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

 

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

Not using all available information sources

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

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

Overlooking the competition

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

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

Thinking the market does not change

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 The market is constantly changing and your Bank Business Plan will not benefit from outdated research.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

Cherry picking information

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

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

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

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

Presenting an unreadable paper

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

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

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

 

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

• It helps you estimate your potential sales volume

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

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

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

• It helps you find your place in the industry

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

• It helps you stay on top of the market trends

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

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

How to do Financial Modeling for an Information Memorandum: 5 Simple Steps

An information memorandum is necessary to prepare for mergers and acquisitions. It provides a summary of your business to potential buyers, so naturally it is important to write it properly. Keep in mind that your business’s biggest selling point will be it’s past financial performance, but the buyers will want to know about the potential for future success as well. And here is where Financial Modeling comes into play.

What are financial models?

Financial modeling is a process of making an overview of a company's finances in the form of a spreadsheet. Using a mathematical equation a financial model is made in which any variable can be changed to create different scenarios and outcomes. They are usually used for making business decisions, managing a company, setting budgets and organising projects. But they are also a necessary component in mergers and acquisitions, which is why they are included in Information Memorandums.

Financial modeling process can be lengthy, but it can be broken down into a few steps.

• Collect your financial information

Financial modeling starts by collecting all of your financial history, your sales records, costs and expenses. The further back you go the better. But for the most optimal results, collecting at least 3 years of your financial history will be enough for making the most accurate financial models.

• Study your numbers

After gathering every financial piece of information you have, it is time to analyze it. Try spotting common trends and reocccurancess. Study growth rates and turnovers. Learn everything you can form your financial ratios. This will later be useful when trying to make financial projections for your business.

• Make assumptions

Making assumptions about your business’s future performance is done through drawing conclusions from what you previously learned from your analysis, or by doing market research. Understanding market trends can greatly help with determining the future performance of your business. Since you will make assumptions based upon what you already know, it is beneficial to collect as much information as possible, and Market Research can be of great help.

• Make financial projections

After making your assumptions, proceed to build upon them by creating financial projections based on a three statement model (income statement, balance sheet and cash flow). This may be the most important part of your information memorandum since it will show the buyers your business may have a promising financial future.

• Run assessments and analyses

The next step is to conduct additional tests and analysis, because Financial Modeling can not be complete without them:

• Discounted cash flow analysis (DCF model) - calculate the value of your company

• Sensitivity analysis - make different scenarios by changing the variables in the model to test different outcomes. This means adjusting the assumptions you made and seeing how the changes to the assumptions will impact the final result.

• Stress testing - test the model by assuming the worst case scenario. This way you will be able to see if your business will be able to withstand extreme circumstances.

Since financial modeling is such an integral part of an Information Memorandum it is important to do it right. Going carefully through each step will assure your model will be convincing and accurate.

3 Key Elements of Financial Projections for a Bank Loan Business Plan

 

Bank loan business plans center around your business’s finances. They are all about proving to lenders that you have been running a successful business in the past, but more importantly, they will want to know if you can keep it up. Enter Financial Projections, a window into the future of your business’s finances. They can predict success or failure, therefore it is important to try and make the most accurate forecasts, especially if you are trying to get a loan. To break them down, there are three key components of financial projections.

• Pro forma income statement

Pro forma income statements predict your future revenue, and they are the biggest portion of your financial projection. They include all of your operating expenses, taxes and show your earnings for a specific time period. So in order to project income statements you will need to make assumptions about potential sales. For that, you will need to look back into your history in sales and/or conduct market research. This part of the financial forecast is extremely important in your Bank Business Plan, because it shows your business will be able to generate enough income to repay your debt.

• Cash flow

Cash flows represent money movement, more precisely the amount of money going in and out of your business for a certain period of time. They consist of two parts:

• Cash inflow (revenue) - all the money accumulated through sales
• Cash outflow (cash disbursements) - all of the expenses your business has

Cash inflow and outflow are later compared to calculate money surplus or deficit. Cash flows are necessary for financial forecasting and bank loan business plans because they can predict future money movement in your company and can be used to calculate your credit risk. They show the lenders just how responsible you will be with your business’s finances and if you will have enough money on hand to repay your loan.

