What Professional Business Plan Writers Want You to Know About Market Research

 

A good business plan starts with a solid foundation.  Professional Business Plan Writers will tell you exactly what should make up that foundation.  Among other things, that includes thorough market research.  The one thing professionals know is that this research can make or break your business plan.  Whether they get your business plan writing business or not, there is a few things they want you to know.

Market research informs more than the market analysis section of the business plan – Common knowledge tends to associate market research with the market and industry analysis section of the business plan.  While this is true, it’s not the only section that market research will inform.  Throughout your plan you should support decisions and points with relevant research.

This is perhaps most evident in the financials.  Everything from the price you charge for your product or service, to the price of rent/lease for your office, to the likely volume you can expect is informed or answer by Market Research.  Professional business plan writers understand the importance of analyzing this information and apply it throughout the plan.

Market research is not one size fits all – Each business will have its own specific questions it needs to ask.  There is also a lot of advice out there on market research.  Professional business plan writers have seen it all and know that some forms of research work better than others depending on the business.

If you consider hiring a firm to do your research, or you are currently researching how to do your own research, you need to know what you need to know.  You need to be clear on exactly what information is most important for you to know.

Market research is best done by experts – It may be clear by now that market research can be more involved than a lot of people initially realize.  Each business is different.  Each market research methodology is different.  It can be time consuming and costly, especially if you don’t know how to begin or set things up or ask the right questions from the beginning.

All these reasons and more are why professional Business Plan Writers recommend market research be done by a professional.  It is simply too important for the entire business plan and the success of your business in general to be done wrong or not be done at all.

Professional market researchers will be able to guide you through the process.  They will start at the beginning by understanding your current business.  Then, they will help identify the most important question you should be asking.  Next, they will devise a custom-tailored approach to the research.  Once the research is complete, they will compile the research, analyze it, and provide you with a meaningful market research report.

This is the best way to approach Market Research but, not every “professional” will approach it the same way.  Make sure they are including all the steps above.  If not, make sure you know how to cover what they don’t or considering hiring someone who will own the full process and dive deep into the insights you need.

Financial Modeling vs. Financial Projections in the Business Plan – Which is More Important?

 

When it comes to planning a business, the financial projections in the business plan are arguably one of the most important parts.  You may or may not be aware that financial modeling is involved too.  These two aspects of the business plan – Financial Modeling and financial projections – are clearly important but, is one more important than the other?

Defining Financial Models & Financial Projections

Before we get too far ahead of ourselves, make sure you fully understand what these two terms are and how they are different.

·         Financial Modeling – Think of financial modeling as a verb.  It is the action required to model out nearly any financial scenario you’d want to understand.  A financial model is a dynamic document, typically created in a spreadsheet format, that allows you to put in various inputs to see how they will impact potential outputs. 

·         Financial Projections – Think of financial projections as a noun.  Once set, projections do not change.  They are one of the possible end outputs of financial modeling.  They are meant to demonstrate your expectations for where a company will end up given reasonable assumptions.

Financial Modeling Feeds Financial Projections in the Business Plan

Now that the distinction between the two is clear, we can move on to how they relate.

When creating Financial Projections Business Plan, most people’s first step will be to sit down and plan out their financial modeling.  As already mentioned, this will usually be done in spreadsheet software.  The model, where you will put in assumptions and the numerical representation of your plan, is the vehicle that allows you to arrive at your financial projections.

Can Financial Projections Exist on Their Own?

While financial modeling and financial projections are different, they are ultimately two sides of the same coin.

It’s conceivable that you could pull random numbers together to create financial projections but, that wouldn’t make much sense.  Answering the title question, “which is more important?” when it comes to financial models vs. financial projections in the business plan, the answer is a resounding BOTH.

Financial modeling serves no purpose without an output to work towards, in this case the financial projections.  In terms of Financial Projections, the only way you can apply all of the assumptions in a coherent way is through financial modeling.

Do You Need to Be a Financial Expert?

Financial modeling doesn’t require you to be a finance guru.  In terms of using them to create financial projections for the business plan, all you really need to understanding is two things:

1.       Basic Financial Projections – The biggest challenge in creating financial models is understanding the end output you are planning to produce.  Everything basically works backwards from there.  So, be clear on what the core financial reporting documents are that are to be projected.

