2 Similarities and 2 Differences Between the Bank Business Plan and Information Memorandum

 

There are many times throughout the lifecycle of your business you will need to create specialized business documents. Two of the most popular and common are the Bank Business Plan and Information Memorandum. These are completely distinct documents, yet they are more similar than you may realize.

Understanding the differences and similarities can help round out your understanding of business documents. It may even give you some insight if you are considering writing your document yourself.

Similarities

Key Sections – When you first look at these documents you will see that they at first glance they really do look similar. This is because you will see several of the same sections. The sections that almost always appear in both include an Executive Summary, Industry Analysis, Sales & Marketing Plan, and the Financials to name a few.

It’s important to note that even though the same sections may appear in both documents, the contents and focus may be quite different. We’ll touch more on this in the next section.

Overall Layout – Not only are many of the sections the same but in general they will follow a similar order. Both documents will open with an Executive Summary and end with the Detailed Financials. The order of the other sections may be a bit more diverse. Though, this is true from business plan to business plan or Information Memorandum to information memorandum as well.

The reason for these variations themselves may vary. It can be anything from the business model to the intended audience and may have little to do with the type of document. The important point here, is that at first glance, these documents are quite similar.

Differences

The Purpose – What really sets a bank business plan and information memorandum apart are their intended purpose. In the case of a bank business plan, you are attempting to get someone to loan you money. In contrast the purpose of the information memorandum is to entice investors or buyers to buy a share of or outright purchase your entire business.

The Audience – Getting into more detail, you’re writing these documents to appeal to two very distinct audiences. On one hand, for the Bank Business Plan, your audience is a bank representative or loan officer. In this case, their biggest concern is whether or not you will be able to pay back your loan. They will primarily review your document from a stability and cash flow perspective.

Meanwhile, investors or buyers are mainly interested in growth potential to ensure a good return on investment. That is why, although you’ll have the same general information in the financial section, what you focus on and how it is presented will differ. Here, your audience is likely less risk-averse with the trade off of the chance for more return.

Professionals See This Clearly

It can be anxiety-inducing trying to decide what to do for your specific document. You need to consider so many factors. Given the importance a bank business plan or information memorandum can have on the overall success of your business, many people choose to hire Professional Business Plan Writers. Fees for the most experienced may feel steep but, it is an important investment in your future success, regardless of what the end goal is for you.

The Basics of Financial Modeling and Financial Projections in the Business Plan

 

It is well known that financials are one of the most important aspects of the Business Plan. If you don’t have a background in finance or experience creating or reviewing financials or writing business plans, you may have wondered how the financial projections in the business plan get created. The answer: Financial Modeling.

There is a Big Difference Between Financial Modeling and Financial Projections

What often makes financial modeling and financial projections in the business plan tricky to understand is that people often confuse the two. They are intimately connected but, also quite distinct. Understanding the basics begins with defining these two concepts.

Financial Projections – These are static and once set do not change. They are the combined representation of how you expect the finances to change in both the short and long term. Financial Projections in the business plan typically take the shape of the standard financial statements.

Financial Modeling – The projections are the set numbers but, the way at which you arrive at those numbers is financial modeling. Financial modeling is the process of creating a financial model that will allow you to input numbers to see their output. These are typically produced in a spreadsheet format – such as Excel or Google Docs – or special software.

How Financial Modeling Becomes the Financial Projections in the Business Plan

In the sense of the financial projections in the Business Plan Writer, financial modeling is the process of creating them.

There is more than one way to approach a financial model and we’ll give you one example. You will setup a spreadsheet to look the way you want your end report to look. You will then begin setting up formulas to add, subtract, and otherwise calculate the way they need to. Where and how you setup these formulas and structure will depend on the information you’re going to work with and, to some degree, personal preference.

You may setup underlying information in other sheets, or even other workbooks, and have the results link/pull from those sheets. You may use the grouping function to setup all your input areas on the same page as the outputs and then easily hide them.

