Some businesses may not appreciate the value of a financial model since a business can operate without having one. However, statistics show that people who prepare business plans for a proposed project are most likely to pursue putting up the company than those who don’t. Putting an effort to put your plan in a paper and see the financial matrix for your proposed project will be invaluable to your business success. It can serve as a guide on how you manage the business and can be very helpful in everyday decision-making for the operation.
Why You Need To Prepare a Business Plan
Listed below are some of the reasons why you need to use a business plan:
1) Raising Capital. Most banks and other financial institutions require a business plan for loan evaluation. These help them see the projected sales and revenue, the return on investment, and the capacity of the business to pay the loan. You cannot just present an idea to the bank without estimated figures that show business viability.
2) Business Expansion. To assess the feasibility of the proposed business expansion, you need to prepare a business plan as a decision guide if it is worth the risk and time to expand. It will give you the vision of what the future may hold. And based on the numbers, if it is showing promising projections, you will be more confident to pursue your plan and will be ready to take a calculated risk for the business expansion.
3) You are assessing the Viability of the Business. By using different financial tools and analysis, you can determine every aspect of your business and adjust your projections. You can take advantage of the business’ strengths and make use of the available opportunities to grow. By knowing in advance the weaknesses and threats of the company, you can plan precautionary measures and avoid unnecessary downside events.
Why You Need a Spreadsheet in Excel
A business plan template in Excel is a powerful financial tool that can be used by executives, investors, entrepreneurs, consultants, and other decision-makers of the business. Many people may find it time-consuming to prepare and needs technical know-how and expertise. However, there are financial models widely available online that you can use to save time but have a reliable business plan template.
A business plan template in Excel provides a detailed evaluation of the business and help you in assessing the viability of your business. The advantage of using numbers in a spreadsheet over a written text is that a financial plan becomes measurable. Management needs to specify how much value will generate over the next year. Such statements need to be analyzed and compared to the results of similar businesses. Therefore, management cannot hide behind general statements, which are challenging to validate.
When using a financial plan template, you can see a picture of what the business can achieve in the near future. Also, by using a spreadsheet template, you can save the time of starting from scratch and save money compared to hiring a business consultant to prepare for your business plan.
Instead of developing a financial plan from scratch, it can be a smarter idea to make use of the already available resources online and choose an economic model template that is tailored-fit for your business or needs some tweaking to it. You can find different industry-specific models here at efinancialmodels.com.