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.

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.

If Your E2 Business Plan Changed During COVID, Your E-2 Visa Renewal May Still Be OK. Here’s Why.

It seems as if the pandemic has affected every part of our lives. Even something as simple as grocery shopping took a hit. Remember when we couldn’t find butter and toilet paper? Life here in the US is slowly feeling more “normal” — more vaccinations, fewer masks, less physical distance between us and our friends, family and colleagues — but we’re not yet fully back to business as usual. Because of this, many E2 Business Plan with E-2 visa renewals coming up right now are feeling understandably anxious. Because of COVID-19, these businesses have not performed as expected, which means they didn’t meet the financial or hiring projections they originally expected, had to pivot or change their business model, or otherwise fell short of the goals outlined in their last E-2 visa application. Our team of experienced consultants, project managers, and writers are here to help you – or your clients – produce convincing, succinct documents that give your business or investor immigration case an edge. We’ve written over 5,000 business plans for immigration and commercial purposes. In other words, we know a thing or two.

Read More If Your E2 Business Plan Changed During COVID, Your E-2 Visa Renewal May Still Be OK. Here’s Why.

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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.

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!

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.

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.

How – and Why - to Include Financial Modeling in Your Bank Business Plan

Financial modeling will play a larger role in the Bank Business Plan than you may realize. Although it is one step removed, it still forms the basis of the one of the most important aspects of the plan, the financial projections.

Financial Modeling Defined

In order to understand why financial modeling in a bank business plan matters so much, you have to know what it is. Financial models are interactive documents created in spreadsheets or special Financial Modeling software. They are created to allow for various inputs to be tested out to view and evaluate the outputs.

They are used in several business scenarios. This includes bank business plans and everyday business decision making. They can help with every aspect of the business from inventory planning to deciding which vendor to use for a specific supply, from understanding the value of the business to projecting the ROI for a potential investor.

Financial Models vs. Financial Projections

People often confuse financial projections and financial modeling. While financial models are dynamic, interactive tools, financial projections are static numbers that do not change. Financial models are meant to change, that is their purpose. to input different potential scenarios, plug in appropriate assumptions, and see the outcomes. Projections, on the other hand, are meant to be a prediction of the future. In the case of a bank business plan, this tends to be a 3- to 5-year outlook of the expected outcomes at a set point in time.

Financial Modeling as it Relates to the Bank Business Plan

1. Financial Projections – The most obvious relationship to the bank Business Plan is seen in the financial projections. You cannot arrive at your final financial projections without the use of financial modeling. Financial projections are almost never decided in one pass. They require looking at your number in various scenarios before landing on what is most reasonable and feasible.

2. Determining You Need a Loan – The only way you can know for sure if you need a bank loan in the first place is to explore financial modeling. Through the use of financial modeling, you can look at your future business plans and future cash flow. This allows you to determine if a loan is needed in the first place and, if so, when the cash infusion will be necessary.

3. Planning for Growth – Often, the need for a bank business plan isn’t out of financial survival but, rather to facilitate potential growth. It is only through financial modeling that you can view the potential future of your business’s overall trajectory. This includes viewing how you can grow if you can secure additional funding at a particular time.

Financial Modeling Facilitates the Bank Business Plan

Financial modeling allows you to see the potential future of your business. In the process of creating the financial projections for you bank business plan you are effectively set goal posts for your business. It is also highly revealing of the potential outcomes of future decisions on your business. This is all vital information that loan officers will want to consider when deciding whether to loan you and your business money. Solid financial modeling leads to solid Financial Projections which turns into positive bank loan application results.

Breaking Down the Main Sections of a Business Plan or Pitch Deck

 

A Pitch Deck is an abbreviated and more visual version of your business plan. While both will cover the same basic concepts, they way they are presented and broken down will differ considerably.

The Business Plan Breakdown

Not every business plan will have the same exact sections. Each Business Plan will – and should – be tailored to the exact audience. They usually will contain the following sections at a minimum. Some may contain others or break certain parts down further if necessary.

Executive Summary – A brief overview of the entire business plan. This section is usually written last.