• Pro forma balance sheet

Pro forma balance sheets present a total estimate of your business’s net worth including assets, liability and equity. In order to make a good balance sheet you will need to gather data, the further back the better. It is generally recommended to collect at least two years of your business’s financial history. A pro forma balance sheet predicts what business will own and owe, which determines if you are a suitable candidate for a loan. Because banks do not tend to take big risks, having something to offer as collateral helps minimize that risk and show that there is a safety net in case your business fails or you otherwise default on your loan. It is important to note that a pro forma balance sheet has to match your income statement and cash flow, any inconsistencies will deter loan officers from approving your loan.

In the end keep in mind...

Pro forma income statements, balance sheets and cash flow are all necessary parts of financial projections. But because they are all based on assumptions it would be beneficial to make several different projections. Collecting all of your business’s financial data helps, but a good financial forecast will take into account other factors as well, such as market trends and currents, or unexpected costs and losses. That is why usually more than one forecast is included in bank loan business plans, ranging from the most optimistic to the most pessimistic scenarios.

Bank Business Plans are written with a purpose of getting a loan approved. Therefore, they rely heavily on the most accurate and detailed financial projections. If made properly, they can show your business will produce a steady revenue, and you'll be able to repay your debt.

The Difference Between an Information Memorandum and a Pitch Deck

 

Have you ever been to a situation where you are not certain if you need an information memorandum or a pitch deck for your business?

Information Memorandum and a Pitch Deck can be valuable when presenting your business if you know when to use what type of document.

Professional business plan writers and other experts know how busy and engaged you are with growing and establishing your company. If you’re not sure which document you need, this will help you determine that quickly!

Here is the difference between an information memorandum and a Pitch Deck.

Information Memorandum

When you provide a comprehensive overview of your business to potential investors or buyers, you will use a confidential information memorandum, also known as an offering memorandum. It overlooks the past, current, and expected future performance of your company.

You may use this document to:

- raise funds

- remove assets

- sell the entire business

Like you, investors and potential acquirers are busy people. These documents will make their decision-making easier and quicker.

An information memorandum is important because you can completely provide the summary and most important details of the main aspects of your business and future transactions.

Information Memorandum includes the following sections:

Overview and Key Investment Highlights – the information of your company’s major milestones

Company Information – description of the major milestones, management team, ownership, organizational structure, and the expertise of employees

Products and Services – describes what products or/and services your company offers

Market and Competition – the industry and market overview, current and expected sales, and target audience

Proposed transaction – A summary of the transactions you propose from potential investors.

Pitch Deck

A pitch deck, also known as a startup pitch deck or slide deck, is a visually based brief slide presentation of your business plan. Having a Pitch Deck can be a vital tool when raising funds for your business. These documents can open a door and secure you the next meeting with an investor. The optimal number of slides of a pitch deck is between 10 and 20.

A pitch deck is often presented face to face to potential investors but can also be sent as a way to get a foot in the door.

Here are a few tips on how to present your pitch deck.

Tell a story

Even busy people like investors like to hear an engaging short story about your business.

Be concise

Today, we are overwhelmed with information, and people lose interest. Stay on the same page with your audience (in this case investors).

One slide = one idea

Sometimes, less is more.

Good First Impression

The first two minutes or first few slides are the most important. A good first impression sets the tone of the whole presentation.

Show Your Team

Present the people that are working with you and their value to the company.

Do your Homework

Know your numbers by heart. Financials are the section that interests the investors the most. Defend your numbers, and you will increase your chance of approving the proposed fund.

While the Information Memorandum has a more detailed approach to presenting a business, the pitch deck is all about the visual effect. Both documents represent the same information, the difference is the depth of that information.

