How to do Financial Modeling for a Pitch Deck

 

Financial Modeling may be the deciding factor in gaining investment for your business. It is certainly what investors are the most interested in when you are pitching your business idea to them. That is why having an outstanding pitch deck is so important. But, fitting your financial model on a few slides can be a challenge, so here is the best way to do it.

Financial modeling in 4 simple steps

Before you even make your Pitch Deck, first make sure your financial model is complete and accurate. It is a number crunching process, but to make the whole experience a bit easier, it can be broken down into four steps:

1. Collecting data - Start by gathering all of the necessary information you can find. Look into your business’s history in sales, get data from doing market research, anything and everything you can get your hands on. The more the better.

2. Making assumptions - After getting every piece of information you can find, proceed by making a list of assumptions. This step should be taken very seriously, since the rest of the model will be based on it.

3. Forecast the 3 statement model

The three statement model consists of income statement, cash flow statement and balance sheet.

4. Income statement will show your income and expenses for a certain period.

5. Cash flow statement shows how much money is entering and leaving your business, or how much money your business has at hand for a specific time frame.

6. Balance sheet shows how much your business owns in assets, liabilities and shareholder’s equities for a given period.

7. Risk assessment and sensitivity analysis - financial modeling is not complete without testing your model first. By doing assessments and analysis you are checking for any discrepancies in your model, checking to see if it will hold up, and understanding where you may fall within a realistic range.

Organizing your financial model on slides

After you’re done with financial modeling, the next challenge is trying to figure out how to present it in your Pitch Deck. This is by no means an easy task, and there are a few things to consider:

• Consider the number of slides

The whole pitch deck should not contain too many slides. Opinions on the slide number can vary. Some say no more than about 20 slides are necessary, but recently the trend is to keep your presentation down to only 10 slides. Keep in mind that only a fraction of those will be intended for your business’s finances, so your financial model may take up only about one or two slides.

• Consider the visuals

Having only a couple of slides for your financial model will force you to get creative when presenting your numbers. The best way is to use visuals to convey information such as graphs and charts. But think about their design as well. It is not just about having an aesthetically pleasing slide, but it should be easy to read. Think about using adequate font and font size, and do not forget about having enough negative space, meaning do not cram your slide with too much text and visuals.

Preparing a presentation is not easy, especially if you have a lot of material to work with. A challenge with pitch decks has always been how to present all of your business’s aspects in a limited number of slides, and having to incorporate Financial Modeling into them does not make things easier. Luckily, using the aid of compelling visuals will get the job done every time.

Why You Should Get a Professional Business Plan Writer to Write your Financial Projection

When running your small business, cutting out the middleman may seem like a good way of decreasing your costs and expenses. But a lot of the time this kind of business strategy leads to a DIY mentality that can, quite frankly, be detrimental to your bottom line. Sure, if you are capable and know what you are doing then go for it. Just be aware of the toll that it can take on you and your business. Be aware of your limitations. Taking on more than you can handle can have serious consequences. So if you need to write your financial projection, consider hiring a Professional Business Plan Writer, and here is why.

Experience is everything

Having expertise means you’ve seen it all. It means you’ve been through enough to know what works and what doesn't. But can you really say that for writing financial projections yourself? Well, professional business plan writers can. They know the ins and outs of writing them and know all the tips and tricks.

Writing projections is definitely no easy task. It involves complex calculations, tests and analysis. Not to mention the various steps needed to complete them. It can definitely be an overwhelming task for a novice, but a walk in the park for someone with experience in this field.

It's all about getting the job done

Let's face it, a lot is hanging on the line when it comes to writing Financial Projections, the success of your business to be more exact. Writing them properly and diligently is a necessity and something to be taken very seriously.

Most of the time projections are used to gain investments or loans, or even just for organizing and managing a company. Therefore, when your reason for writing them is so immensely important, then half baked projections will not get the job done. Investors and loan officers will not take them nor your business seriously and brush them off immediately. But, professional Business Plan Writers know how to make the most complete and accurate projections. So do not take for granted the quality work they can provide you, especially when the stakes are so high.

