Develop financial model to attract investments to your business

Posted by juanoliv3 on December 21st, 2015

To keep a business running, one of the most important factors is proper financing. Regular source of fund is what keeps a company on the run and any cash-rich company is always in an advantageous position to undertake investment plans for enhancing growth. But, when you seek external funding you need to develop financial model that can form the framework on which your sourcing of fund, project milestones and other intricacies will be chartered. A basic component of a financial model is information memorandum. Before getting into the advantages of having a finance model, let us discuss what an information memorandum means. It is a document that is made for prospective investors to attract them in investing in your venture.

An information memorandum is more like a business plan but in a much more detailed manner. It chalks out the reasons why the investment is required, how it would be used and what the returns would be. The document lays down the bare facts about the business plans and in general avoids superlatives, promotions or advertising. To make the document lucrative you need to do your homework well. This involves doing a lot of analyses regarding market trends, rick assessment, financial projections etc. You should develop financial model first to get all these facts and figures at your disposal.

The main benefit of an information memorandum is that it forms an open document that investors can refer to before deciding on whether to put in money. The more transparent the document is, less the number of questions you get from the investors. The memorandum is usually prepared by the CEO with help from the CFO and the legal department. Often all necessary expertise many not be available within the company. But that should not be a deterrent for you. You can take help of consultation agencies that have a team of financial experts best suited to assist you. Hire one such company that has the necessary expertise to develop financial model that will make all the projections and assumptions more objective.

The consulting company must be competent to develop financial model for property projects, oil and drilling projects, gas projects, mining projects, industrial projects, infrastructural projects and so on. The company should be comfortable to work for government, private and PPP (Public Private Partnership) projects. The firm will help you to prepare the information memorandum that ensures to disclose all facts related to the investment. Normally of ten to fifteen pages, the memorandum is often referred to as the “marketing document”.

Being open and transparent gives the investors a better perspective and view about your business and the project. The information memorandum should include all the confidentiality clauses, the background of the project, structure of the company, the activities involved in the project and various other metrics. All these provide valuable insights to the investors in measuring up the project viability. Take professional help in drafting the document which draws financiers to your doorstep. Make your business plan smart by getting the professionals to develop financial model that clearly defines all the risks you should be aware of and the prospects the project sponsors should be eyeing at.

To keep any investment project running successfully, hire professionals to develop financial model. They can also prepare information memorandum to rope in big finance.