If you have trouble composing any of these documents, seek out Professional Business Plan Writers that can assist you.

6 Types of Financial Modeling in a Bank Loan Business Plan

 

Financial modeling to a bank loan business plan is like milk to cookies. When applying for a bank loan you need a bank loan business plan, and your document needs to contain financial projections which can only be created through Financial Modeling. It is a crucial section of any business plan.

Financial modeling is like a built-in spreadsheet tool created in MS Excel, that forecasts a future financial performance of a business.

There are more than a few types of financial modeling.

Here are 6 types of financial modeling for a Bank Business Plan or other business plans and documents you may need.

Three – Statement Model

This is the fundamental financial model. As the name says for itself, there are 3 linked statements with formulas in MS Excel. These three statements are:

- Income statement

- Balance sheet

- Cash flow

To link these three statements, you need to have strong accounting, finance, and Excel expertise.

Discounted Cash Flow (DCF) Model

This model builds on the previous three statements (income statement, balance sheet, and cash flow). Discounted cash flow model estimates the value of your business. DCF model takes cash flows from these three statements, and with the XNPV function in MS Excel, discounts them back to today at the company’s Weighted Average Cost of Capital.

Merger Model (M&A)

M&A is a more advanced financial model. This model represents the final result of combining two companies into one through an M&A process. A new consolidated entity forms under a mutual agreement between these two companies.

The merger model occurs when one side proposes to offer cash or shares to merge with the other company.

We often use this model in investment banking and corporate development.

Initial Public (IPO) Model

We use this model in investment banking and corporate development to value a private business before going public. The initial public model compares equivalent company analysis and assumpts how much investors will pay for a specific company.

Leveraged Buyout (LBO) Model

This model evaluates a leveraged buyout transaction. LBO is the purchase of a company that is funded by using a great amount of debt. With the cash flow of the company, the company can pay down that debt. The exit cash flow of the company, exit multiple, and the paid-off amount determines the total return achieved by the investors in an LBO. This is an advanced form of financial modeling that requires strong financial skills.

Sum of the Parts Model

You build this type of model by taking different DCF models and linking them together. Any further components of the business that are not complementary for a DCF analysis will be added to that value of the business. For example, if you add segment A, segment B, and segment C of the business, you will get the total company value. Before the modeling, you need to determine the business segment and the valuation for each segment.

We still can not predict the future, but financial modeling can help predict the future of your business. These 6 types of financial modeling can help you compose a successful Bank Business Plan for your needs. If done well, your chance of bank loan approval will increase.

Not all of these models may be needed specifically for your bank loan business plan but, understanding them and being able to include them when appropriate will enhance any document.

But, if you are not familiar with accounting, finance, and Excel, business experts at companies like Joorney can help create perfect Financial Modeling for your company’s needs.

4 Questions to Answer when doing Market Research for a Bank Loan Business Plan

It is well known that Market Research is vital for any business. By doing market research, you will understand who your customers and competitors are, as well as the demand for the product/service you provide. A lack of funds when establishing a business may slow up your entrepreneur journey. One of the best ways to increase your business efficiency is to apply for a bank loan by composing a successful business plan.

Here are the 4 questions you need to know the answers to when doing market research for a Bank Business Plan.

What is the purpose of the research?

When doing any type of research for a bank loan business plan, first, you need to establish your purpose. What is the reason behind the market research? Is it to analyze past mistakes, problems, or successes? Or to establish who your customers are? Or, do you have other reasons?

Before even starting your research, determine the purpose.

What is the outlook of your industry?

Now, you have established the purpose of your Market Research, what is next? Summarize the state of your industry.

Determine the direction your industry is heading, and be sure to have reliable data from trusted sources to support your conclusion.

Your bank loan is more likely to be approved if you do your homework on the industry of your business.

Who are your target customers?

After acknowledging the outlook of your industry, focus on your customers.

This is an important segment of market research for a bank loan Business Plan. Not every person can be your customer. To establish who your potential customers are, you may consider the following criteria:

• Age
• Gender
• Location
• Education
• Income
• Occupation
• Family status

Implying these metrics, you will be able to define who your target customer is.

