5 Considerations for Financial Projections in a Business Plan or Information Memorandum

1. 5 Considerations for Financial Projections in a Business Plan or Information Memorandum The financial projections in your business plan or confidential Information Memorandum (CIM) are often one of the most important components of your document. Your entire plan or CIM is important, of course, but when it comes to business it usually all comes down to numbers in the end. There are a number of things you can do to ensure that this vital piece of your document is the best representation of your business as possible. · · Do Not Overinflate Your Numbers It is natural to want to paint the best picture of the business possible via the Financial Projections Business Plan or information memorandum. There is a tendency to want to show the highest revenue and the lowest expenses possible. You should resist this urge at all costs. No matter your audience or the purpose of your plan or CIM you should include reasonable numbers. External professionals will know when you are trying to oversell.

2. · · Include Background and Backup The financial projections in your Business Plan or information memorandum will likely raise more questions than any other component of the document. You should stive to answer as many questions as possible – before they are even asked – by including backup for your financials in the appendices. This will include details on the assumptions included and any financial models you may have used. · · Anticipate Obvious Questions Beyond just including backup, try to put yourself in the shoes of your audience and anticipate what information they need so the financial projections in the business plan or information memorandum are easy to understand. Do all aspects of any charts and graphs have labels? Are your financial statements in a format that is easy to read within the context of your document? These are all the types of questions you should consider before sharing your business plan or information memorandum with outside parties. · · Footnotes are Your Friend One way to proactively answer questions without your audience needing to look at the detailed backup in an appendix is to include some detail in footnotes. Just be careful not to use too many as they can become a distraction if they take up too much of the page. · · Include Visual Elements There will be specific points of the Financial Projections in your business plan or information memorandum that you are going to want your audience to pay special attention to. Sometimes the best way to highlight certain things is in a chart or a graph. You may also be able to effectively do this through the use of formatting and headers. Including visual elements not only can make your

3. projections easier to understand but, it gives you some control over what information stands out. Crafting the financial projections for a business plan or information memorandum can be overwhelming, especially if you do not have experience with such things. Don’t be afraid to reach out to professionals for help if you are able. Even if you choose to write your business plan or CIM on your own, often times business plan writers will do specific aspects like the Market Research or financial projections. Given how important the financial projections are, it is worth considering this if financials are not your forte.