2.       Using Spreadsheet Software – Beyond understanding the projections that you are trying to produce, the only other thing you to have for financial modeling is intermediate spreadsheet skills.

If you have these two main skills, you are well on your way to creating excellent financial projections for the business plan.  But, what do you do if this doesn’t apply to you?  The good news is you can get someone else to do them for you!

Professional business plan writers often have someone on their team who can tackle the financial sections.  Searching solely for a financial modeling expert can be far more difficult than going directly to someone who deals with business plans. 

If you are planning on hiring someone to do the overall writing, you may want to check with them if the financials projections for the business plan are also something they can do.  Having their own team do it will help ensure a seamless business plan.

Looking for a company that can write your business plan and do all the Financial Modeling to arrive at your projections?  Check out Joorney Business Plans!

3 Things You May Not Know About Bank Business Plans or Information Memorandums

 

There are so many things to think about when creating your Bank Business Plan or information memorandum.  There is a lot of common knowledge around these two documents.  There is also a lot of misconceptions and disinformation.  There may also be some things about them you didn’t know at all.

 

Before we get ahead of ourselves, let’s make sure we cover the basics.  In case you’re new to the world of business planning or business sales, make sure know what a bank business plan or Information Memorandum is and the purpose these documents serve.

Bank business plan – In general, a business plan is a structured outline that covers all the basic foundations of what your business is, what it will sell, and how it will achieve its goals.  It includes key sections like an overview of the broad market, identification of your core or target clients, how you will reach them, who will run the business, and the financials that surround all of this.  The bank business plan is a business plan specifically meant obtain a bank loan or other bank funding.

Information memorandum – Often referred to as a confidential information memorandum (CIM), this document is like a business plan but specifically meant to attract buyers for a business that is for sale.  It is confidential because the information is private and proprietary and is not meant to be shared or disclosed.

So, here’s what you might not know about these documents:

1.      They are rarely read in order – Having a cohesive story throughout your bank business plan or confidential Information Memorandum is important.  But, that doesn’t mean your audience is going to read it in order.  Most readers, regardless if they are loan officers, a potential acquirer, or another type of audience, will skip around to what is most important to them.

For this reason, you need to make sure that your plan is cohesive but, also that each section can stand on its own.  If you’ve been reading business plan samples, you may notice key things are repeated several times in various sections when relevant.  That’s a sure sign it has been written by a professional who understands this.

2.      Big words make you sound less intelligent – When you sit down to write your bank business plan or information memorandum, you may be keen to use big words to come across more intelligent.  However, many studies suggest that this actually has the opposite impact.  It’s okay to use business jargon, especially if you’re dealing with a bank or potential acquirer.  However, you should leave the SATs words out.

3.      It unleashes your potential – This aspect may be more true of the information memorandum but, applies to the bank business plan as well.  Your CIM can directly impact the quality of the acquirers you attract, ultimately increasing the amount you may be offered for your business.  In the case of the Bank Business Plan, it can make or break whether your bank loan is approved.

Sometimes, the most important aspect of a situation is knowing what you don’t know.  This information will hopefully provide you with insight to avoid common mistakes and allow you to approach your business document with confidence.

 

7 Emerging Trends in Business Plans & Pitch Decks

It seems like everything in life has changed with the onset and continuation of the pandemic.  Outside of regular routines, businesses are near the top of this list.  This means that the documents that support them, such as a business plan or Pitch Deck, are evolving as well.  Here are a few trends that have emerged or accelerated as a result of events of the past year.

1.       No Offices – One thing the pandemic has shown the world is that a great majority of work that we thought had to be done in offices, doesn’t.  A resulting trending in business plans or pitch decks is the office-less business.  They are run through things like registered agents and P.O boxes to give them a mailing address.

2.       Online Businesses – Besides businesses being fully remote, more businesses are based online.  They are selling services or products that can be sourced and delivered through an online supply chain.  In many cases, they are based on technology and the transfer of information, rather than the transfer of physical goods.