A common approach is to create a buyer persona. This is a fictional character that represents your ideal customer. Your business can have multiple buyer personas.

Creating our buyer persona

Let us say that we own a business plan writing company – like Joorney, for example, and that we need to establish our buyer persona based on the data that we have.

• Here is an example:
• Occupation: Immigration Lawyer
• Education: Harvard University
• Age: 45
• Income: $120,000
• Location: United States of America
• Gender: Male
• Family status: Married

Who is Your Competition?

The final segment of doing successful market research is to study your competition. It is crucial to understand who your competition is. Research what your competitors offer to the customers, and who is their target audience. It will not do you harm if you spy on your competition, because this is the smartest way to learn the strengths and weaknesses of your competition.

Doing thorough market research for your business will help you compose a successful business plan, and having a successful business plan means that your chance of bank loan approval will increase. Simple as that!

If doing deep market research seems difficult, our Professional Business Plan Writers at Joorney will be happy to help.

3 Reasons Why Market Research is Important for an Information Memorandum

What is an Information Memorandum, and why do you need it? An Information memorandum, also known as an offering or sales memorandum, is a document primarily made for potential acquirers or investors. It describes what type of transactions you would like to have with an investor – how much of your business you are selling and what the audience will gain for their investment.

An information memorandum is similar to a business plan but more transactional. This document is necessary if you want to invite investments or outright sell your business. Market Research represents the activity of gathering information about the customers using your product or service.

One way to gather information is by directly contacting the customer through interviews, online surveys, and questionnaires. Market research is also crucial when it comes to your competitors. You need to know who your competition is and how well they operate their business.

Here are 3 reasons why market research is important for an information memorandum.

Information

Market research is important for gaining information about your competitors and industry which can affect your future Financial Projections. If you are a business owner, you probably consider yourself a hands-on type of person. You may also think that you are well aware of the business industry your company is in, and that you know the market.

Unfortunately, in most businesses, that is not the case. No matter how much a business owner knows about the market, it may not be enough. When it comes to any market, it changes and evolves all the time. Novelties and new trends can appear in any industry daily, and you have to keep track of the changes.

Business Strategies

When you gather information from your Market Research, it is logical that you will use it in a certain way. This information will help you make vital decisions for your business.

For example, if you see that the price of a product or service skyrocketed, you will likely also raise the price of that specific product or service. Or, for instance, if market research shows that customers are interested in a new product that your company does not have, what will you do? Market research will help you create new or change old business strategies. That way, when reading your information memorandum, investors could see a financial potential with your company.

Challenges

Like any other business, even yours has some challenges. Market research will help identify your challenges and weaknesses and detect the source of them. When you manage to notice and acknowledge the challenges of your company, you can address them.

Turning your weaknesses into opportunities and strengths is a selling point to the investors. Your business will look more attractive if you present how you overcame challenges and made the best outcome out of the situation. Conducting market research will secure you with potential investors in no time.

Composing a perfect information memorandum requires professional assistance. The right team will gladly help with creating an impeccable Information Memorandum for your company.

The Main Sections of the Investor Business Plan and Pitch Deck

A Pitch Deck and investor business plan are both needed in order to raise capital for your business. They may not be the same, but they both include and prioritize information that would grab investor’s attention. That is why they have a few sections in common despite having different formats.

Introduction (executive summary)

When writing any document or presentation you need to start with a good introduction. It needs to be interesting and above all engaging, while summarizing the document’s content. In a pitch deck, an introduction is included on the first slide, but in an investor Business Plan it is usually a separate section, the executive summary.

Investors usually have piles of business offers on their desks or in their inbox, so they value when your documents get straight to the point. This means that introductions should not drag on and should include the most relevant information first, in order to make your documents stand out from the rest.

