this high scrutiny, there are a few things to keep in mind about how your financial modeling will tie into the final bank business plan.

Have Financial Modeling Output Linked to Final Financial Projections

First and foremost, your financial modeling should be linked via the spreadsheet or other software program features to your financial projections that will be put into the Bank Business Plan.  Your financial modeling may get expansive and relatively complicated as your bank business plan evolves and you begin to plug in all the information you will need.  It is important to keep track of where all the numbers are flowing from so you can fully understand and double check your numbers.

Providing the Backup for Your Financial Projections

Proper linking is important for providing back up.  If your bank business plan is done well, it should raise questions.  A great deal of those questions tends to be around finances.  When creating the financial modeling for your bank Business Plan, it is going to be based on a lot of assumptions, especially if the business is brand new.  When you properly label and link your inputs, including making notes as to the assumptions, this will provide further detail that you will be able to quickly reference to answer any questions.

Include Key Financial Modeling Elements in the Appendices

Because so many of the assumptions behind your Financial Modeling will – or at least should - be written in your financial projections, the details behind it will be in the financial models themselves.  Some financial models are difficult to capture due to their size and expansiveness.  However, those that can be paired down, shown in a summary version, of where the entire financial model fits, should be considered for the appendices.  In the end, you likely won’t include everything but, there are certain pieces of information you will decide to include.

Financial Modeling Exercises Help Demonstrate Your Numbers are Reasonable

In a bank business plan, more than other types of business plans, they don’t want to know the best possible outcome, they want to know the reasonable, most probable, and conservative outcome.  They will also be more interested in the care with which you have approached your cash flow plan.  You will need to balance reinvesting in the business so it can grow, while also making sure you have enough available cash to cover your loan payment.

Regardless what type of business plan you are creating, financial modeling will play a huge part.  However, there is heightened scrutiny around your financials in a Bank Business Plan in many ways.  When numbers are uncertain and based off of assumptions, you need to put a loan officer’s mind at ease.  This all begins with effective financial modeling.

 

 

 

 

4 Ways to Enhance Your Information Memorandum or Business Plan

 

When it comes to drafting an Information Memorandum or business plan, it is important that you are putting your best foot forward.   There are troves of articles and guides that will give you step-by-step instructions on crafting a business plan.  In contrast, the tips presented below are things to keep in mind throughout the writing or your plan or for enhancing your business plan once it is written.

1.       Make it Relevant

The world is constantly changing, sometimes in rapid, drastic ways as we’ve seen with the global pandemic.  In order to show you have seriously considered all aspects of the business, including threats and opportunities, you should mention any current events instead of shying away from them.  Although they may be threats to your business, it is better to explain how they will be overcome instead of ignoring it, which will show a lack of due diligence.  Many businesses operate successfully in challenging environments when they are planned well.  Proactively addressing any “elephants in the room” will make for a far more convincing and trustworthy plan or business overview.

2.       Ensure it Flows

Throughout the information memorandum or Business Plan, you should be restating and reaffirming the same points.  Your market research backs up your products and services and financials.  The financials are informed by all aspects of the business plan or information memorandum.  Your staffing plan should make sense for your anticipated revenue and so on.  Most importantly, when you review your plan in its entirety, make sure there are no contradictions.

3.       Showcase the Value

Whether you are creating an information memorandum to sell your business or a business plan to secure investment in your business, it’s important to remember the purpose of your document is to showcase the value of your business.  This isn’t solely achieved through the financial projections.  Throughout the business plan or information memorandum, you should be pointing to the advantages and opportunities that exist for the potential buyer, investor, lender or other interested parties.

4.       Hire a Professional

Professional Business Plan Writers, or information memorandum writers (sometimes these may be the same professional as the business plan and information memorandum are so similar), are experts at crafting these documents and hitting all the points above.  In addition to their vast experience writing these documents, having an objective view can help you spot oversights or missed opportunities. 

Their insight will not only be invaluable but, they will write a completely customized plan that will definitely stand out from others who tried to write their plan on their own.  Furthermore, if you have a tight budget, you may choose to write the business plan or information memorandum yourself and then have it corrected and finalized by a professional.  Either way, this added professional touch can make a significant difference.

 

Regardless the intended purpose for creating your business plan or Information Memorandum, following the advice above will help strengthen your document.  That may mean getting the best possible price for the sale of your business or securing a more favorable loan or investment.  Whatever your end goal, a professional, cohesive document can make all the difference.

The Financial Projections from your Business Plan to Show in your Pitch Deck

 

The first step to getting investors for your business is crafting a stellar business plan. With your business plan complete you will move on to creating the pitch deck. The pitch deck will include an overview and summary of your entire plan, in an effort to entice potential investors to consider the full plan. Among the important aspects that will be covered is the financials. There will be far more detailed Financial Projections in your business plan than will be shown in the final pitch deck.

