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Take Your Business to the Next Level

The financial portion of the business plan is an explanation on how the money which you are going to receive from loans and investment is going to be spent. It explains to the potential investors how you plan to use their money, or the new capital you are asking for.
Take Your Business to the Next Level
Take Your Business to the Next Level
Investors want to know what you do with the money. They want to know that the money they invest is going to the business, building new things, and taking the business to the next level. You need to show investors that the funds are for building up the capital requirements, for marketing, and for getting new equipment. It is not going to pay past debts or go to your salary.

Show investors that you are going to take the business to the next level so that they have a return on investment at that next point.

Cash Flow
Cash flow is often used to assess the financial performance of a business. If your business has sufficient cash on hand, you can invest the cash back into your business and generate more profit and more cash.

A sufficient cash flow ensures that you can pay creditors, employees, and other debts on time. Investors want to know the situation of your cash flow – they want to know your present financial situation. If you have debts or are unable to pay your debts, investors might hesitate to invest their money in your business because they want their money to go to some new things that can help you build your business. They don’t want you to use their investment to pay off debts.

You have to show potential investors that you have other financial tools at your disposal which you can use to keep your cash flow going. You might have other investors or assets that you can sell right away which can be a good source of cash.

ROI
The Return on Investment or ROI is the main reason why investors put their money on your business. Typically, investors want a rate of 30% to 40% ROI per year, probably for 5 to 7 years.

For example, they invest $100,000 in your business, so they want that to be worth $130,000 next year, compound that and they want that to be worth $130,000 plus 40% on the second year, and it is going to add up over 5 years.

Take Your Business to the Next Level
You need to demonstrate to your potential investors how you could probably return their investments. You can not promise your investors a certain return on investment. Show them the return on investment based on your projections which you believe are reasonable. If the business does what management projects it to do, then your investor can make a lot of money and you can make a fortune. Your investor is taking a risk on you and your business, so he has to make a lot of money when your business goes from zero to 50 million dollars in 5 years.

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