In the article I’m going to tell you about Financial Projections & Growth Strategy. This section is perhaps the most important of all information categories that directly reflects the company’s outlook on the market and its capability to generate revenues as per projections. If the company depends on external borrowing for its operational plans, a detailed note on the desired mode of financing, repayment schedules and outflows have to be shown. It is therefore wise to enlist the services of professional firm of accountants or auditors to draw up plans to outline these.
The Financial Information section should include the following details:
a) Desired mode of financing – Amount of funding required and utilization or allocation for different expenditure heads.
b) Utilization of funds – A thorough explanation as to how the proposed funding is going to be utilized is very essential. This explanation should be in line with the financial projections or expansion plans. If funds are to be utilized for expansion plans, details of equipment, production, investment in space etc. through various levels have to be made available.
c) Future financing options – Outline the company’s funding requirements in the future based on the projections already worked out. References to stages and milestones are required.
d) Present financial reports – Current financial statements and balance sheets need to be presented.
e) Projections – Cash flow projections, income & expenditure statements and balance sheet projections for three, five or ten years are needed. Principally, these will be required by investors who naturally expect return on investment and by financial lenders for their study.
f) Sales forecast – Since the financial projections and desired modes of financing are relevant to market expectations, it is important to prepare a sales forecast. The sales forecast will be helpful in arriving at the probably revenue or income stream that will be generated from operations along a given timeline.
A Growth Strategy is an essential highlight of projected growth and sustainability. The most significant objective of elaborating a growth strategy is to project how sales targets can be met, proportionate increased targets can be set and revenues multiplied.
The easily identifiable means of doing this are:
– Multiple locations in key geographical areas to increase visibility
– Enlarge customer bases and customer service points
– Introduce new products and enhance product portfolio
– Examine franchising options
– Use the Internet as a tool to market your products
– Implement successful marketing strategies
– Examine cost reduction in key operational areas (this will need a good corporate finance lawyer!
– Strategic acquisition and deals
This is the last segment of the Business Plan. An Exit Strategy seems an unlikely option when you create a Business Plan for growth and profitability; but from the point of view of investors and money lenders this is essential as a tactical requirement to fulfill those obligations.
It is well known in corporate circles that the biggest and best of conglomerates can face a “shut shop” situation due to several factors. In view of this, a clear cut plan that takes care of exigencies or unexpected downtrends will create a more comfortable working relationship with investors and employees.
Long-term exit strategy:
a) Let the company runs its course and dry
b) Sale of shares
Short-term exit strategy:
a) Make the company public –
d) Outright sale