Financials

Introduction

The financials are the most important part of any business whether it is new or old. The financial projections make the important part of any business plan or investment proposal. If you are planning to expand your existing business or if you are planning to start a new business then also you need the funding from various investment agencies. The financials will help you develop the trust amongst investors to invest in your project. The business financials will also help you monitor your business in all respects. The properly formed projections or financials will serve as the perfect tool for making in decisions in future.

The Accurate Financials – Key To A Successful Business

It has been observed that creating accurate financials is the base of successful business. The accurate financials are less of the mathematical calculation and more of the business expertise. The team of experts from various areas of business can work in conjunction with each other to project the accurate financials. Various forecasts are necessary to form the financials. You may need to take the sales forecast, market potential, the market demographics, the lifestyle and many other such factors together play an important role in structuring the business financials. The new business that doesn’t have any previous records of the buying patterns of the customer base may find it even more difficult to frame the accurate financials. The new business need to do the sales forecast based on the market research or available data with various trade organizations. Hence, many brains need to be employed to make the accurate expert guess of the projected financials. If the financials are projected accurately then it will act as the ready referral for your company performance even in future.

How To Prepare Financial Projections?

The financials can be projected with the help of the mathematical model that can be used to get the approximate financial projections from the available data. These mathematical models are complex and are also affected by the various external effects. The mathematical models for financials for different quarters may be different. The complex mathematical models derived by the experts to project the financials may contain the easy mathematical expressions like addition or subtraction but at the same these models have hundreds of formulae interrelated to offer the almost accurate results. These formulas are good but at the same time quite impossible to do the calculations manually. The accuracy of the financials may also decrease due to the human error associated with the manual calculation. The computer software are also developed by many IT companies that can be used on your personal computer to get the accurate projected financials. This software is the ideal method to prepare projected financials as it will not include tedious calculations. Also this will automatically carry out the repetitive tasks and will work on several in built assumptions. The various models of this software like spreadsheet model or stand alone model are available in the market. The managers can save lot of time and efforts by buying such software. Some of these computerised finance models come with customising options where you can enter the formulae as per the conditions. You may customise it as per your product and customer buying pattern. The different products may have different demand during various periods of the year. Hence, you can customise this software to work out the financials for different quarters depending on the product type and customer buying patterns.

Check Twice

When you have your financials ready with the help of any of these methods, you need to check it twice before finalising. You can get your financials checked from the experts of other industries whom you trust for the advice. Take their reviews and think over it along with your team of experts. If required make the necessary changes. Check the financials for any type of calculation error. The calculation must be checked thoroughly so as to avoid any silly error. After you are totally convinced with the business financials, you can include it in your investment proposal.

Role Of Financial Projection In Investment Proposal

The financial projection forms an important part of any type of investment proposal. If you are looking for the angel investors to invest in your project then you need to form the attractive investment proposal first. This investment proposal will have all the details like the business plan, marketing plan, the management, the target market and the financial projection. The exit plan for the angel investors is also necessary to be mentioned in the investment proposal. The business financials for the next five years will give a probable value of return to the angel investor. The angel investor will not be having any past references or sales report in case of new ventures and they rely more on the financial projections. The angel investors will get an idea of the probable returns from these financials and hence based on that, they will take the decision of investment. Most of the investors are investing their hard earned money in the new project just to get good returns. They will also look for the business ideas that fall into their field of expertise as most of the angel investors like to extend their inputs for the venture they have invested in. The details of the management along with the strengths and experience will help the investors assume the success of the plan. But at the same time if the accurate financial projections are mentioned in the investment proposal then the angel investor will confidently calculate the returns and also be able to negotiate the share in the venture accordingly. Thus, the experts recommend including the accurate financials in the investment proposal so as to accelerate the decision of investment. You can approach the angel investment networks to submit your investment proposal to the angel investors of your industry. The angel investors will then contact you if they find your investment proposal lucrative and beneficial. Many angel investment networks charge for the registration fees only after you are contacted by the angel investor.

Review

The financial projections are derived through different manual or computerised method. The financial projections can then be used to form the investment proposal. This investment proposal will become the deciding criteria for investment in case of many angel investors.

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