Industry Analysis – An overview of the entire industry. It will usually touch on the history of the industry, the current status, current trends, and future predictions.

Market Analysis – This section of the business plan will focus on the market. This may include the exact location in which you operate and the target market(s) (in other words, customers) you intend to pursue.

Marketing Plan – A description of how you plan to reach and appeal to your target market(s).

Personnel Plan – One of the key aspects of your business plan is who is going to run it and what experience they have. Even the best ideas will fail without the right people, so the personnel plan is especially important.

Financial Projections – This is where you will present historical information about the company’s performance (if applicable) as well as the future expectations. The Financial Projections in the business plan usually look 3 -5 years ahead.

The Pitch Deck Breakdown

When it comes to the pitch deck, the list of regular or expected sections is longer but, the amount of information in each section will be considerably shorter. This is because the pitch deck is presented in a slide format, so you need to keep the information brief. The goal is to gain interest in reading the full business plan.

Problem(s) – Every product or service needs to be solving a problem or filling a gap in the market. This is where you present the issue your product addresses.

Solution(s) – After identifying the problem, you explain how what you offer will provide the solution or fill the missing need.

Product/Service Description – At this point in the pitch deck you will go a bit more in depth about the product(s) or services(s) that will be offered.

Business Model – Here you will give the general structure of the business and how it will run, operate, and generate revenue.

Traction – If your product or service already exists, you will explain the interest you have already generated or sales you have already made in this part of the pitch deck.

Industry and Market Overview – A brief description of the overall size of the industry, what your market is, and the potential in the market.

Competition – Key competitors can have a tremendous impact on the ability of your business to succeed or the potential of market share it may achieve.

Competitive Advantages – This slide of the pitch deck will explain how your business will fit in with or overcome the competition.

Market Approach and Strategy – With your target market identified earlier, here is how you will cover the key points of your plan for reaching them.

Team Bios – As mentioned in the business plan section, the team is very important. This slide of the Pitch Deck is where you will call out the most impressive aspects of the teams’ experience.

Deal Description – Most pitch decks are created for potential investors. Here you will list what you need from them and what you are offering them in return.

Financial Projections – Select pieces of information from your full projections. Usually touching mainly on total revenue, total expenses, profits, and cash flow.

It’s evident that there is a great deal of valuable information that is contained in these two documents. Though they will often serve different purposes and be presented differently, they should still tell the same general story. One that hopefully excites and encourages other people to be interest in your business as well. Following a similar format makes it more understandable for your audience, whoever that may be.

6 Tips for Preparing Financial Projections for your Business Plan or Pitch Deck

Creating Financial Projections for a business plan or a pitch deck is an incredibly important task. Yet it is often something that founders have the least amount of experience with. Many choose to hire outside professionals – like financial modelers or professional business plan writers – but, if you choose to go it alone, here are some important tips to keep in mind.

1. Start with expenses – Coming up with financial projections for a business plan or subsequent pitch deck can seem like an overwhelming task sometimes, especially if you are not experienced in coming up with sales assumptions. It’s easier to break it down and start with your expenses. These tend to be easier to identify and predict than sales, especially if you’re a new business. Start with expenses and build from there.

2. Layout your history – If you have been in business for a year or more, layout your historical information before predicting your future financial projections for the business plan. You will often be able to identify trends and understand big drivers which will impact your future performance with this information in front of you.

3. Consider multiple scenarios – When creating the financial projections for your business plan or Pitch Deck there is a tendency to want to be optimistic. However, optimism – especially in a business landscape – can be unrealistic, or at least viewed as such. The best way to present realistic financial projections is to consider multiple scenarios and choose a number in the middle. When appropriate, you should even apply various calculation methods. That way when your numbers are questioned, which happens frequently, it’s easier to justify.

4. Hard coding assumptions in your spreadsheet - You are going to have many assumptions that will go into your numbers and as implied above, you are going to have people question them. You need to make sure you can clearly point to them in your models. This means in your spreadsheet they should be in their own cell or section and labeled appropriately. You should not, under any circumstances, incorporate your assumptions into a formula that will not be visible when presenting the document to others.

