One of the most important yet challenging components of a
business plan is the financial section.
Many first time business planners are overwhelmed by the prospect of
converting their business intentions into financial analysis. For many business plans, this section is
often provided by a consultant or financial service provider (eg. Accountant).
Pro-forma financial worksheets are another option. This option requires a basic level of
understanding of financial concepts.
Some times the act of building the financial section can help provide
input to other sections of the business plan.
If the strategy you intended persuing does not result in the appropriate
financial outcomes, you may need to go back and adjust your strategy or
assumptions.
A particularly effective way to understand the driver of
your financials is to use a formal business modelling method. We utilise the 9 element business model
method in our Question led planning process.
This approach requires you to determine the core activities and
capabilities of the business. Often the
core activities of the business also reflect the cost driver portion of the
financials.
Ideally a financial model will provide for sensitivity
analysis. This provides an understanding
of the key risk points associated with the business, and determines their
implications in financial terms.
After having built hundreds of business plans and associated
financial models, we have found that by first taking a structured approach to
the construction of the business model, constructing the financial model is a
relatively simple process.
Business Planning HQ.com was developed as a resource for
business plan writers. Our “Question Led
Business Planning” approach simplifies the process of developing a business
plan, particularly by automating the construction of the financial
elements. This approach automatically
uses the information generated throughout the business model design process to
populate key drivers of the financial model.
This ensures integration and alignment between the financial model and
the body of the business plan.
Marcus Tarrant is a leading or management consultant, entrepreneur and thought leader. He has worked for leading consulting firms including Deloitte Consulting, leading major strategy development and business planning initiatives. Business Planning HQ was developed to bring the advantages gained by employing a consultant, without the associated cost. We have developed the “Question Led Approach” to simplify the process of creating a high quality business plan. Our clients agree with our claims that we have reduced their planning times from over 1 week, to less than 4 hours.