3.       Global Businesses – The thing about businesses that aren’t tethered to a physical office and are based online, is that they world becomes their pool for employee candidates, suppliers, and customers alike.   This has increased the rate of creation for truly global businesses.  Finding partners and opening additional virtual businesses around the globe has never been so attainable.  The business plans and pitch decks are popping up to prove it.

4.       Complex Business Models – These office-less, online, global businesses are coming in all shapes and sizes.  They also tend to be more innovative, and tech based.  The days of the most common business plan or pitch deck being something in retail or restaurants are long gone.  The new businesses of today are far more complex.

5.       Written in Plain English – There are some audiences that still expect and require super technical language filled with business jargon.  This may include a Bank Business Plan or more traditional pitch deck audience.  Overwhelming though, it seems investors and others have learned that if someone can’t explain something in simple language, they may not understand it well enough themselves.

6.       Reliance on Technology – It probably comes as no surprise that predominantly online businesses are relying on technology.  Tech is required for them to run.  Tech is also being relied upon in a big way in recent examples of a pitch deck or business plan.  In order to be as efficient and resilient as possible, technology has become an imperative.

7.       Business with Purpose – The pandemic did just force us all online and increase our reliance on technology.  It also ripped open our awareness of our interconnectedness.  Beyond that, several events relating to social unrest were also emerging at the same time.  This has led to an acceleration of a more purpose-driven consumer base.  More and more, businesses are operating with a purpose-with-profits.

Businesses are led by humans the therefor are deeply impacted by “human” events.  The pandemic is glaring evidence of this.  As humans evolved to a new normal, their businesses adapted alongside them.  In turn, the business plan and Pitch Deck have changed as well.

Understanding the Need for Financial Projections in the Business Plan & Pitch Deck

Are you preparing to create documents to present your business to others? If so, you’ll need to create financial projections for the business plan, Pitch Deck, or any other type of presentation document. This can be one of the most important aspects of your presentations.

There are a number of reasons this information is so important to your audience. It doesn’t matter who your audience is, either. The focus may differ but, they are important regardless. Here is some basic information you need to know.

They Quantify the Full Plan

If your document is written well, it will tell a story. The Financial Projections Business Plan or pitch deck do the same thing. They will tell your business’s story numerically. This is where you will quantify everything you’ve explained throughout the rest of the document.

As an example, the price you’ve decided to charge for your product combined with your expected sales volume will become your revenue. Your market research and marketing plan will have helped decide what these numbers will be.

Show Where Your Company Has Been

When you present the Financial Projections in the business plan or pitch deck, there are a number of things that your audience will want to know. If your business has already been in operation, they will expect to see historic figures. Although “actuals” are not projections, they will inform the projections.

Historic actuals are one of the many things that will help justify the financial projections. Your projections can’t simply be a guess. They need to be supported by other information. The actual performance or committed future sales, will help to support the numbers you include.

Show Where Your Company is Going

The main role of financial projections in the Business Plan or pitch deck is to show where your company is going. That’s what they are all about, projecting the future. The main purpose of presenting your documents to someone is to paint a picture of the business’s future.

Think about it, it works in every instance. If you’re applying for a bank business plan, trying to convince an investor to invest, trying to bring on a partner, or trying to secure a lease, it’s all about the future. It answers many questions about the future. Will the business succeed? How much return might I get (as an investor)? What is the market likely to do? How will the company adapt to anticipated – an unexpected – changes?

Financial Projections: Arguably the Most Important Aspect

It should be clear now just how important and informative the financial projections are in the business plan, Pitch Deck, or any other type of business document. They aren’t separate from the rest of the plan. Rather, they bring the entire plan together in numerical form.

Business, at the end of the day, always comes back to the numbers. No matter your audience, they are going to have questions around the numbers in one aspect or another. Make sure to give this section the attention it is due. If you do that, and make sure that they tie in the rest of your plan, you will be one step closer to success.

3 Ways Financial Modeling Enhances the Information Memorandum

 

If you frequently prepare Confidential Information Memorandums (CIMS), then you are well aware of the role of financial modeling in their creation. If you are new to information memorandums and business deals, you may be less aware. If you fall into the latter group, read on. This article is for you!

First, it is important to fully understand what financial modeling is. A financial model is an interactive document, usually created in a spreadsheet like Excel or Google Sheets, or through specialized financial modeling software. They are created to allow you to view the potential output of various different inputs.