Financial projections

Investors are looking for many things in a business, but one above all others, is an attractive ROI. They avoid taking uncalculated risks, so showing them that your business is on a path to success is necessary to secure fundings for your business. Presenting your financial projections is the best way to prove your potential financial success and pique their curiosity. Financial projections are estimates of future revenue. Proving that your business is able to generate enough revenue to be worth investors' time and money is something to definitely include in your business plan or pitch deck.

Market research and marketing strategy

In order to run a successful business you need to know if there is a market for your product or service. This is something that investors will definitely want to know before deciding to invest in your business.

That is why market research is a necessary component in investor business plans and pitch decks. Market research is a direct way of knowing customers' opinions of the products or services your business is offering. Having direct feedback from the consumers helps provide pivotal information that can be used in determining your business’s future success.

Additionally, knowing how to reach potential consumers is another part of the equation for success. Sales can suffer without a good marketing strategy. So, investors will want to know if your business will be able to reach its target market and increase its brand awareness. Overall, Market Research and marketing strategies prove to investors that your business has potential to achieve its goals and secure them a ROI.

Management team

Showing that you have the best person(s) for the job is a necessity if you are looking to gain investments. Investors will want to know if your team has the right skills and experience to market and sell your products and deliver the results you promised. This information should not be exclusive just to the Investor Business Plan, but include it in your pitch deck too.

When looking to secure findings for your business it is crucial to prepare the right documents, and knowing what to include in them is half the battle. Both your investor business plan and Pitch Deck need to include information that will convince investors your business is a high profit and low risk investment. That is why they share similar components like an attention grabbing opening, finances, your team description, market research and strategy.

Why Professional Business Plan Writers Refuse to Write Business Plans Without Conducting Market Research

Business plans are not compulsory, but they are surely useful when trying to get a loan or for helping you organize and structure your business operations. So what is exactly necessary for writing an outstanding business plan? Well, Professional Business Plan Writers can tell you that the first and most basic thing for writing a good business plan is collecting all the necessary data and information. It is usually gathered from your company's history in sales, its previous costs and expenses, but a lot of useful information can be obtained through market research.

There is just not much to go on without an in-depth knowledge about the market. That is why experts do not write business plans without understanding the market’s needs first. Some of them will expect their clients to do their own research, but others will conduct it themselves as part of their fee.

Either way, there is a good reason why professional business plan writers need Market Research before they begin to write business plans. It helps answer a few burning questions, such as:

Is there a market for your product?

It is ill-advised to go blindly into business without testing the market first. Doing market research beforehand will greatly help reduce risk for failure. For a company to succeed there needs to be a demand in the market for its products and services. Research conducted through surveys and product testing will determine the likelihood of your product’s success with the potential customers. Professional Business Plan Writers cannot write business plans without knowing a company's target audience and its size.

Is the price right?

It is not enough to know if the customers are willing to buy your product, but also how much they are willing to pay for it. Knowing the value of your product on the market will help you set the appropriate price for it. Overpricing can result in lower sales. Additionally, having a good understanding of the market means knowing your competition as well. Properly pricing your products will help you better compete on the market.

Additionally, Market Research can help professional business plan writers compose documents, like financial projections for example. Determining the price can be used to calculate future revenue and predict business’s profit margin.

Is there a need for improvement?

Keeping an eye on the most current market shifts and adjusting your products and pricing accordingly is crucial for writing successful business plans. Because the market is fast changing, you will need to keep up with those changes in order to stay in business. Regular market research is necessary for the most up-to-date information. professional business plan writers need to know the latest market changes to be able to modify and adapt your business plan to the latest industry trends. This helps the experts write a business plan that will help you outperform your competitors.

Without market research there is just not enough data for writing a well-structured and successful business plan. This is why many Professional Business Plan Writers hesitate to write business plans without researching the market first. By doing so, they can collect all the crucial data that is fundamental for most sections included in a business plan.

4 Tips for the Financial Projections in the Business Plan or Information Memorandum

Financial Projections Business Plan have an extremely important function in business’s operations, but also serve as an integral part in information memorandums too. They present a series of assumptions that translate into a potential financial outcome of a business. Therefore, it is crucial for them to be as accurate as possible.