Better task management

Like mentioned before, doing everything yourself may seem tempting but it is definitely not necessary. Multitasking may seem like a useful skill, but it can result in jobs half done, which is not something you want for operating a successful business. When running your business there are a lot of things to do and take care of. It is hard work to stay afloat or maintain growth, so why burden yourself unnecessarily? Outsourcing your Financial Projection writing to experts, can free your hands, and let you focus on other aspects of your business.

Having a professional business plan writer write your projections for you is not only freeing your hands, but mind also. Making projections is a long number crunching process and being free from it will give you an opportunity to set your mind on other projects. This way you will have better focus for your tasks and therefore, better outcomes for your business.

Do not take writing financial projections for granted. It is not an easy process and it most definitely needs to be done properly. The success of your business depends on it. So having Professional Business Plan Writers make them for you will save you a lot of headache in the long run. Rest assured that they can provide you with the best possible projections for the best possible achievements. So next time, think about hiring one when you’re in need of financial projections.

The Necessity and Benefits of Financial Modeling in a Business Plan

 

A business plan is an extremely useful document that can serve a few purposes: as a detailed step-by-step road map to follow, a document to make business decisions and track progress, and a tool for gaining investments and loans. But no matter its intent, its components are universal, one of them being your business’s finances. And what better way to present your business’s finances than through Financial Modeling, a process in which all of a business's earnings and expenses are put through a mathematical equation, designed to test multiple different scenarios and predict future financial outcomes?

There are a few reasons why financial models are a necessity for any business plan.

Making financial projections

Financial models are used to cast predictions on a business’s future performance, in other words making Financial Projections. Making models is a long number crunching process but to put it simply, models are made by making various assumptions, based on which numerous scenarios can be made to calculate multiple possible outcomes.

Having several scenarios (or financial projections) for your business is very beneficial, as it will show you the full spectrum of possibilities for your business. Making the most realistic, the best and the worst scenarios will show you what to expect, what you can aim for, but also what to be on the lookout for. Seeing exactly where your business might be headed can help you make decisions early on, that can prevent disasters, or at the very least, help you make a plan b.

Gaining funds for your business

Furthermore, financial projections are one of the most important aspects of your business plan, since many investors or lenders will be interested to see if your business will be able to make a profit in the future. Investors are looking for an ROI, and lenders will want to make sure you can repay your debt. So if your goal is to get investments or lonas, doing financial modeling for your Business Plan, you will greatly increase your chances for success.

Making decisions

One of the biggest benefits of financial modeling is just how great of a decision making tool it is:

• It is a great way for planning projects and deciding on their budgets. For a successful project, good planning is needed from the start. Financial modeling can provide a perfect overview of the funds needed for the project and whether they can fit in your budget. But, it can also predict the losses in the event that the project fails. Having all of the possibilities displayed can help you make the best possible decision.

• Models can show whether there is excessive spending in certain areas of the company or if others are lacking resources, showing ideal opportunities for better allocation of funds, and making your business operate more smoothly and efficiently.

To make a long story short, Financial Modeling is necessary for any decision making process in a business, but also for gaining funds and investments. It is not only necessary for making the most optimal business plan, but it is of great benefit when aiming for success.

A Three-Statement Model of Financial Modeling in a Bank Business Plan

Let’s assume that you want to build a new financially sustainable business, but you need some funding. To raise the funding, you will go to a bank, and ask for a loan. Asking a simple question is easy, but convincing a banker to fund your business is not easy at all. You need to provide your banker a bank business plan. A Bank Business Plan for your business is like an ID for you, without it, no one will have any data on you or your business.

A bank business plan is an overview of your company’s goals and future, and what will you do, as a business owner, to achieve them. Before composing a bank business plan, you need to do Financial Modeling, which can become your worst nightmare if you do not know how to set it up.

Financial modeling is the process of creating a dynamic, working summary of a company’s expenses and earnings in a form of a spreadsheet. The information about your company’s expenses will affect the banker’s decision about the loan.