Financial Modeling allows you to determine many of the key figures that will go into the information memorandum. Most importantly, the following three:

1. Financial Projections – One of the ways that potential acquirers or investors will evaluate your business is through your financial projections. They want to have an understanding of where the business is going. They want to see the historic results applied to what is known about the future to understand what could happen.

Financial modeling plays a key role in arriving at financial projections. You will likely have a model of base numbers or variables – also known as assumptions – that will play into the financial projections in the information memorandum. The inputs will then flow through to models of each of the standard financials (income statement, balance sheet, statement of cash flow) and others as appropriate.

2. Valuing the Company – Another important metric in the Information Memorandum, or something that a potential buyer may want to see, is a valuation. Though it is likely that they may want to do their own financial modeling to calculate this based on their preferred method. In this case, the modeling may be done by them or you, or possibly both. Either way, it still plays an important role in the document.

3. Investment Opportunities – If you’re not looking to sell outright and are owning looking for a partial investment, you need to show the potential return. It is through financial modeling that you will determine this. Usually, you will need to explore multiple scenarios to determine how you wish to structure this or what you want to offer.

Much like valuing the company, both you and the potential investor may run these numbers themselves. An investor may wish to negotiate. Their suggestions will most likely be based on their own financial modeling as well.

This is only a sampling of how financial modeling ties into the information memorandum. In nearly every type of business document, from business plans to pitch decks, to CIMs, financial modeling is at its core. It will be used in a variety of ways to create some of the most important aspects of the plan.

It doesn’t matter who your audience is, they will be interested in your financials in some way. It is business, after all. In order to have strong and believable financials, you must start with proper Financial Modeling. This will give you the foundation for a strong information memorandum overall.

Surprising Important Aspects of the Bank Business Plan, According to Professional Business Plan Writers

Professional business plan writers know what works for a Bank Business Plan. They have seen the plans that work, and they know the ones that don’t. After seeing so many of them, they have identified the most important aspects of the winners. Now, they are sharing that information with you.

A Good Story

Your bank Business Plan must be solid. It has to make sense and be well researched. Loan officers are still humans though and, like any other human, they like a good story. They are also more likely to make a positive decision when they feel emotionally connected to something.

Business plans that could go either way gain an advantage by telling a cohesive story. Professional business plan writers have seen the difference in approval rates between bank business plans that do and those that do not. It helps keep the loan officer interested in your plan and creates excitement about the direction you’re going.

Research & Connection

Your bank business plan will be filled with assumptions. Business is just as much an art as a science. So, it is important that the “art” side is based as much in reality as possible. Often, a big difference Professional Business Plan Writers see, is that approved plans have thorough research.

This research shouldn’t just appear in the obvious sections like market overview and financials. It should be evident that every aspect of your plan was researched and thought through. Relying on your research will also allow you to make obvious connections through the plans.

This interconnection is how you weave the various sections of the business plan together cohesively. This is the foundation that gives your bank business plan more validity and allows you to tell a full story.

Personal Reassurance

Businesses fail all the time. It’s a statistical fact. So, in most cases, a bank loan will need to be personally secured. This aspect shouldn’t just be part of the paperwork you fill out but, should also be included in the bank business plan itself.

If your business fails, you will still be personally liable to repay the bank loan. The way to reassure a wary loan officer is to make it apparent you are committed and taking ownership for this responsibility. That could include putting up personal collateral or offering a cosigner, especially if you know your personal credit isn’t the best.

Bringing it All Together

These insights from professional Business Plan Writers may come as a surprise. They are the same types of advice that you will usually find. Ultimately, they remind us that even business bank loan officers are human. They have a job to do, and that’s to loan money that is likely to be repaid. Minimizing risk for them is key.

That doesn’t negate the need to entertain them and get them emotionally invested. Adding these elements to an already solid plan will keep the loan officer interested and believing in the full plan. This will put you well on your way to a successful application.

7 Types of Market Research That Can Inform Your Business Plan

Market research is an imperative when it comes to your business plan. It may be possible you only think about market research as a single-faceted approach. The truth is Market Research covers a lot of ground and can inform your business plan in a number of ways.

