Preparing the financial forecast in a business plan can be daunting for most entrepreneurs as the majority do not know how to begin the process.
Putting your business plan in numbers can look overly complicated, but that’s why we are offering our services to make things easier for you.
Now, it doesn’t matter the stage if your business. It could be a startup or an already established enterprise; we can still give an accurate breakdown of numbers and prepare a specific financial model to serve as a guide for your business.
Financial forecasting is the last step to creating an accurate business plan.
Before forecasting, you already have an idea of the market size of the industry as well as the consumer behavior and your competitors. You already know the costs of essential things that will help your business thrive.
Some entrepreneurs would prefer not to use financial forecasts that spans more than a year because they believe that the market is unpredictable.
Why keep reviewing a financial model when you can prepare a new one every year right?
But the truth is if you are going to need investors for your business, you must make those projections. Why?
The investors need to know that you are aware of the financial challenges that come with the business, and you are ready to tackle them.
Preparing a year projection doesn’t address the financial challenges of the business, which is why investors request more than one to show how committed you are to your vision and goals.
They need to see that you are set out to achieve everything you desire, no matter the challenges.
How financial forecasts benefit your business
Aside from getting investors interested in your business through your business plan, financial projections expose the weak areas of your business model and allow you to fix it before progressing any further.
It eases the decision-making process of a business where you can always refer to your cost and revenue projections to decide whether or not a business will bring in profits.
Here are some of the elements you need to consider when doing a financial projection process:
Per unit profitability sizing
Here you need to determine the margin between the manufacturing cost of a product and services and the consumer price. As a rule, the consumer price should be 50 percent or higher than the manufacturing cost unless you are producing in millions or hire.
Failure to follow this rule might lead to business failure as your revenue would not be able to keep up with operational costs and other essentials such as marketing and advertising.
It involves estimating what your team members can deliver. It’s a difficult one to achieve since humans are generally unstable.
One thing you can use to draw your estimates is the strength of their commitment. Their level of engagement can help with the forecasting.
Now you can’t overlook the fact that you’ll have to pay for office space, warehousing, inventories, electronic gadgets insurance, and other utilities.
You’ll need to do an estimation of all these while checking with the industry statistics to ensure you are on the right track.
Cash flow out
You need to have an idea of the amount of cash that flows out of your business to control it.
When you can project your cash flow out, you’ll be able to track and control it even when you break even, and your revenue catches up with it.
Financial forecasts that fit into any business model
Financial forecasting can be overwhelming for an inexperienced entrepreneur to handle, which is why many prefer to overlook it and concentrate on other areas.
However, for our expert consultants, financial forecasting is a business financial model at its best.
It is the use of an excel spreadsheet to predict the cost and revenue of a startup from the present moment to at least 3-5 years. It could also include product volume growth rate and the number of salespersons.
Our services ensure that we customize the forecast to suit your business model. We can also create a new business model if you prefer.
Our forecasts work more with fact and less with assumptions. We would not eliminate the use of premises when making a financial forecast, but we strive to keep it at minimum.
We prepare the financial forecast in a flexible way that allows for re-forecasting. We also make use of the cause and effect relationships where we identify the success of one variable as dependent on another.
Other services we offer
Risk analysis and management
We can perform a risk analysis to find out what can go wrong in your business and how to mitigate the risk.
Every business has a risk or set of risks attached to it. An entrepreneur intending to enter this business must identify these risks, analyze them, and look for ways to eliminate them if possible or manage them.
When you are aware of a challenge your business would face but already have a solution at hand, you become more at ease and eager to put in all your efforts to ensure the company succeeds.
We can help to identify these risks through an effective risk model and show you the outcomes of such risks while proffering solutions on how to mitigate them.
We can help you detect errors you must have made while trying to build your spreadsheet.
We know how complicated to create spreadsheets. There are always hidden errors which could create a more significant confusion if not sorted out on time.
We have our auditing experts to help you find the mistakes and fix them.
We offer other features such as balance sheet, cash flow, and income statement, operational costs, employee revenue, and so on. We also proofread and edit every document to spot errors and make an immediate correction
Contact us to prepare a business plan for your franchise while also helping you review the franchise opportunity through the franchise disclosure document to see if you should go on with it or watch out for better opportunities.