Many entrepreneurs think that building financial projections and financial business plans is merely an exercise for pursuing investors. They many times build sophisticated models for their business plans and then after they get a loan or an investment, they never look at the financial model again. While it is necessary to build a persuasive set of projections, the primary goal of financial plans should be to make sure the business does not run out of cash.
Within the human body, the heart pumps blood that circulates throughout to deliver all that is necessary for life to the various parts of the body. Similarly, within a company it is cash that delivers life to all parts of the business. One of the most common reasons for business failure is either the lack of cash in the beginning or running out of cash as they grow. As a company becomes starved for cash, various parts of the business suffer causing a lack of health in the overall business.
In a manufacturing business, as an example, a cash-starved company might start to cut back on marketing which affects sales. New equipment might be passed over which might improve quality and efficiency. Layoffs are often made which place more burden on the existing staff which can lead to fatigue and more mistakes. The lack of cash causes a domino effect throughout the company which eventually will damage, if not destroy the entire company.
Building a set of financial projections is about much more than a company’s business plan. Financial modeling should focus on making sure that your company will have the necessary cash to start, operate and grow your business. A financial projection is a vital part of creating business plans and helps your business to get funds from different funding or financial sources.
Projections Fast can quickly provide the business plan and a financial model that prevents your company from running out of cash. As you take the road which leads your business to success, let Projections Fast help your business create the financial model or business plan projections you need to achieve financial strength. Call now at (248)821-5362 or mail us at – dcarr@practicalba.com.