1. Market Overview – This is the form of market research that people most often think of when they think about market research and the business plan. The market overview requires gaining knowledge about the overall industry. It then focuses down to specific target markets.

2. Competitive Analysis – Part of truly understanding your industry and market is knowing your place in it. That is the role of competitive analysis in the business plan. The name implies it all. This aspect of market research focuses on learning who your competitors are. It’s also about understanding exactly what they sell, how they sell it, and what your potential clients think about it.

3. Location Analysis – You’ve likely heard the expression, “location, location, location!” Location matters, especially for a retail business or one that relies on foot traffic or local business. Analyzing the location as part of your market research also matters for less obvious businesses.

Where you place your office, or a warehouse can have significant impacts. This is because of regulations and tax differences between states and localities. Make sure to understand your location, no matter what type of busines you have.

4. Price Analysis & Product Comparison – A very important part of your Business Plan will be the financials. Two primary factors drive your financials, the revenue and expenses. Revenue depends on what you choose to charge for your product or service. Not only does market research help you determine how much you may be able to sell, it helps you know how to price your product.

Part of the price analysis also comes from the product comparison. Competitor pricing can be one of the determining factors in your pricing decision, though certainly not the only one. In order to price it in a way the market will tolerate, you must know how it compares to what else is out there.

5. Value Chain Analysis – A recurring theme here is knowing your place in the market, and that is one facet of the value chain analysis. This requires not only understanding your own place in a value chain but, also the distribution chain required to get your products or raw materials to you. This will help complete various components of the business plans.

6. Potential List of Clients – While market overview will give you a top-level overview of the market, it is important to clearly identify potential clients. This is especially true if you sell business-to-business. Not only will this help you know who to go after for sales but, you can survey a sample of them to better understand these clients for several reasons.

7. Data Analysis – Inherent in all the types of Market Research listed above is data analysis. Simply digging up information is not enough. You must also analyze the data to draw insights from it so that it can inform the business plan.

3 Tips for the Financial Projections in your Business Plan or Information Memorandum

 

Whether you are creating Financial Projections for your business plan, an information memorandum, a pitch deck, or any other business document these helpful tips will still apply:

1. Substantiate Your Assumptions

When creating the financial projections for your business plan or information memorandum, you will use a set of assumptions. The projections are all about predicting the future, so they are going to be a guess but, they must be an educated guess.

You should make it known throughout the Information Memorandum or business plan where your assumptions came from. In part, this will be explained in writing in other sections of the respective document, and the financial section. 

An example of what this may read something like this, “We are projecting 10% growth based on future product release and historical year on year growth”. Don’t just guess. Put the effort into your financial projections and make it evident how you arrived at them. 

2. Present for Your Audience

The financial projections must be accurate and realistic to be believable. Great financial projections will also be created with their audience in mind. Certain types of audiences will be more interested in some components of your projections than others and you need to be able to identify this or trust professionals that are skilled at this.

In either case, ensuring the financial projections are prepared and presented with your audience in mind will be very beneficial. It reduces the number of questions that are asked, possibly speeding up the review process. It will also ensure that your audience remains interested, as they are looking at financial information that is relevant to them and will help them quickly make the decision they seek to make. 

3. Follow Standard Formats – 

While you need to present the financial projections with your audience and mind you also shouldn’t reinvent the wheel. All three core financial statements (income statement, cash flow statement, and balance sheet), as well as other types of analysis (example: break even analysis) follow a similar format. You need to present this information in a predictable layout to avoid confusion.

If you decide to deviate from this, you risk confusion. Chances are, busy business brokers, investors, loan officers and other common audiences, are not going to take the time to figure out overly complicated financial projections. Not only do they not have time but, it will make you look unprofessional.

At the end of the day, financial projections in the business, information memorandum and other documents are the same. They are all about using the best information at your disposal to realistically predict the future. The more believable these predictions, the more professional they will appear.

Although your financial projections should be realistic and follow a standard order and format, you can still customize the presentation for the audience. Make sure you are highlighting the information that matters the most to your audience and you will be well on your way to achieving your goals, whatever they may be.

Don’t be afraid to hire a professional to prepare your Financial Projections, your business plan, or your information memorandum. It can give extra validity to your business and your numbers.