Feb 5, 2023 | Financial Coaching
A business plan is an essential document for any business, whether it is a start-up or an established business. It outlines the goals and objectives of the company, as well as the strategies and tactics that will be used to reach those goals.
A well-crafted business plan can help entrepreneurs secure financing, attract investors, and gain a better understanding of their industry. The first step in creating a business plan is to conduct market research. This involves gathering information about the industry, competitors, customers, and potential partners. This research should include an analysis of the current market trends and opportunities for growth. It should also include an assessment of the competition and its strengths and weaknesses. This research will provide valuable insights into how to position your company in the marketplace. Once you have conducted your market research, you can begin developing your business plan. The importance of a business plan cannot be overstated. It provides a clear vision of where the company is headed and how it plans to get there. A business plan can also help entrepreneurs secure financing from investors or lenders, as it provides an in-depth look at the company’s financials and operations. Additionally, having a comprehensive business plan can help entrepreneurs stay organized and on track with their goals.
A good business plan should include an executive summary, market analysis, competitive analysis, product/service description, financial projections, management team information, and marketing strategy. The executive summary should provide an overview of the company’s mission statement and objectives. The market analysis should provide insight into the target market and customer base for the product or service being offered. The competitive analysis should identify competitors in the industry and how they compare to one another in terms of pricing, features, etc. The product/service description should explain what makes the product or service unique from its competitors. Financial projections should include estimated income statements, balance sheets, cash flow statements, etc., which will help investors understand how much money they could potentially make by investing in the company. Management team information should include bios of key members of the team as well as their qualifications for leading the company forward. Finally, a marketing strategy should outline how the company plans to reach its target audience through various channels such as advertising or social media campaigns.
The plan should include a description of your company’s mission statement, objectives, strategies, tactics, financial projections, and marketing plans. Your mission statement should clearly define what your company does and why it exists. Your objectives should be specific goals you want to achieve with your company over time. Your strategies should outline how you will reach those objectives while your tactics should detail how you will implement those strategies on a day-to-day basis. Your financial projections are one of the most critical components of your business plan as they provide potential investors with an idea of how much money they can expect to make from investing in your company. These projections should include estimated revenue streams from sales or services provided by your company as well as projected expenses such as salaries and overhead costs associated with running the business. It is essential to be realistic when making these projections so that potential investors can accurately assess the risk associated with investing in your company.
Finally, you need to develop a marketing plan for promoting your products or services to potential customers or clients. This includes identifying target markets for each product or service offered by your company as well as developing effective marketing messages that will resonate with those target markets. You also need to determine which channels are most effective for reaching these target markets such as print advertising, radio spots, television commercials, online advertising campaigns, etc., so that you can allocate resources accordingly when launching marketing campaigns for each product or service offered by your company.
Creating a comprehensive business plan is essential for any successful venture but it does take time and effort to develop one properly so it is important not to rush through this process but rather take the time necessary to do it right from the start so that you have all the information needed when presenting it to potential investors or lenders who may be interested in investing in or lending money to fund your venture’s growth plans.
Jan 27, 2023 | Financial Coaching
Business valuations are an essential component of the business world. They are used to calculate the value of a business for a variety of purposes, including mergers and acquisitions, estate planning, and tax planning. Business valuations are also used to help determine a company’s fair market value when it is sold or transferred.
Business valuation entails analysing a company’s financial statements and other relevant information to arrive at an estimated value for the company. This process can be complex and time-consuming, so having an experienced professional who understands the complexities of business valuations is essential. There are several approaches that can be taken to determine the worth of a company. The most common method is the discounted cash flow (DCF) analysis, which estimates the present value of a company’s future cash flows by taking into account future cash flows from operations and investments. Other methods include asset-based valuation, which examines the current market value of the company’s assets; income-based valuation, which examines historical income streams; and market-based valuation, which examines comparable companies to determine a company’s worth. When conducting a business valuation, it is critical to consider all relevant factors that may affect the company’s value. These include economic conditions, industry trends, the competitive landscape, the experience and capabilities of the management team, the customer base, and potential growth opportunities. It is also critical to think about any potential risks associated with owning or operating a business, such as legal issues or environmental concerns. To obtain an accurate estimate, all of these factors should be considered when calculating the value of a company. In addition to these factors, certain intangible assets, such as a company’s brand name or reputation in the marketplace, can affect its worth. These intangible assets may not have an immediate monetary value, but if properly managed, they can add significant value over time.