Regardless how you set it up, this model is what will create the final financial projections for the business plan. The mechanism, the tool by which you setup your formulas and input your assumptions is financial modeling. The end result is the projections.

Creating Either One Will Require Some Expertise

Financial modeling requires at least basic spreadsheet skills. Financial modeling requires good math ability to know how to setup your formulas required. You will also need to have solid assumptions. The assumptions are what allow you to predict what will happen in the future. Those predictions will come from solid market research and industry knowledge.

It’s clear to see that there are a lot of skills which are needed to do financial modeling well. That is why many people choose to hire advisors to help them with financial modeling or Professional Business Plan Writers who will also tackle the financial projections in the business plan. The financials are really important so, whether an its advisor or writer, make sure someone helps to construct them in a purposeful and meaningful way.

Why to Choose Professional Business Plan Writers Who Do Market Research

Have you ever considered hiring Professional Business Plan Writers? There are so many options out there, it can be overwhelming. Anything you can do to help narrow the search will make your choice much easier. One characteristic to look out for is whether or not they offer market research. Here’s some compelling information on why this matters.

The One Circumstance Where Market Research Isn’t Needed

First, it’s important to note that Market Research is going to be needed for any business plan that you will ever create. Regardless of the reason for your business plan, if you don’t have market research you are overlooking major insights. The types of information you learn from market research helps shape most aspects of the plan.

So, is there ever an instance where it’s okay that professional business plan writers don’t do it? Yes. But, only when you conduct it yourself and provide sufficient information to them.

Why Some Professional Business Plan Writers Don’t Include Market Research

There tend to be three main reason that some writers choose not to offer market research.

1. They Don’t Know How – Not all professional Business Plan Writers know how to do market research. They understand the importance but, don’t want to oversell clients and offer them something that they know they can’t do well.

2. They Don’t Consider It Their Job – One of the types of business plan writers to be weary of are those that don’t see market research as their job at all. They view their role strictly as putting together a plan based on the information you provide them, market research included.

3. The Don’t Have the Capacity – There are other professional business plan writers that understand the importance of market research and know how to do it but, they don’t have the capacity. Doing proper market research takes time and money. Some writers, especially solo practitioners, simply aren’t able to do it and still make the margins they need for their business.

Choosing professional business plan writers who don’t offer Market Research may work for you. But, you should understand why they don’t and also be aware of the advantages choosing one that does can have.

The Best Advantages of Professional Business Plan Writers

Take the professional business plan writers at Joorney Business Plans, for example. They include basic market research with every single business plan. Even if the client provides it, they will still do their own to ensure that what they find matches the information provided. Also, they will closely examine the market research provided by clients to see if they gather any further insights.

This is one of the main advantages and reasons to use professional business plan writers. Their objective, informed eye helps them see things differently than a client might. They often help spot opportunities or see additional threats. These insights help prepare and present the business in the best way possible.

In this way, it starts to become evident that the most professional business plan writer can actually end up acting as consultants to an extent. Unlike some consultants, however, they have a tangible deliverable while providing valuable insight.

So, if you’re considering hiring Professional Business Plan Writers, one way to spot the best is to ask if they do market research. This should help you considerably narrow down your search. Unless you’re sure you can do a thorough job yourself, steer clear of those that don’t.

How to Determine Which Should Come First - The Pitch Deck or Business Plan?

 

The two most popular documents when presenting your business are the Pitch Deck and Business Plan. When it comes time to make your presentation, regardless the reason, it can sometimes be unclear which one you need first.

The unfortunate thing is that the most direct answer is that it depends. There really is no direct answer to that question. It will depend on a number of factors. Let’s examine some of them.

Like the Chicken & The Egg…What Comes First?

What comes first between these two documents is a little like the chicken and the egg question. In one instance, the pitch deck should be a summarized version of the business plan, so in theory the business plan should be done first.