5. Go beyond the basics – It is a given that you will include the three basic financial statements in your financial projections in your Business Plan. These include the income statement, the balance sheet, and the statement of cash flow. This might be the norm but, consider your audience and what information is going to be most important to them in assessing your business. This is especially true in the pitch deck, which will likely also include investment ROI information.

6. Update when new information is available – You may go months or years between presenting the financial projections in your business plan or pitch deck to someone. You should make sure to keep these projections current. Even if it has only been weeks or months, if information has come to light that will materially change your assumptions, you should reflect that.

Crafting the Financial Projections for your business plan, or selecting the abbreviated version for the pitch deck, should not be taken lightly. They’re also not as complicated as they may initially seem if you have some guidance. Applying the tips above will be a good start and help the process go smoother for you.

From the Information Memorandum to the Bank Business Plan, Audience Matters

There are a number of common business documents from the bank business plan to the confidential Information Memorandum. Each have their own unique purpose and speak to a specific audience. Each also have their own structure and expected contents. In all these factors that set them apart, perhaps the most important is audience.

All Business Documents Are the Same

Obviously, all documents are not the same when you get into the details. Our two prime examples here, the bank business plan and the information memorandum, are two very different documents. Yet at the end of the day, they both aim to do the same thing: sell the business.

In the case of the bank business plan, its to sell it in the sense of convincing the bank to issue a loan. When it comes to the information memorandum, to sell is more literal. In either case, it ultimately comes down to the same thing. This is true of any business document including pitch decks, executive summaries, and beyond.

Knowing Your Business Documents

In order to understand the comparison, it is important to understand the two primary examples. A Bank Business Plan, as the name implies, is a business plan meant to be presented to a bank, usually to secure a loan. It will include all the elements of a traditional business plan, starting with an executive summary and ending with financial projections.

The purpose of the information memorandum is less obvious, though the structure is very similar. An information memorandum is a document used in mergers and acquisitions to prepare a business for sale. It is primarily a marketing document used to attract potential buyers. Although many of the sections are the same as a bank business plan, these documents will differ significantly.

Why the Audience Matters Most

The reason the bank business plan and the information memorandum will differ so drastically – despite having similar sections and a comparable layout - is because they are prepared for different audiences. The audience should be central to your thought process when preparing any business document. While the fundamental aspects of your document will not change, the way it is presented and what is emphasized will.

The best way to make this case is to use the financial section of these two documents as an example. Let’s say in some strange instance the same exact business is looking to possibly sell while also pursuing a bank loan to keep the business going in case they can’t sell. In both the bank Business Plan and the information memorandum, the historical financial information will be exactly the same. However, how it is presented will change.

The reason? Because in the bank business plan the audience is mainly concerned with whether or not you have cash flow management practices that will allow you to pay your loan on time. They are not overly concerned with how profitable you are or what your business’s worth may be in one, three, or five years.

It’s quite the opposite when it comes to the Information Memorandum. Most potential buyers will want to see the potential for a healthy return on investment. They will be far more interested in your overall revenue and profits and growth potential.

Conclusion

Regardless of what business document you are putting together, you should draft every section with your audience in mind. At the end of the day, most business documents are quite similar. What will really set them apart, is who they are intended to be shown to and what matters most to that audience.

How to Decide if You Should Hire Professional Business Plan Writers for Your Bank Business Plan

Creating a bank business plan can be intimidating. That is why many people choose to hire Professional Business Plan Writers. It is not the right decision for everyone though. There are a number of questions you should ask yourself to help determine if hiring a professional writer for you bank business plan is the right decision to you.

Am I familiar with bankers and lenders?

Banks and loan officers have very exacting standards and high requirements. Not just for the information contained within your bank business plan but to how it’s presented. When considering whether or not to hire professional business plan writers the first thing is to ask yourself if you are clear on what bankers – or possibly the SBA depending on the type of bank loan you are applying for – expect. Not just what is required, but how they expect a business plan to look and sound.

If you’ve spent time in the banking industry, or already have an established relationship with the bank and have attended several meetings, the answer to this question might be yes. If this is the case, you may be able to craft a Bank Business Plan that speaks their language. If not, you should consider professional business plan writers.