Comparable company analysis is another popular valuation method (CCA). This method examines similar companies in the same industry to determine their current market values in order to estimate how much a target company is worth. CCA considers factors such as size, profitability, industry competitiveness, and other relevant metrics that may affect its value. Another common method for estimating the value of a business or asset is valuation multiples. This method compares similar companies using ratios such as price-to-earnings (P/E), enterprise value-to-sales (EV/S), price-to-book (P/B), and others to arrive at an estimated value for the target company or asset being valued. Real options analysis can also be used to perform valuations (ROA). This method considers how various scenarios may affect future cash flows in order to determine which options will be most beneficial to investors or owners over time. When making investment or acquisition decisions, ROA considers factors such as timing risk and uncertainty. Finally, relative valuation methods such as price-to-earnings growth (PEG) ratio analysis or price-to-sales ratio analysis can be used to perform valuations (PSR). These methods examine how similar companies trade in relation to one another in order to arrive at an estimated value for the target company being valued. When making investment or acquisition decisions, valuations are an important tool for both investors and business owners. They estimate the value of a company or asset based on a variety of factors such as expected growth rates, capital expenditures, taxes, inflation rates, and competitive position in the industry, among others. Professional appraisers and investment bankers typically conduct valuations using discounted cash flow analyses (DCF), comparable company analyses (CCA), valuation multiples (P/E ratios, etc.), real options analyses (ROA), and relative valuation methods such as PEG ratio analysis or PSR ratio analysis, among others.
Finally, business valuations are required for any business transaction, such as mergers and acquisitions or private sales transactions. They help buyers understand what they are getting into before making any commitments, and they assist sellers in setting realistic expectations for their businesses when selling or transferring them to new owners. Overall, business valuations provide useful information about what a company is worth today and what it might be worth in the future.
Nov 16, 2020 | Financial Coaching
Entrepreneurs tend naturally to shift their focus from being investor-focused to being business (the venture) focused after receiving their
first round of financing. This particular mistake makes the next round as difficult as the first.
At the same time, it is not possible to censure the entrepreneur who bares the full responsibility of making the venture successful and increasing the return on investment (ROI). The ROI is the commitment to the investor and between receiving the funds to achieving the target ROI, there are countless challenges faced by the entrepreneur.
First round of financing
Entrepreneurs need to keep their attention in succeeding their venture while holding a clear communication and frequent updates about the business with the existing Investors as well as potential investors.
Keeping the investor updated reward the entrepreneur on many levels.
First, investors are experts in their fields, they have made their wealth form it, so they have valuable inputs on the strategic planning, the operation processes, and technical opinions. They may not force it or impose its implementation, which is the fear of every entrepreneur. But often, these valuable inputs can be the breakthrough point of the venture.
Secondly, keeping the investor updated yields a great deal of goodwill from the investor to the entrepreneur and the venture and that is the most important aspect in the investor-entrepreneur relationship. This goodwill has an influence on the venture bottom line by realizing indirect marketing of the venture and its services. Most importantly it is the key in the venture next round of financing.
Z Advisors enables entrepreneurs to keep the communication with the investors open with frequent updates about the business while letting the entrepreneur focus his full attention and effort to succeeding the business.
Aug 11, 2020 | Financial Coaching
The objective of performing a business valuation is to reach the intrinsic value of the business. The Intrinsic value is the fair value of the business. To do so, reach the intrinsic value, a comprehensive analysis of the business should be done by independent financial analysts, experienced and capable thats Why Valuation and Valuation Report.
They will articulate the process, the assumptions, and the findings in the valuation report, highlighted by the value or a range of values that they consider the fair value/s. But there are much more insights into the valuation report about business health, arguably, are more significant for investors and financiers than the money value. It gives them the reasons whether to pay the money value, negotiate or pass the investment.
The Valuation Report
It is a comprehensive report about business value, all the values! the process is the same regardless of the size of the business, but we will focus on small and medium-sized businesses (defined as with lower than 250 employees as per WB). Usually, It starts with the content, executive summary, the company historical financial reports for SMEs or the business plan for startups, then the financial data:
The reason for performing the valuation is the main influencer of the method and the kind of report generated. Fundamentally, It should include financial analysis of the historical data, forecasts of the future financials – item by item – and includes at least 3 scenarios, Base case, upper case, and lower case. The report should also include a discussion about the 3 approaches used to value the business:
Why Valuation and Valuation Report?
3 Approaches
- Asset-based approach
- Income-based approach and
- Market-based approach
Based on the nature of the business and the circumstances surrounding it, the evaluator can use one or multiple approaches to value the business. Sometimes, analysts use a weighted average value of the 3 approaches. Startups are exceptionally challenging for the simple reason that they do not have historic data, hence, the only available inputs for the financial model are the assumptions and the expected benefit.