On the other side, a pitch deck is like your Business Plan in its infancy. It can be the first attempt to organize the information about your business and write up something professionally. It can become the basis to the business plan.

This is why the question of which should come first in a general sense can be confusing. You’ll need to look at your specific situation to figure it out.

The Factors That Will Help You Decide

Armed with the full understanding that it is the particular circumstances that will decide, we can now dive into the specifics. These are the main things to think about when trying to decide.

Your Timeline & Budget – The first things to ask yourself is how much time you have and if you are able to consider having someone else write the business plan and/or pitch deck. Writing a business plan on your own can take a lot of time but paying professional document writers can cost a lot of money.

For example, if you have a limited budget and limited time, you might want to put together a pitch deck first. With unlimited time and budget, all options are really at your disposal.

Your Purpose – Are you trying to get someone to pay attention to your idea? Or are you trying to convince a partner to invest in and work for the business? In the first instance, you’d probably want a Pitch Deck first. In the latter, you’d probably want a more detailed business plan.

Your Audience – Tying directly into purpose is your audience. How much time do they have to review your plan? How interested might they be at the beginning? Do you need to get their attention first or are they likely to want a lot of details right off the bat?

When appealing to investors, a pitch deck is usually better for them. Meanwhile, loan officers from banks should probably see a full business plan. The type of audience is a key indication.

Specific Requirements – In some cases, this won’t be a question at all because whoever you are applying to or planning to send information to will tell you exactly what they want. It may not even be a traditional pitch deck or business plan. It may be a hybrid based on their specific requirements.

When All Else Fails, Ask – If you are really questioning what document to prepare, ask. Ask an advisor or your audience. Advisors can help you decide or your audience will tell you exactly what they want to see. It might feel unprofessional but, there is a very good chance that the investor, loan officer, etc. will appreciate you asking and presenting information the way they want to see it.

It’s Less About What Comes First and More About What’s Needed

There is no correct answer of which should come first because it will always depend. Considering the factors above will help you determine what you need. Through that exercise, you will determine what to produce and whether or not you will be the one to produce it. Don’t be afraid to consult advisors to help you decide and plan your business or Professional Business Plan Writers to help you put your documents together.

The Important Role of Financial Modeling in the Information Memorandum

When it comes to creating business documents, such as business plans or an information memorandum, Financial Modeling is key. In most cases, financial modeling is utilized by parties on both sides of the document, the one presenting it and the one reading it.

An information memorandum is only as strong as its parts. Two of the primary parts that create the foundation of the document are the market research and the financial modeling. When these parts are not tended to properly, they severely limit the effectiveness, cohesiveness, and believability of a plan.

It should be starting to become apparent just how important financial modeling can be. Below, we dig in deeper to understand the two of the main ways they contribute to the overall the Information Memorandum. As a seller, some of these are within your control, while others are not.

Financial Projections

One of the most obvious ways that financial modeling applies to the information memorandum is creating financial projections. The same it true for business plans or any other place financial projections are created and used.

Most people don’t even realize they are doing financial modeling when they create them, simply because they don’t call it that. But, it’s pretty difficult to determine your projections without it. Typically, you will put down your historic actuals and use a percentage of growth expectation or other type of assumption.

You apply this in the spreadsheet via a formula that calculates the next month or years numbers. This is an extremely basic example but, that is financial modeling. You will then typically go through those numbers and again adjust for any reasonable assumption.

When it comes to the information memorandum, the Financial Projections are key. They let potential buyers know where your business has been and where it is likely going. This will give valuable financial insight that will also feed into the next main use of financial modeling, the valuation.

Business Valuation

A valuation is the process by which you – and likely your potential buyer – will calculate the current market value of the business you have for sale. Valuations, in terms of financial modeling, are usually far more complex.

When you prepare your information memorandum, you are also going to be thinking about the price you would like to receive for your business. You are most likely going to base this off of your valuation. However, there are several methods of financial modeling that can be applied. There are also several assumptions that can change the figures as well.