The detailed financials of your business plan will cover all the financial statements you would expect to use to run your daily business. This includes the income statement, the statement of cash flow, and the balance sheet. You will likely also have a break-even analysis.

The income statement is typically projected out 3-5 years, in yearly increments. The first year will be broken down by month. The statement of cashflow is likely to follow the same format. Unlike the other statements, which show movement from one period of time to another, the balance sheet shows a snapshot in time. This will also be projected in the financial projections of your business plan but, it is important to understand this distinction.

Unlike the detailed financial projections in your business plan, the financials you present in a Pitch Deck should be select and highly summarized. How do you know exactly what to include? The short answer is it will depend. If you have a particularly impressive aspect, you may want to present that. At a minimum, your pitch deck should include these two following sections.

Top Line Industry Snapshot

In order to justify and better understand the potential for the financial projections of your Business Plan, you will also look at industry financial data. You will likely go in detail about this in the business plan but, in the pitch deck you will include:

• Total industry revenue for the current or prior year

• Total industry segment revenue (if applicable) for the current or prior year

• Expected growth rate year over year

• Estimated total industry and/or segment revenue in 3 or 5 years

Condensed Income Statement

Despite having multiple financial projections in the business plan, the one that will be of most interest initially is the income statement. This will not be the fully detailed income statement. You will likely include an abbreviated version of Year 1, 2 and 3 OR Year 1, 3, and 5. You could show all five years but that tends to be a bit overwhelming, plus it doesn’t give as great an impact of demonstrating growth.

The numbers that should be shown is:

• Total Revenue

• Costs of Goods Sold

• Gross Profit (Revenue less Cost of Goods)

• Gross Margin (expressed as a %)

• Operating Expenses

• EBIT (stands for: earnings before interest and tax)

• EBIT margin (expressed as a %)

If there are any highly relevant or impressive numbers, you should show them as well but, they need to be warranted. If they don’t fit within the pitch book summary, you can also note them in a footnote.

There are other parts of your Financial Projections from your business plan you may want to include in the pitch deck but, keep it limited. It is important to remember that the purpose of the pitch deck is to give a brief overview of your business in order to draw attention to your entire business plan. Start with the basics presented above and only add additional financial information if it truly makes sense and adds to the Pitch Deck.

 

6 Reasons Professional Business Plan Writers Focus on Market Research

Professional business plan writers will sometimes spend more time on market research than any other aspect of preparing your business plan. From a professional viewpoint, market research is one of the most important aspects of business planning process. It is a substantial component to creating a solid foundation in your plan. There are many specific reasons why Professional Business Plan Writers view market research this way:

1. Market research supports the product/service – Professional business plan writers know that the best way to get feedback on your products or services is to go directly to target customers. One of the most important parts of market research is the insight you gain from surveying, interviewing, and observing your customers. The greatest idea in the world will go nowhere if people won’t buy it so hearing from your customers that they would intend to purchase your product is an important step to a successful business.

2. Market research identifies competitors – It’s not enough to know that clients like your products or services, you need be sure they would favor yours over the competition. This starts with identifying all your main competitors and that is what Market Research will do. Once identified, professional business plan writers can then seek to understand how your products or services will stack up against others.

3. Market research reveals threats and opportunities – When studying your competitors, that is when many of your greatest threats and opportunities will become evident. The entire process of market research allows professional business plan writers to continue to identify them. They could also be related to regulations in the industry or area. It’s impossible to describe everything that will be revealed but, it’s indisputable that market research serves this function.

4. Market research validates your location – If you are planning to have a business that will be based on local business only (or in large part), location will be everything. Even beyond that, market research about your location will help you define costs and evaluate other infrastructure needs that your business will need. Professional business plan writers rely on market research to either confirm that where you want to locate is a good idea or open you up to considering other places.

5. Market research informs the financials – Arguably one of the most important parts of your Business Plan is the financials. This is where professional business plan writers begin to quantify things based on market research. The market research aids in determining the prices you will set. By choosing a location, that will contribute to your total revenue potential as well as cost expectations. Even if you aren’t local, you will have identified the total market and your target market share. All of this and more contribute to your financials in the end.

6. Market research ties together the entire plan – Ultimately, it’s what you learn in the market research process that professional Business Plan Writers see as the glue that holds the business plan together. It confirms your beliefs, it tests them and, will most likely make you reconsider some things that will make your plan better. Whether explicitly stated or not, market research becomes a key part of the foundation of your overall plan.