The report is also the articulation of the financial model. It should be easy to read and understandable for non-financial readers. It includes an executive summary, an explanation of the approaches used, the logic behind it and a conclusion. The inputs of the financial model are the historical financial data and the assumptions of the micro and macroeconomics. The outcomes of the model are a detailed analysis of the main and secondary drivers of value for the business. All that data are presented in an understandable simple language report.
3 types of valuations exist in corporate finance: the first is known as the Pre-Money valuation, which is clear from its name, the value before an investment. The second is Post-Money valuation, meaning valuing a business before and after injecting the investment. Third, is the Sell/Buy-Side reports, are professional reports done by an internal evaluator for the buy-side or an external evaluator for the sell-side.
The Financial Model
The model is as good as its inputs. That’s why it is very important to exhibit the highest level of care, prudence and diligence by the analyst building the financial model in collecting the data and analysing it. It is an excel sheet focused. The model predicts earnings, costs and cash flows under different scenarios. The valuation model provides a detailed analysis of the earnings, costs, and benefits. It performs a financial “anatomy” of the business and provides the reader with insights about the working capital cycle the profitability and other key financial indicators.
Leverage buy out (LBO) and management buys out (MBO) are 2 types of financial models that used in specific circumstances such as financing the acquisition by debt issued by the company or internal buy out from the company management. Most commonly used, are the traditional equity valuation models.
Reasons
The intrinsic value of the business or its monetary value has been the most obvious reason for a valuation. During the normal course of the business, the owners could need to know the money value of the business for different motives i.e. partnership (new or exit), sell-off, inheritance issues…
To venture capital investors, the main reason to value a business is to capture the value in investing in the proposed project, the costs affiliated and the return expected. And, in a wider angle, evaluate whether the investment serves the objectives of the total portfolio.
For many investors, the main reason for valuation is to measure the value of their holdings in a portfolio company – not publicly listed –. Moreover, the valuation report is a key resource to validate the direction and the path to the exit. The report highlights gaps and pitfalls as well as opportunities and strengths that impact the future value of the business. The outcome detailed indicators and financial data provide a scan of the business at a specific point of time. It also provides highlights on the probable reasons for the lower case scenario and the limitations of the assumptions for the upper case scenario.
Visualizing the situation
Imagine that you have invested in a company. 2 to 3 years down the line it will be very difficult the assess the profitability of your investment or if it is profitable in the first place without a valuation. The ideal is to value the holding yearly to quickly fill the gaps and the drawbacks that could hurt the value in the future. Sometimes, companies own the model and just update it promptly.
The Valuator
Experience and intellect are basic requirements in the analyst. A particularly important aspect when choosing a valuator beside expertise and intellect is independence. Analysts are humans. They are influenced by the sources of information and they have biases that they should be always in control. The evaluator should maintain independence at all time, he should not accept, offer, solicit anything that jeopardies his independent status.
So there its, Why Valuation and Valuation Report?
Jun 23, 2020 | Financial Coaching
Expanding
Feasibility Studies, Project Economic Investment Appraisal and Networking
Planning
Strategic Planning, Valuations, Financial Analysis
Financial
We help startups understand the impact of the items of the financial statements on the overall valuation of the company.
Fundraising
We enable entrepreneurs to recognise the requirements of each phase of financing starting from seed capital to series A & B, possible prospects and the possible approachs for each phase.
What is Financial Coaching?
Financial coaching is enabling entrepreneurs to understand the numbers. Balance sheet, Income Statment, Cash Flow Statment of the business are providing data, how to interpret it and understand how to improve it is our focus in financial coaching.
How Do I Know if Financial Coaching Is Right for Me?
All business owners and entrepreneurs need to have some level of understanding the financials, but not all at the same level and sophistication. It all depends on the questions they need to answer and extract from the financials. If, for example, if a business owner is approaching a bank for a loan, he needs to have a better level of understanding of Credit assessment than an entrepreneur looking to sell a part of his company and so on.
Do You Only Work With Established Companies?
For coaching service no, we work with startups from early phases to series C.
Do You Offer Ongoing Consulting Services?
Unfortunately, we do not have the manpower or the logistics to do so. So we usually assess the time required by the entrepreneur and the business owner to reaching their goal only.
Do You Invest In Startup Companies?
No, we do not invest in startups or any other company that we coach or service.
How Much Is Financial Coaching?
We do not charge for coaching following our core values. The assessment and coaching are free. We charge for other services (see our services).
follow us and stay tuned for our upcoming workshops.