Financial projection’s objective

Financial projections in a business plan hold a key role in helping business’s make decisions affecting its internal or external organisation, plan projects or to gain investments or funding.

Whether it is for a big corporation or a startup, a business plan is an essential document that serves many purposes. It represents a backbone and a clear path for business to follow, but it can also be extremely beneficial for obtaining fundings or loans. Financial projections in a business plan can show that a business has potential for growth and that it has prospects for steady (or increased) revenue.

Financial projections are intended not only for business plans but for Information Memorandums too. Their purpose is to be presented in a merger or acquisition process. These documents are meant to give potential buyers a general overview of a company and its odds for success. So here is exactly where financial projections come in handy.

What to take into account

Any component of a business plan or information memorandum should be well thought through and detailed, one of them being financial projections or forecasts. Financial projections in a business plan predict a company’s future revenue by taking into account business’s financial history, market research and other factors that can contribute or affect a business' profit margin.

That is why having the most accurate and precise Financial Projections Business Plan is one of the things that can make or break a good business plan or information memorandum.

• Gather your numbers and leave no stone unturned

Financial projections in a business plan heavily rely on assumptions, therefore taking all the busines’s aspects into consideration and including them in the forecast will help increase their accuracy. Anything from the company's financial history, all of the previous costs and expenses should be included.

• Be your own worst critic

It might sound like a nightmare, but second guessing and double checking everything proves to be beneficial for making the most accurate predictions. Making sure that every financial aspect and variable is included and exact, and all the assumptions accounted for, helps to create more precise financial forecasts.

• Do not cherry-pick numbers

While the goal of a business plan and Information Memorandum may be to impress its audience, it is important to to include the bad numbers along with the good. Using company's downfalls as a variable in composing financial projections prevents misleading investors or buyers, and consequently helps to avoid any potential lawsuits or fines further down the line.

• Market research is your friend

Market research is a great tool when composing business plans and especially financial projections. They are a great source of information that can help predict a product's success with the customers and therefore future revenue as well.

Financial projections can show potential investors or buyers what is in store for the business in question.

So, taking necessary steps to make the most accurate financial projections is a sure way for writing a successful business plan or information memorandum. If in doubt, consult a Professional Business Plan Writer who can help you craft these!

4 Reasons You Need Professional Business Plan Writers for Your Business Plan

Being an entrepreneur is very exciting, but yet, it can be stressful too. Today, many open-minded people try their luck by switching their 9 to 5 jobs to entrepreneurial life. Whether starting a fast-food chain business or a local fruit shop, you need a business plan. A business plan is a written document that describes how a business defines its objectives and achieves goals. A person writing a business plan should use their creativity, experience, and a little bit of imagination if they want the business plan to be effective. And who could write a better business plan than Professional Business Plan Writers?

Here are 4 main reasons to use one:

Speed

A professional business plan writer knows that it is essential to compose business plans quickly. Time is money, and no business owner is that rich to waste his precious time on composing a business plan. The professional Business Plan Writers are dedicated to their work and not distracted by any day-to-day obligations that a business owner may have. This way, by delegating a business plan to a professional writer, you will have more time and energy for different business operations.

Professionalism

Let’s make it clear – anybody can write words on a piece of paper, sentences, paragraphs, add numbers and create a business plan. But it takes a great set of skills, experience, and research to compose a successful Business Plan. Professional business plan writers have background knowledge in market research, finance, marketing strategy, and sales techniques. It is hard to find the right people with the right skills and experience to write a successful business plan. Search no more, because Joorney (www.joorney.com) experts will make a professional business plan in no time.

Meticulousness

An expert has an eye for detail and will never miss out on anything. They will make sure that your business plan contains the most important information and clever ideas for the future. Professional Business Plan Writers are very careful, precise, and realistic with the future business forecast and the information about your company. If you want, for example, to point out a slight financial setback from a year ago, you can freely do it, and the professional business writers will make sure to include it in great detail.

