How to show financials in a pitch deck? Financial projections are a vital aspect of gaining funding for your business. When you’re looking for investors, your pitch deck can be your make-or-break point.
As a start-up company, you want investors to see the potential in your business. At the same time, investors want to see the possible traction you have and why your business would be worth their money and time.
Your pitch deck is a brief run-through of how your business operates. It is a breakdown of who your team is, what your business model is, and focuses on displaying your product.
Your financial projections showcase the monetization strategy your business uses. The economic forecast allows you to elaborate on the past performances of your business and the projected performances in the future in more detail.
Investments and funding are crucial to start-up companies. Access to more funds will help to bolster capabilities, production, and the ability to hire more employees to make your dream possible.
But it will also allow you to make deals and connections with your investors that could lead to the branching out of your business into new and different market segments.
The Ultimate Guide To Pitch Decks
The Importance Of The Financial Section
The phrase “time is money” is timeless and has never been more true. Investors want to know that they will get a good return on the revenue they have spent and won’t just break even.
The financial section of your pitch deck now comes into play. You can use your financial projections to persuade more investors into partnering and providing funding for your business.
Your financial projections display the growth of your business and what it is capable of given the right circumstances and capital.
New startups want to dominate the market as much as possible to try and achieve longevity for their business. You’ll demonstrate this potential longevity and growth in the past, present, and projected financial section of your pitch deck.
Your financial projections give the investors more insight into the market in which your business will be operating. As well as where you see your company in the future.
This will help investors to determine if they are the ones who want to help you get there.
By comparing the company’s prior financial projection to its current financial standing, you will get a good indication of how well or poorly the company is performing in its chosen market.
Investors Can Determine Your Financial Position
By using the data available in the financial section, investors will be able to determine the probability of your business meeting its projected financial position.
With the help of experts, you can use your financial section within a pitch deck to secure funding for your company’s continuation and eventual success.
You will be able to use the data from your financial statements to position yourself and your company more favorably within the market that your business operates.
Startup businesses typically have a high failure rate due to a lack of resources and proper funding. Without capital, your business will not be able to function.
And this is part of why it is so important that entrepreneurs should know how to show financials in a pitch deck.
What Questions Should Your Financial Projections Answer?
Your financial projections should cover both long-term and short-term periods. You’ll measure short-term predictions every month. Investors also expect you to produce an annual income and expenses statement.
With long-term forecasts, you will cover a period from 2 to 5 years and are usually measured quarterly or annually with key performance indicators.
A well-drafted financial projection and pitch deck should help to answer the following questions for your investors:
- Has your business seen any growth this year? If so, do you expect this growth to continue, and if not, what are you doing to foster growth?
- In terms of your product prices, will you keep them the same, raise them or lower them?
- Do you plan to enter into new markets or have a new target market using a different sales strategy?
- Is your business worth investing in in the long run?
- Will your projected income be enough for your business to continue in the long run?
- What has been the return on investment (ROI) for your business?
- What type of investor would you most want for your business?
Financial projections allow you to see the potential of what your business has to offer and its capability for growth. However, it is crucial to remind yourself that it is only a projection and not a guarantee of how well or poorly your business performs.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
What Your Financial Section Should Look Like
The financial section of your pitch deck needs to have stats that are well recognized. They will serve as an indication of the growth and maturity of your business.
This is why you should understand how to show financials in a pitch deck. These standard stats should include:
- Profit made per unit sold
- Price point of your product/service
- Burn rate through which the company or business is using its capital
- Net profit that your business makes as a whole
- Gross profit overall that your business has made before taking away deductions
Your financial section may contain the following financial statements and documents:
- The Balance Sheet: the balance sheet is a statement of the business’ overall financial wellbeing. It details and balances the income and expenses for the company during a specific period. The balance sheet measures its ability to pay off its short-term debts.
- Income Statement: The incomes and expenditures over a specific period are displayed in an income statement. The income statement enables you to see whether or not your company has made a profit or a loss during the particular period in which it was performed.
- Cash Flow Statement: a cash flow statement determines how well a business’s operations are performing. It emphasizes the revenue and expenses of the company in more detail. The cash flow goes into and out of the industry through three major components, and they are: 1) investing, 2) operating, and 3) financing.
