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To get the attention of investors, it is essential to have realistic Financial Projections incorporated into your business plan. Projections can be tricky as you try to project revenue and expenses while predicting how quickly your business will grow. With a quick outline and some forethought, you can quickly get a handle on your financial projections. In its simplest form, a financial projection is a forecast of future revenues and expenses. Typically, the projection will account for internal or historical data and will include a prediction of external market factors.
We develop financial projections for clients over any period. Financial projections provide a means for ascertaining the direction of business growth. Such forecasts help to ensure that a business is on the right track and offer the opportunity to design and implement the control measures for business success.
Your business plan is all conceptual until you fill in the numbers. The sections about your marketing plan are all interesting to read, but they mean nothing if you can’t justify your business with good figures.
Financial projections are one of the most essential components of your business plan, as you will need it to have any hope of winning over investors or getting a loan. If you don’t need financing, compile a financial forecast to run your business successfully.
Financial projections differ from accounting. Many people get confused about this because financial projections include statements of profit and loss, balance sheet and cash flow, which look like accounting statements that every business generates. Accounting looks back from today, while financial projections take a futuristic view. You don’t do financial projections in a business plan the same way you prepare your accounting reports, meaning that you summarize and aggregate more than you might with accounting, which is more detailed. You don’t have to imagine all future asset purchases with hypothetical dates and depreciation schedules to estimate future depreciation, and you can just guess based on past results.
The purpose of the financial projections in a business plan is twofold. You will need it if you seek investment from venture capitalists, angel investors, or even smart family members. They will want to see the numbers that say your business will grow quickly and that there is an exit strategy for them in future during which they can make a profit. Any bank or lender will also ask to see these numbers and make sure you can repay your loan. Still, the most important reason to compile this financial forecast is for your benefit, so that you understand how you project that your business will do.
The financial projections help to predict what the business is capable of in terms of revenues and profits, with the help of assumptions made about potential costs, market size, prices, marketing conditions, etc. The projections also help to make clear forecasts about the economic and financial status of the business. It helps you to conclude about the growth pattern, ROI, return on equity, how much investment is needed for the business. There are three  different financial projections we prepare, and these are based on the three main types of businesses there are. We prepare separate financial projections for trading, service-oriented, and manufacturing businesses.