Creating a realistic and comprehensive financial plan for entrepreneurs

Target

To help entrepreneurs develop a sound and convincing financial plan that addresses the needs of all sources of finance.

Steps to create a financial plan:

PASOS PREVIOS

• Developing your company's financial plan is the objective of the sprint 4 of the acceleration programme (ver+).
• The financial plan is much easier to complete if you have already adequately worked through the previous sprint of the programme, sprint 1 Model, sprint 2 Feasibility and sprint 3 Sales.
  • Use the same excel sheet that you have already worked on in the treasury (see+) (make a copy).
  • Include in the cloned excel the sources of financing and their repayment until your initial cash balance is positive... this is your financial plan!

COMPLETA EL ENTREGABLE

• Answer in writing to the questions included in the deliverable "financial plan". Follow the order we propose!
  • Use your deliverable to answer the key questions in your financial plan. This will help you clarify your objectives and strategies, and enable you to present a well-informed proposal to funding sources (use the deliverable "FINANCIAL plan" that you will receive during the programme).

COMPARTE

• Present and receive feedback from your peers:
  • Share your financial plan with your fellow programme participants, allowing them to comment and offer suggestions for improvement. (see+).
• Defend your financial plan in the webinar (watch+).
  • Participate in the planned webinar where each entrepreneur can present their financial plan and receive feedback from others and the expert speaker. https://mentorday.es/wikitips/ponente-de-los-webinars-de-mentorday/ . This activity will allow you to receive additional feedback and gain a broader perspective on your plan and learn by collaborating on other plans.

MEJORA

• Improve your financial plan by taking advantage of all the feedback received:
  • With the feedback obtained, adjust your financial plan as necessary, focusing on reducing costs and increasing revenues to reduce dependence on external funding.

¿SIGUES TENIENDO DUDAS?

• Consult your doubts at wikiTIPS (see+) If a query of yours does not get a good answer, don't worry, because an expert will take care of it.
• Individual sessions with your mentor or advisor:
  • Submit the updated financial plan to your mentor or advisor.
  • Share your financial plan (send them a link as a "commentator") with your mentor or advisor, and ask them to insert written comments in your file. 

REVISA Y ENTREGA

• Final review of the financial plan and delivery of the document:
  • Conduct a final review of your financial plan, making sure it is realistic and complete, and then submit it to funding sources for evaluation and risk analysis.

Desarrollando un Plan Financiero Efectivo

By following these steps, you will be able to create a solid financial plan that will not only help you better understand your business needs, but also increase your chances of obtaining funding and support for your project. The financial plan is a a tool used by entrepreneurs to determine how they will finance their projects and how they will generate income and profits in the future.

Fundamentos y Actualizaciones del Plan Financiero

It is a fundamental document in the planning process of any business, as it allows entrepreneurs to establish realistic and measurable financial objectives and strategies for their business. The financial plan usually includes short- and long-term financial projections. Entrepreneurs tend to update their financial plan on a regular basis to reflect changes in the market and in their business. Financing sources, especially banks and administrations... usually use the financial plan to assess the viability and profitability of a business project. Therefore, it is important for entrepreneurs, develop a comprehensive and accurate financial plan that reflects their expectations for growth and profitability.

Some of the key questions an investor may ask an entrepreneur about his or her financial plan include

Deliverable Financial plan

The objective is that you have a written document that you can give to financial institutions or public administrations to obtain financing. This document helps you to ensure the financial viability of your project. To elaborate your financial plan you should write down each of the points of reflection with the help of the expert advice given in each link. Share your financial plan with the rest of your colleagues to receive their feedback. Make as much progress as you can on your financial plan so that you can present it at the webinar (see+).

Questions that you should have thought through, thought through and clearly answered in your financial plan depending on the stage you are at:

• Emprende (idea phase): you just need to have an idea of where you are going to get the funding.
• Accelerate (launch and growth phase): you have to detail very well all the questions
• InternationaliseFocus only on your international growth, on the additional funding that will come from going to other countries.

HOW MUCH FINANCE DOES YOUR BUSINESS NEED? HOW WILL YOU USE THE FINANCE YOU RAISE? HOW WILL YOU PAY IT BACK? (see+ TIP).

Summary financial plan. Attach to the financial plan the same excel sheet you used for the financial viability to include this time the amounts of funding you expect to raise from each source until you achieve positive balances.

• Are you sure you have tried bootstrapping? Describe the bootstrapping techniques you have already used (see+).
• Are you clear about the stage you are at in creating your business and the type of investor best suited to finance you now? (see+).
• What sources of funding are you going to apply for (see+).
• Which financing instruments have you chosen and why? (see+).
• How are you going to get funding from the public administration (see+).
• How are you going to get funding from banks (see+).
• Access to business angels and private investors in general requires other information collected in the investor deck (see+).
• Economic-financial plan: What are your financial accounts for the next 5 years (see+).

It should answer the following questions that all funders ask themselves

• How much money does your company need and by when?
• What you are going to use the money for. Investments, expenses (until customer collections exceed expenses... break-even point).
• Your model generates sufficient cash flow (+) to repay the financing plus a sufficient return to compensate for the risk that the institution will incur.

The financial plan will help us to convince the different stakeholders of the need for a financial plan. sources of funding (+) that by financing our business they will receive more return than the risk of losing the money they invest in us. The business plan (+) is a more numerical part of the business plan (+) of your company.

It makes sense to make a financial plan when you have previously completed the following sprints:

SPRINT 1

You have validated a business model which is The market wants it to be. You have a solution and the Market segment who is willing to pay for it! It is impossible to make sales forecasts if you are not clear about who your customer is.