Are you able to be objective?

Often, when working on building a business, you become emotionally attached to it. Are you the type of person who can look at creating your bank business plan from the perspective of a banker? Not just do you understand how they think but, can you consider what information is most important to them and what details are actually pertinent from their perspective? One thing professional business plan writers are particularly good at is seeing a business plan through the lens of the audience. This is a skill that is imperative and you should make sure you have and, if not, find someone outside.

Have I written a business plan before?

It is possible you’ve been to business school. Or maybe you’ve written a business plan before or at least been part of the process to create one. This experience is highly valuable and may put you in a position to tackle this very important task on your own. If you’re confident in your abilities, have the skills you need, and have familiarity with bankers (as discussed above), then tackling the business plan on your own could be the right choice for you.

Do you have the time?

You cannot sit down and write a formal bank business plan in one sitting. Or, at least, you shouldn’t. It takes time to do Market Research to perfectly support your strongest points. It takes time to format and reformat and likely reformat again until its just right. If you don’t have several days – at a minimum – to devote to the art and practice of putting the bank business plan together it is definitely better to go with professional business plan writers.

What’s my budget?

Most experienced, proven, and professional business plan writers will usually charge around $1,000 or more for a standard bank business plan. That can feel like a big sum, especially if you’re just starting out. However, if your budget is too low, it may be a waste entirely to hire an inexperienced business plan writer. What they may produce may not meet your expectations (or the loan officers) and you will likely scramble to put it together yourself or amend it on your own to make it suitable. If you are able to budget $1,000 or more, professional business plan writers are likely the path for you.

Going through this series of questioning will help you identify your own strengths and weaknesses as it comes to preparing your bank business plan. While it is hard to tell whether or not you may be able to craft a winning plan before it is actually reviewed by bankers, hiring professional Business Plan Writers can allow you to apply with additional confidence.

3 Reasons Not to Skimp on the Market Research for your Information Memorandum

Anyone who has ever created a business plan understands the role that Market Research plays in its creation. The business plan isn’t the only place where market research matters. It is a vital part to many business documents, including an information memorandum.

An information memorandum, sometimes referred to as a Confidential Information Memorandum (CIM) is a document used in mergers and acquisitions when preparing a business for sale. It is a lengthy, thorough document, similar to a business plan, that outlines all the pertinent information about a business so potential buyers can make a decision whether or not to purchase or invest. Thorough market research can play a very helpful an important role in the creation of this document.

1. It Informs Multiple Sections

If you have owned or been in a business for any length of time, you may think you have a full handle on the industry and market in which it operates. However, things are changing all the time and markets and trends are evolving at a more rapid rate than ever before. It is especially easy to miss cues from the outside world when you are busy working in your business. Therefore, market research often becomes even more important the closer to the busines you are.

The reason it is so important in the Information Memorandum? It doesn’t just inform the industry and market overview but, can have implications and tie-ins to several other aspects of the plan, most notably financial projections. While the financials are based on actual performance of the company to-date, market research will help solidify the assumptions about the future which become the financial projections. This isn’t the only area that will be impacted by this information either.

2. It Reinforces Strengths & Opportunities

One of the more important reasons for conducting current market research to include in the information memorandum is that it can reveal or reinforce strengths and opportunities of the business. It is often through the process of market research that new opportunities become apparent. When trying to sell a business, this can make a huge difference in how attractive the business is to others. Market research not only helps quantify and qualify the current position of the business in the larger market or industry but, also what might be on the horizon or ways a potential buyer may capitalize on opportunities identified.

3. It Can Maximizes Selling Price

At the end of the day, one of the main purposes of the information memorandum is to maximize the selling price of the business. As explained above, market research may do that in a number of ways. Although this is not the only reason market research matters for the information memorandum, it may ultimately be the most important one. It also makes buyers more comfortable because it shows you have done your due diligence and that the information you are providing is accurate and sound.

When it comes to any type of business transaction, Market Research always has a role to play. Specifically, it informs a lot of the external factors under which businesses must operate. Although most commonly thought of in terms of a business plan, it is actually crucial for all types of business documents, including the confidential information memorandum.