How Financial Modeling is Utilized by Professional Business Plan Writers

Professional business plan writers use all the tools at their disposal to create exceptional, winning business plans for their clients. One such tool is financial models. Professional Business Plan Writers will utilize financial modeling for a number of reasons but, primarily to create and backup the financial projections.

Understanding Financial Models vs. Financial Projections

Financial models are often confused with financial projections. However, these two are fundamentally different. Projections are a static, snapshot of an expected future financial position. Financial Modeling may be used to produce Financial Projections but, they are not one in the same. Financial modeling is an adaptive process that involves creating an interactive financial model that can be changed for various scenarios based on various inputs. Financial modeling is used to not just settle on things like financial projections but, also to provide vital financial information to make daily business decisions.

Financial Modeling in Business Planning

Professional Business Plan writers are often involved in creating the financial projections that will accompany a business plan. They will take information from various data sources and plug them into financial models to help solidify or support the current projections.

Through the process of doing the research for a business plan and depending on the depth of that research, professional business plan writers will learn information that will change some of the assumptions in the business plan. Market research being one of these key drivers. Things that may result from market research that may be used in Financial Modeling include total market size, competitor market share, or anticipated selling price of products and services.

As the numbers used to generate the projections are verified or confirmed, they will be plugged into a financial model that will give a new picture of potential revenues and expenses. When these numbers come together, they help set final projections.

Use in Investor Business Plans

Financial modeling is especially useful in investor business plans. Investors often want to calculate the potential for their investment under different scenarios. Have a working financial model that you can used during an investor meeting can help speed up the process of coming to a decision. You and the potential investor are able to get a preliminary feel of where both of your comfort zones are for the amount of their investment and their potential share of the business, at the time you meet with them.

Often this step will be done by either or both parties after the meeting. It is unlikely investors will make a snap decision on the spot as they usually want to do their own due diligence but, being able to plug numbers in, together, can get you closer to a final offer and avoid some of the back and forth that usually takes place after an initial meeting.

If you plan to utilize professional Business Plan Writers for your business planning needs, make sure you understand what they offer. All businesses will require different level of assistance depending where they are in the business planning process. Some business plan writers merely write your plan based on your existing information. Others offer consulting, whether included in the plan or additional, to help guide the decisions you are making about your business. Others still will help you plan your business basically from scratch including conducting your Market Research and creating your financials.