A financial plan or financial projections serve as the starting point, from which an integrated financial model can be developed. A financial model is essentially an evolution of a financial plan, incorporating more interactions, analyses, and control capabilities. In the financial plan, the goal is to accurately represent the company in an Excel file, including the key drivers of value. This tool can also be used for strategic planning. Once a financial model is in place, you can easily explore multiple scenarios, test variations, and simulate the consequences of management decisions.
Creating a financial model also involves interacting with management and forces you to ask questions (e.g., regarding value drivers, costs, interactions, etc.) that are often overlooked in day-to-day operations. Just this process alone often leads to a deeper understanding of your business and all its dependencies.
The result of such a financial model typically includes the financial projections.
Businessplan-Pro’s client, who needed a business plan, was considering three different options for financing the equipment required to start the business: purchase, leasing, and a combination of both. Businessplan-Pro was tasked with incorporating all three scenarios into the financial projections and describing them separately in the business plan’s presentation and financial results.
A switch was created that allows the selection of one of the three options. The consequences of the choice for the financial projections are immediately reflected in the financial plan, enabling an initial analysis to determine which option, depending on the selection criteria, would be most suitable.
During the preparation of a business plan, the founder had not yet definitively decided which legal form to choose for the company due to certain open points. To avoid a delay in completing the business plan, Businessplan-Pro decided to incorporate a switch into the financial projections, allowing for an instant switch between different legal forms with the consequences of such a change immediately reflected in the financial plan. This allowed the client to explore various scenarios in the financial projections and ultimately derive which legal form would be optimal for them, especially from a tax perspective.
In the process of creating a business plan for a client who was about to start their own insurance brokerage business, Businessplan-Pro was tasked with additional work based on the client’s request. Primarily, this involved creating an Excel tool designed to accurately calculate broker salary payments. Brokers work on a commission basis but receive a fixed monthly salary that they need to earn before they can expect higher salary amounts. One challenging aspect was that the brokers’ performance can vary from month to month, which must be taken into account in the salary calculations. The tool also needed to consider extreme scenarios, such as a broker who didn’t make any sales during a period to a situation where they earned their entire annual salary during a specific timeframe.
To meet these crucial client requirements, Businessplan-Pro created an Excel tool that met all specifications and performed the described task flawlessly.
This project is part of a larger financial plan. It involves splitting periodic loan repayment payments for a loan into interest and principal components. This is necessary because these components are accounted for differently.
All inputs, such as the loan amount, borrowing period, and interest rate, can be manually edited at any time, and the results automatically adjust accordingly.