4 Types of Market Research and How it Ties into Financial Modeling

 

Market research is the process of gather information about your potential and target customers. Meanwhile, financial modeling is the process(es)/tool(s) you will use to determine your financial projections. Unlike projections, Financial Modeling is not static and is meant to be interactive to reveal financial impacts of various different scenarios. Market research often informs financial modeling.

There are four types of market research and each kind may tie into financial modeling in different ways.

1. Primary

Information you directly collect yourself is considered primary Market Research. It includes methods like surveys, polls, interviews, and even conducting focus groups. It is particularly useful because you are getting direct information from your target customer group.

This particular type of market research may not tie directly into your financial modeling as it may not relate to numbers. However, it may inform things like the price you set for your product or how frequently customers are likely to purchase your product/service.

2. Secondary

In contrast to primary research, secondary market research is that which is obtained indirectly. It is data collected from information that already exists. This includes data and insights that are typically presented as articles, white papers, and infographics.

While primary market research tends to focus on customer preferences, this type of market research is typically used to gather information about the overall market. Because of this, it is likely that you will conduct secondary market research prior to primary.

Secondary market research tends to be more number centric and therefor ties into financial modeling quite well. It reveals the total potential for selling your product or service. It may factor into making decisions about how to price your product, as well as how much business you can reasonably expect. Both will factor in highly to your Financial Modeling.

3. Qualitative

Simply, qualitative information deals with data that cannot be measured or meaningfully expressed in numbers. Primary or secondary market research can be qualitative or quantitative. This is not a distinct type of data but, rather another way to classify the data you are collecting.

When it comes to qualitative market research it may or may not play a role in your financial modeling. It’s important to note that even if a type of market research doesn’t contribute to financials, it will inform other vital aspects of your business plan. It will help you refine your products or services and start to truly understand what your target market wants. This will still contribute significantly to supporting and validating your overall business plan, even if it doesn’t directly relate to financial modeling.

4. Quantitative

As oppose to qualitative market research, quantitative market research is anything that can be measured and expressed in numbers. Again, this may be from primary or secondary market research sources.

Quantitative Market Research always deals with measurable data. Not surprisingly, that means it has a strong tie to financial modeling. It will inform many of the numbers that will go into your financial models. This includes things that have already been mentioned like setting your price and estimating the total potential sales. It can also include things like costs specific to your market or industry.

When Selling a Business Should You Have a Pitch Deck, Information Memorandum, of Both?

Selling a business requires much more preparation than most people realize. Part of this preparation includes creating the marketing and disclosure documents that will be used to help attract buyers or investors and facilitate a sale. Two of these documents are the information memorandum and the Pitch Deck. They both play an important role in presenting your business.

Information Memorandum

The Information Memorandum is a document that outlines the details of the business for sale. It is laid out similarly to a business plan. It includes a history of the business, a description of the current products/services, marketing and operation plans, market/industry overview, information of current key staff, and – of course – financial history and Financial Projections. It will also include information on what type of sale or investment you are seeking and what the benefits are to the potential buyer/investor.

In most cases, potential buyers or investors will not review the information memorandum until they have expressed interest in the business and signed a non-disclosure agreement (NDA). There are multiple ways a potential buyer or investor may have come to be aware of your business. One of those ways is a pitch deck.

Pitch Deck

In terms of mergers and acquisitions, the pitch deck is often referred to as a teaser. The teaser, or pitch deck, is a visual summary of the information memorandum and is treated like an investment summary. It is used to spark interest in reviewing further details about the business, which is what is covered more in depth in the information memorandum. It is a much shorter document, that may be as small as a one-sheet, or a collection of several top-line slides.

The Argument for Both

You can’t know for certain what your potential buyers are going to want to see until you have identified them. Only once they are identified can you start to consider which approach will be best. In many cases, in order to be prepared for any potential buyer that may come along, you should have both. The teaser can get them to agree to look at the full information memorandum and seriously consider the business.

The Overlap

It may seem like if you aren’t certain you will need a pitch deck or teaser, maybe you should hold off. However, it is actually quite efficient to design both at the same time though you certainly don’t have to. Perhaps you are comfortable creating the information memorandum or you are utilizing an M&A advisory firm that takes care of that. You may then choose to have a Professional Pitch Deck writer take care of the teaser after the fact. Either way, the information memorandum will inform the pitch deck. Once that’s done, you can do the other at any point.

Ultimately, it’s going to come down to what you think will work for your particular audience. If you have a serious buyer who is already interested, you can likely skip the pitch deck. You will always need the Information Memorandum, especially as it is required in many states along with other types of disclosures. But, in the end, these documents work best together so, you should consider having both at the ready.