Assets are usually tangible assets that can be used and converted into a cash amount. Liabilities refer to the short-term and long-term debt that the business has accumulated over time.
Owner’s equity refers to the owner’s share of assets once the liabilities have been deducted.
The cash flow statement details the investing activities that the business has made to continue in the long term.
The operating activities document how money flows into and out of the company, including accounts payable (creditors), accounts receivable (debtors), depreciation, inventory, and cash.
Lastly, the financing activities will refer to the investors or the bank that have helped provide an income to the business.
It is also crucial that the break-even point is calculated to determine which point the business will be operating on a profit instead of a loss.
Investors need to see this data, which is why you should know how to show financials in a pitch deck.
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Measuring Growth And Hypothetical Projections
The data you use to measure the growth of your business should be of a standard metric measurement or performance. You could measure the growth of your business based on the following:
- Month-to-month performance
- Quarterly performance
- Annual performance
The standard metric measurement unit must be kept constant.
It’s crucial to remember that your company’s growth is not solely dependent upon its financial status.
You can measure your company’s growth in other ways:
- Customer base: The more clients your company has, the better. The increase of clients shows that your business is attracting more clientele and, by extension, growing the business by entering new target markets.
- Market share versus Competition: As your business grows, it will have the opportunity to corner a more significant part of the market. This means that you will have newer and bigger competitors to contend with if your business is growing. This is because you will now have a more significant hold over the market in which your company operates.
- Goals: Another way to measure the growth of your business is by how many of the milestones you have reached. The more goals that your business can achieve, the more growth it will demonstrate. The achievement of goals is indicative of the development of your business.
- Profitability: The revenue that your business is bringing in is an excellent way to measure growth. Profitability measures by how much the profit outweighs the debts.
Suppose your business doesn’t have the sales figures necessary to compile a financial section. In that case, you can use the hypothetical performance projections based on research regarding competitors, niche or sector growth, and market research.
Even if you don’t have projections based on your own sales figures, it still shows drive and ambition to conduct a financial forecast. The hypothetical estimates will allow the investors to gauge how well or poorly their investment could perform.
Presenting financials can get challenging when you’ve just started the venture. Here’s some added information on how to present financials for a startup with no revenue. You’re sure to find this video helpful.
The Best Way To Show The Financials In A Pitch Deck
When you are sharing the financial position of your business or company, it is imperative that you are doing more than just spouting off numbers.
Bombarding potential investors with data alone will not make them more likely to invest in your company.
Different to-the-point sections can separate good pitch decks. The data, statistics, and numbers will need to be presented in a clear and attainable way.
When goals seem more achievable, it is easier for the investors to see how your business and product/service fill a market gap.
Your business plan and pitch deck will offer a solution to wants or needs previously left unfulfilled while also discussing your team members.
To have a compelling pitch deck, you will need to explain the concept behind your product/service throughout your pitch. Elaborate on the goals you and your team have achieved.
It will allow your investors to understand which direction your business is growing and where your business will be with their added investment.
You should know how to show financials in a pitch deck in the following ways:
- With line graphs
- As bar graphs
- As a table
- With written text and bullet points
When you are demonstrating a trend within your business, is it better to use a line graph? Trends are usually compared month to month using the exact metric measurements.
The line graphs will show you the areas in which your business has grown and decreased. They will allow your investors to be able to project what your future growth will be.
When you compare the financial status of your business, it would be better to use a graph. Using a diagram should allow you to see a side-by-side view of your business’s financial position.
Negotiating A Good Deal
Startup companies and businesses have become the new norm. From Tik Tok to Etsy, many startups have spiraled to become unicorns by acting fast and gaining a larger market share.
With so many startups around it’s no wonder businesses only have a 1.28% chance of becoming a million or even billion-dollar company. Companies that garner this kind of attention are called Unicorns because they are rare to find.
Your best bet to secure long-term funding would be to negotiate the best possible investment for your business. It is important to remember that you are not just pitching numbers or statistics but telling the story of your dream and how it came to pass.
Your financial projections are data and statistics that help to provide proof of the viability of your business.
Use the financial projections as a way to push your dream forward realistically and demonstrate what your business can do to your potential investors. Learn how to show financials in a pitch deck.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.