This is where things get interesting. As part of the buyer’s due diligence, they will conduct their own valuation. This is partially how they will determine what price to offer for the business. If they take the same approach and have the same assumptions, their Financial Modeling will likely lead to about the same value. In that case, great! Chances are you will come to a deal.

This is not always what happens though. Often, the numbers will be significantly different. This is completely natural. After all, your objectives are different. You will want to use a method that will help you receive top dollar for the business, while the buyer will want to purchase it for as little as possible.

Don’t Overlook the Financial Modeling

It should be much clearer now just how important financial modeling is to the Information Memorandum and business sale process. The above examples are very simplistic and there are often other factors that go into the price a business will fetch when up for sale. But, at the heart of it will always be financial modeling.

How Adequate Market Research Can Make or Break Your Bank Business Plan

 

Have you ever tried to complete a puzzle without knowing what the final picture is supposed to look like? In business planning, market research is one of the ways you are able to view the full picture of the business puzzle. It is for this reason that Market Research can have a significant impact on your business plan, especially a bank business plan.

When creating a bank business plan, the most important thing to keep in mind is your audience. A bank loan officer’s primary objective is to determine if you are going to be able to pay back your loan. Your market research will help them make this determination in a variety of ways.

Market Research Shows You Are Prepared

One thing that allows great business plans to stand out from good business plans is your market research. Market research is arguably one of the most difficult parts of the business plan to complete.

When you have thorough market research, with information from trusted and reliable sources, it shows you have truly done your due diligence. By association, this will help to legitimize and validate the rest of the Bank Business Plan as well.

Market Research Creates Cohesion in Your Business Plan

Reflecting back on the opening paragraph here, market research is what helps paint the picture for the entire bank business plan. It helps shape the potential for the full plan. It also helps pinpoint the micro aspects.

When your market research is done thoroughly, it helps inform all aspects of the business plan. It will – or at least should – be mentioned in nearly every section of the plan whether directly or indirectly. It becomes an underpinning aspect of your plan that helps tie all the decisions you make together.

Determining the size of the total market and reviewing your competitors give you a sense of your overall market potential. It allows you to pinpoint your niche markets. It helps you plan for how many people you will need to hire. It informs if you hire them locally or outsources. It tells you how much expenses are likely to cost. The list goes on.

Validates Your Financial Assumptions

Last but certainly not least is the impact of market research on the financials. The Financial Projections are undoubtedly one of the most important aspects to the loan officer. This is where they get the chance to determine if you are likely to have the cash flow to meet your loan repayment terms.

Your market research will give them an indication if your financial assumptions are reasonable and achievable. This then gives validity to the rest of the numbers. While other factors like your personal credit or prior business success will weigh in heavily, good market research can help tip the decision in your favor.

There are few parts of the business planning process that are as vital as the Market Research. If you’re unsure about how to conduct this research, don’t be afraid to look to professionals for assistance. Knowing the impact it can have, it is well worth the investment.

 

Creating a Pitch Deck? Don’t Reinvent the Financial Projections from Your Business Plan!

Are you creating a pitch deck? Have you already created your full business plan? If so, you’re already well ahead of the game! If you’re creating a Pitch Deck it’s likely to approach investors. One of the most important aspects to them will be the financials. The good news is, you won’t have to reinvent the financial projections from your business plan to suit the pitch deck.

You Should Always Have Consistency in the Numbers

It’s possible when you first put together the Financial Projections Business Plan it may be for a different reason than approaching an investor. So, you may be inclined to present something different when putting together your pitch deck.

This may be warranted but, you first need to ask yourself if there is reason to change them. When first putting together the financial projections for the business plan, what was the purpose? Internal planning? To apply for a bank loan or a commercial lease?