SPRINT 2

It is legally viable and economically, technical, etc. There is no point in seeking funding if I am still not clear on how to make my model viable, no matter how much money the funding sources give me, I will not be able to make something viable that is not viable.... money can't do everything!

SPRINT 3

Maximizando el Potencial de Ventas

We know how to sell, generate a sales engine, you have discovered and validated the most appropriate sales channel. There is no point in having financing if you don't know how to use it to increase sales.

Planificación Financiera para el Crecimiento

When we are clear about the amount of funding we need for our business, (which we do in sprint 2) we will open financing round and we will start to raise funds for our company in order to be able to tackle our growth and development project, but to do so it is essential to complete your Business plan, and above all, being able to translate your business plan into "financial plan" numbers. The financial plan is the form we use to communicate to the investor (be it a public entity or a private entity) that the investor has a financial plan. public administration, private fund or business angel), our company, team, business model and the return we offer on your investment. The benchmark in any financing round is the Financial Projections, also called "Financial Projections".Financial Plan".. Because when an investor or institution invests in your company, they expect a return or economic viability for the operation to be a success and this must be clearly explained in numbers.

De Números a Éxito

It is necessary to put your business plan in figures, to demonstrate not only that there is an opportunity, that there is a large market waiting for your value proposition, but also that you have to translate your business plan into numbers to show that there is a profitability, and that the investor can realise his economic objectives by investing in your company. That is a financial plan, your business plan in numbers, a cornerstone for those who want to raise funds to boost their company.

Estrategias Prácticas para Elaborar un Plan Financiero.

In this TIP we help you to understand each of the elements of the financial plan and how to prepare it, identifying the keys to have financial projections that allow you to obtain financing to be able to translate your business plan into numbers. However, in sprint 2 we have taught you how to make a simple excel forecast for the coming months, which we recommend you to work with in order to present a "summary financial plan" sheet. You have all the explanation and the model in this TIP (see +).

Superando Incertidumbres en el Emprendimiento

When an entrepreneur starts to launch a business idea, he or she faces a lot of doubts and uncertainties. Some have received certain training, which helps them to clear the horizon a little, others have the experience that helps them to advance along the path of a new venture, the luckiest ones have a person in their promotion team whose professional profile clears up some of these uncertainties, but the most common situation is that we find ourselves alone in this situation and we have to resort to external help to be able to continue moving forward. 

Financiación: El Pilar para Materializar Ideas

When the entrepreneur considers that he has an investable project, because he has found a highly scalable model that can bring high profits, he faces the arduous task of finding the financing that will allow him to make this project a reality and turn it into a great business. To do this, he will seek private capital through business angels, from the venture capital or to public capital in the form of loan financing.

Minimizando Riesgos para Inversores

When this moment arrives, the entrepreneur must arm himself with arguments that will make it easier for him to obtain the necessary financing to make his business idea a reality. These arguments must be aimed mainly at minimising the risk perception that investors may have when analysing the project and also at showing the benefits of the project that will make it worth investing in order to make it grow.

El Reto de las Proyecciones Financieras

Financial projections are one of the main arguments on which the entrepreneur will be able to rely in order to convince financiers of the suitability of investing in his project. But at the same time, this part of the business plan is one of the greatest complications that the entrepreneur faces due to the lack of knowledge in many cases of financial matters and the prediction exercise that has to be carried out, for which very few of us are prepared.

Tips for making financial projections in the financial plan:

• REALIST 

Remember the famous saying that a pessimist is a well-informed optimist and bear in mind that everything takes longer than you think and above all the first euro you collect from the first client always takes a long time to arrive, everything costs more than you think and everyone misses details. Inform yourself well, be pessimistic in your evaluations and compare yourself with experts or other entrepreneurs who have already made the journey.

• CASH IS KING

Remember that it is the sales collections that are important. Don't forget that income and expenses are not receipts and payments. The profitability that the accounts show does not ensure that you have enough money to survive. An entrepreneur should focus his or her financial projections on the need for funds, not on the need for cash.that's why we recommend that you focus your efforts on updating your cash flow!!! Excel holds everything. Dragging and copying formulas is very easy. Make sure that every piece of data in your projections is defensible and achievable.

• CENTRE

Focus on what is important: the clients where you are going to charge the most, the cost items or the largest investments, do not get lost in the detail, you are making very approximate estimates, this is not exact mathematics. There are many concepts that make up financial projections, but few that really influence cash flow and profitability. Here too, the law of 80/20 applies.

• UPDATEABLE

If you want to avoid spending endless hours making small changes, build the model so that it can be easily updated, we recommend an Excel model that is very easy to maintain and update every month.

• PROVEN CRITERIA

Validando Proyecciones Financieras

Contrast the data you enter in Excel with studies, pilot tests, historical data (add this info in Excel, inserting comments to each figure). Criteria are the basis of good financial projections and your credibility. There are financial institutions and public bodies that ask you to make 5-year financial projections, presenting 5-year balance sheets and profit and loss accounts. On mentorDay we do not explain how to do this because we understand that it is an exercise in science fiction. (if it is difficult to make forecasts in the next few months... in 5 years' time only with a crystal ball), it is that, does not contribute to the success of your company. There are many models on the market that create it automatically and sufficiently to cover the dossier.

Optimización y Colaboración Financiera

I recommend that you complete the Excel model we have provided by adding quantifying each month the sources of financing you are going to use to ensure that your cash balances are never negative. The most appropriate sources (the cheapest, the least demanding and the most appropriate for each phase). Share the sheet with other entrepreneurs and let them interpret your figures, "remember, numbers speak for themselves", invite them to give you feedback and improve your Excel... and, when you feel ready, start presenting it to experts in financing or sources of financing (during the mentorDay acceleration programme you will have many occasions)