Objectiveness

We all know that your business is your baby. You cannot be objective when it comes to your baby, I mean business. That is why having professional business plan writers is crucial. A professional will take their time in learning about your brand and company. They will look through the existing plans of the company and figure out how to overcome different obstacles on the way. What is most important - they will see your business objectively. But, you, as a business owner, need to be included in this process. Your job is to be present and provide business plan writers with adequate information. It is vital to always be available to the Professional Business Plan Writers to create a successful business plan.

If you are interested in creating a professional business plan, feel free to contact us (https://www.joorney.com/contact-us/) or visit www.jorneey.com

4 Ways Market Research Informs Financial Modeling

 

Your business’s financial history is the most obvious source of numbers for Financial Modeling. Looking into previous sales and expenses your company had in the past is a great way for calculating and predicting future revenue. But consider doing Market Research in order to get the most accurate forecasts. It can provide important information and data which can later be used for changing variables in your model, and calculating the most precise financial outcome for your business.

1. Determining market size

Having a good understanding of the market is a good starting point for making your business decisions. Knowing how much interest or need there is for your product can greatly impact your business finances. For example, it can determine production rates and therefore greatly affect revenue. This type of data gathered from market research can be processed through financial modeling to examine how much market size can influence future production and earnings.

2. Setting the price straight

Correctly pricing an item increases the likelihood of it being sold. And this is how market research comes into play. It can give you an idea of how much the customers value your products, or to be more precise, how much they are willing to pay for them. This way you will be able to set an exact price for your products, and calculate your future earnings. The price you decide can be used in Financial Modeling to predict your business’s exact profit margin.

3. Following the trends

Because the market is fast changing, companies that do not stay on top of those changes do not remain relevant. They will slowly fade and disappear. To avoid this, companies do regular market research to be able to follow its trends and demands.

Conducting this systematic research detects markets' imminent shifts and changes. Collected data can be later used to determine what business decisions need to be made in order to be able to beat the competition. Therefore, changes in the market can affect the variables in financial modeling and produce different financial forecasts.

4. Testing new products

If you are in the process of upgrading your products and services to follow market trends, you will certainly want to know if you're going in the right direction. Any changes you make to your merchandise can be either a great success with the customers, or an absolute detriment to your business. That is why Market Research can help analyse the public's opinion of the new and improved product, which can later be used for financial modeling. Different models can be created depending on the product's effectiveness on the market, and consequently drive product’s development.

Market research is a great source of information for your business. The data collected from it can serve many purposes. But the bottom line is that it is an integral part of the decision making process in any business. It provides important information that can change variables in financial modeling and provide many potential outcomes. Therefore, it shows all the possible directions your business can take, and is extremely useful when trying to plan your business’ operations or estimate its Financial Projections.

8 Tips that Apply to a Pitch Deck or Information Memorandum

Writing any business documents can be a daunting task. The sheer amount of work that goes into writing them may seem distressing, but it doesn't have to be that way. There are a few helpful tips that will make your Pitch Deck or Information Memorandum a bit easier to prepare.

1. What is it their purpose? Who are they for?

First things first, why do you need these documents? The purpose of your documents determines who will be reading them and what exactly will be included in them, or at the very least, what kind of information you should prioritize. Your business documents will be shaped by your reader's interests, whether they are an investor or loan officer.

2. Do the market research

Market Research is an integral part of any business plan, but they are very important for information memorandums and pitch decks too. They show the potential success a product or service may have with customers, and can demonstrate to buyers or investors just how valuable your business is in the market.

3. Support your claims with numbers

Your readers will not appreciate bold, unsubstantiated claims. They are not interested in listening to fairy tales but want to hear facts and see results. And the best way to do that is by gathering your numbers from your financial history or research, as mentioned above.

4. Include financial projections

Financial projections predict future revenue through financial modeling. By gathering numbers from your business’s financial history, a forecast can be made to determine all of the potential financial trajectories a business can take. Your audience will want to know where your business is going and if it is going to be a success.

