Financial Consulting
What is a Financial
Projection?
A financial projection is a tool
through which you can evaluate and
communicate the potential for your
business to employees, shareholders,
and potential investors.
A financial projection is a model
that is composed of a series of
specific business assumptions that
provide the basis for creating your
pro-forma financial statements
(balance sheet, income statement,
and cash flow statement) for a
future period of time.
Fully developed financial
projections provide you with a clear
understanding of the true potential
for your business to build and
create value. They will also help
you understand the key areas of risk
and will help you mitigate these
risks as you grow your business.
Why are Financial Projections
important?
The best conceived strategies
will fall apart if they are not
grounded in financial reality.
Business is ultimately about
making money. Financial projections
provide a roadmap that identifies
how you will get from point A to
point B with your business.
Financial projections provide a
clear picture of the potential for
revenue, the expected costs, and the
capital investment required to build
and run your company. This process
will force you and your team to
think through the details of how you
will generate revenue, how much it
will cost to generate that revenue,
and how your business will make
money. Used effectively, financial
projections can help:
- Prevent cash flow problems.
- Prevent major planning
errors.
- Identify and evaluate
opportunities.
- Attract external funding.
- Provide strategic guidance.
- Evaluate financial and
business development options.
- Set growth goals and monitor
progress toward those goals.
Many businesses view this process
as a "necessary evil." At BDC, we
believe that the financial
projection is the core element of
all business planning.
When do you need Financial
Projection Services?
Obviously, you have a strong
personal interest in the financial
success of your business, but so do
others who might be looking at your
business plan for investment,
funding, or budgeting purposes.
In fact, your financial
projections will be the most
scrutinized portion of your business
plan or project. You will need
financial projections when you are:
- Assessing possible funding
requirements
- Compiling forecasts for
annual budgeting purposes
- Exploring the financial
consequences of alternative
funding, marketing or
operational changes
- Writing a business plan
- Raising a financing round
- Developing a strategic plan
The financial projections that we
help you develop will assist you in
the following ways. They will help
you:
- Align your resources with
activities and investments that
will help you achieve your
vision.
- Create goals for you and
your staff that will allow you
to measure results and will
allow you to make adjustments as
needed.
- Determine the capital
required to support your
organization through each phase
of your company’s development.
- Assess your expense
structure to determine if it is
appropriate for your business
and if it will support your
business operations and growth.
- Create realistic
expectations for the growth of
your business.
- Prioritize your growth
opportunities including which
customers to pursue.
- Compare your organization to
the industry or similar
businesses to show how your
business model compares to other
successful enterprises.
Our Financial Consulting
Services
Financial Modeling
Financial modeling is an
extension of your financial
projection. It includes the use of
scenario analysis to identify the
major variables of your business and
how changes in your business
environment may impact your
business. By evaluating potential
scenarios, you will be able to adapt
your business to meet potential
challenges that may come your way.
Financial Projection
Development
BDC can help you and your team
develop comprehensive,
investor-grade financial projections
that include detailed assumption
models and pro-forma financial
statements (balance sheet, income
statement, and cash flow statement).
Our proprietary process will help
you to develop and validate the key
financial and business assumptions
for your revenue projections, cost
projections, and investment
requirements. We will then help you
incorporate key financial statement
assumptions for working capital
items like accounts payable,
accounts receivable, and inventory.
Financial Projection Review
BDC provides independent reviews
of existing financial projection
models. Our review evaluates the
strengths and weaknesses of your
plan and the output of our
engagement includes: a list of
questions about your model,
discussion around potential areas
for improvement, and documented
reality checks of your model against
established market trends.
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