Here is a three-statement model of financial modeling in a bank business plan.

Income Statement Model

The income statement model results in the projection that allows you to present your company’s profits and losses by showing revenue and costs. This way, the banker can have a clear vision of the financial state of your company. Tracking an income statement is very useful because it can help you determine how to make a profit. It will help you decide things like whether to increase revenue by decreasing costs, remove unprofitable products or services, decreasing inventory, etc.

To be a successful entrepreneur and have useful financial modeling in a Bank Business Plan, track and analyze your existing income statement then make reasonable predictions about the future.

Cash Flow Statement Model

The cash flow statement model allows you to visualize how cash is flowing in and out of your business. This statement model shows the banker what happens to your money on a monthly basis. Put yourself in a banker’s shoes. If you are likely to loan money to a business, you will want to know if the person owning that business is reliable. A banker will want to see what happens with the money in your company and how you manage it. By looking over your cash flow statement model, the banker will know if you can fund your day-to-day operations or if you have a debt or not.

Balance Sheet Statement Model

A balance sheet statement model shows “how rich” your company is – or who owns it. This financial statement model represents assets, liabilities, and shareholder’s equity in your company. It is called a “balance sheet” because the sides of this equation must be balanced. For example, if a company takes a ten-year loan of $20,000, its assets, as well as the liabilities will increase by $20,000. A balance sheet is the financial health of your company. As your doctor would like for you to be healthy, your banker will like the same for your company.

Financial Modeling is one of the most challenging parts of preparing a business plan. To compose a successful financial model that will lead to accurate projections, you need to know accounting, finance, and business metrics. A team of skilled Business Plan Writers can help you create a perfect bank business plan in no time!

3 Tips for How to Present Financial Projection from Your Business Plan in a Pitch Deck

The act of showing your Financial Projections in a pitch deck is not merely a presentation. You will need to defend those numbers you are presenting to sell your business. Having the perfect financial projections in a pitch deck is not enough to make a deal with an investor. You have to know how to present them.

A pitch deck is a brief presentation of your business plan to a potential investor, business partner, or customer. Every Pitch Deck should include some version of your financial projection.

A financial projection is a prediction that uses existing or estimated financial data to forecast the future of your business. These predictions are done on a monthly or annual basis.

To have a successful pitch deck, you need an accurate financial projection. Here are 3 tips to successfully present your projections.

Be Conservative

Talking about the future, especially when it comes to your business, can be exciting! After all, you are using your imagination and creativity. When you represent your business with a pitch deck, you will present a set of three- or five-year financial projections, which is not easy at all.

Investors will, from their experience, cut your predictions in half, and they will not consider you as a serious investment opportunity if they are overinflated. This is why your financial projections need to be conservative. A conservative approach to a Business Plan is more realistic, logical with precise goals. It is a step-by-step approach that includes many details on revenues and costs.

Be Direct

When you want investors or loan providers to finance your idea or business, your storytelling has to be top-notch. No one will listen if your presentation is boring and not clear enough. When presenting your financial projection, make brief and comprehensible presentation slides. Do not talk about any irrelevant statements. Make it clear why your business model is viable and why it can be profitable. The basic financial projections will be successful if you always include a cash flow statement, sales forecast, balance sheet statement, and income statement.

Be Invested in Research

So, you are presenting your business with a Pitch Deck and expect the investors to finance it, to bet their reputation on you, and use their connections. For that to happen, they will expect you to do your research. There is no point in owning a business if you do not know the answer to these questions:

1. Who are your competitors?

2. Who are your customers?

3. What sets you apart from others?

If you want someone to invest in your business, they will need to invest in you, and they will never do that if they do not trust you. The effort you put into your market research will be shown through your financial projections in the business plan. As you present your business, the investors will likely be asking many questions about the numbers. You will have to defend those numbers if you want to make a deal with an investor.

If you have difficulties with composing Financial Projections or the business plan itself, consult an expert business plan writing firm or advisory experts like www.joorney.com.