5. Honesty is the best policy

Pitch decks and Information Memorandums may seem like advertisements for your business, but they are most definitely not. Sure, they are used to promote your business, but many make the mistake of only showing the positive side of their company. Your investors or buyers will want to know the full story to be able to make an informed decision. So do not hide unfavorable or damning data. Instead, be sure to mention it and provide solutions.

6. Think about the format

Because pitch decks are short presentations of your business, averaging about 15 slides (or less), they should not be overwhelmed with details. That is a sure way to lose your audience's attention. Therefore, the information included in them needs to be carefully selected.

On the other hand, information memorandums are detailed descriptions of your business, and therefore can be lengthy documents. They can range from 30 to 50 pages, depending on the size of your company.

7. Layout and visual appeal.

It goes without saying that pitch decks need to be informative as well as aesthetically pleasing. Your slides should not be difficult to follow because they’re oversaturated with text. So make bullet points, get to the point, and include graphs. Similarly, your information memorandum should be clear and easy to read.

8. When in doubt, ask the professionals for help

It is no wonder business documents are difficult to write. But you don’t have to do it alone. There are plenty of Professional Business Plan Writers, who have plenty of experience in writing these types of documents. A good piece of advice is to turn to them for help.

If you consider all of these tips, or at least some of them, writing business documents will be a breeze. Knowing how to approach them is half the battle and can save you a lot of trouble. Therefore, keep these tips in mind, they will come in handy when writing your Pitch Deck or information memorandum.

3 Ways Your Bank Business Plan Isn’t an Ordinary Business Plan

Be careful when writing your Bank Business Plan, because not every business plan is the same, and there are many things to think about when writing them. To begin with, consider its intended purpose. Is it for internal business organisation, or is it to try to get fundings?

Even when looking to gain investment for your business, the difference between getting a bank loan or seed funding from investors will determine how your Business Plan will be written. If you are looking to get a bank loan there are a few things to keep in mind when writing your bank business plan, and it all boils down to what you need to get your loan approved.

• A steady revenue

When writing your business plan it is important to consider your audience and what they are interested in. Unlike venture capitalists or angel investors who are looking for an increase in revenue for a higher ROI, loan officers are wanting to see if your business is able to maintain a steady revenue. Having steady revenue from your company's history in sales, or predicting one in your financial projections, will give enough reassurance that your business is financially stable and fit for repaying a loan.

• A good credit score

Just like investors, banks avoid taking risks and lending money to unsuitable borrowers. That is why a credit score is used to calculate if you are the right candidate for a loan. Your credit score is a number between 300 and 850 that determines how reliable you are as a potential borrower. It is calculated using the numbers from your financial history, where many factors are taken into account, such as:

• payment history,

• amounts owed,

• length of credit history,

• new credit,

• credit mix.

The higher your score is, the higher your chances are for receiving a loan and lower interest rates. Because a credit score determines your reliability as a borrower, having positive credit and a strong financial history included in your Bank Business Plan will greatly increase your chances of getting a loan for your business. Or, if your credit score is in the mid to low range, your business plan is a chance to explain that and give reassurance that you can repay the loan.

• Adequate collateral

Even if you have a good credit score, loan officers will want to see what assets you are willing to forfeit in the event that the debt is not repaid. Things that can be used as collateral for a business loan can include vehicles, equipment, buildings and inventory. Your credit score and the amount of the loan will determine the collateral’s value. If the borrowed amount exceeds a certain point, you may be required to pledge collateral that covers 100% of the loan, which may not be the case for smaller loan amounts.

There is no other business plan, quite like a bank business plan. They have a very specific objective which determines how they are formulated and what is needed to compose them. All the information included in them revolves around your business's and your own financial stability.

Having a good credit score, reliable financial history and suitable collateral is what sets them apart from other types of business plans. So keep in mind these 3 key differences when writing your bank Business Plan.