There are instances when you may be bullish and sometimes when you may be more conservative. That is often the nature of projections. But, they should all be in the same general ballpark unless something has significantly changed. Potential investors will be able to identify unsubstantiated financial projections presented in your pitch deck pretty quickly. It’s imperative that you keep the numbers consistent whether for internal planning or pursuing investment.

The Art is In How You Consolidate the Financial Projections from your Business Plan

Now, when you are ready to consolidate your financials for your pitch deck you need to keep your audience in mind. Ask yourself what the investors are going to care most about. Beyond that, you also need to make sure you present them in a way that is legible and understandable on a slide.

As an incredibly basic example, you may sum up the income statement Financials Projections from your business plan like this for the pitch deck:

1. Revenue

2. Expenses

3. Net Profit

Now, based on your business, within each category you are going to break out key numbers. These are going to be the ones that make up the largest portion of each category. They also may be ones that are most important or questioned in your business. Maybe even the numbers most likely to be called into question so you can proactively address them.

Although this was an incredibly basic example, the key is to keep in mind what will be of most interest to the investor. You also need to ensure your numbers are realistic and supported. Combine that with making sure what you put on your slide is readable and you are well on your way to a winning pitch deck.

Taking Your Pitch Deck to Another Level

When it comes to your pitch deck, you usually only have one shot at making an impression on the chosen investors. Unless you happen to be a financial wizard, excellent business writer, and a graphic designer, you should consider hiring a professional to create your business plan. You need to make a strong impression from the cover to the last slide to stand a chance at gaining funding. Professional firms can cover all the bases and ensure you are in the best position to get your Pitch Deck noticed.

3 Reasons the Savviest Entrepreneurs Trust Professional Business Plan Writers

Do you need to write a business plan? Are you looking for information to guide you in writing your own? Have you considered hiring Professional Business Plan Writers instead?

Professional business plan writers bring a great deal of advantages to your business plan endeavors. Hiring someone to do something so close and personal to your business can be nerve wracking. Yet, the savviest entrepreneurs will often seek one out for several key reasons.

1. Save Time – As an entrepreneur or executive, you’re busy. Really busy. Even though you may be more than quilifed to write a great business plan, you still have to find the time to do it. This is where professional business plan writers come in.

So, saving time is super important but so is writing a great business plan. Therefore, saavy entrepreneurs will go right to proven professional Business Plan Writers. They don’t waste time trying to find the cheapest person, they just want to find the best. They also realize that a professionally produced business plan is an investment worth making.

2. Value Expertise – There seems to be a few common traits among really successful entrepreneurs. Among these traits is the ability to recognize you’re not the best person to do everything. There are some – sometimes many – things that are better done by others. Being able to identify when to trust someone more skilled or qualified is a vital asset.

One such case where entrepreneurs regularly reach out to other experts if when it is time to write a business plan. It doesn’t matter if it is for a bank loan or an immigration case. In either instance, trusting someone who writes business plans day in and day out and knows how to perfectly tailor a business plan to any audience, is a smart move.

3. Objective View – As an entrepreneur, it becomes difficult to “see the forest for the trees”. Often you are so caught up in the details and the overall planning, that you may miss obvious risks or opportunities. Professional Business Plan Writers are just what their name implies, business professionals.

They have seen the best of the best and the worst of the worst. They will quickly spot weak points or tremendous strengths in your plan. Most professional business plan writers do more than just write your plan. They also act as consultants and a second set of eyes on your entire plan, ultimately helping you strengthen your business overall.

When it comes to writing your own business plan, sure, you can do it. But, have you considered that maybe someone else can do it better? Not only do it better but, bring other incredible perks with writing your plan? This is why savvy entrepreneurs hire professional business plan writers.

These reasons above are a few of the main reasons why sophisticated entrepreneurs bring in outside experts. They are far from the only reason though. There is nothing wrong with writing your own Business Plan but, consider the advantages you could gain from hiring someone else. Turning over the writing of your business plan may feel difficult but, it could be one of the best things you ever do for your business.