To generate an image of your company in hypothetical situations
Financial modelling consists of generating dynamic models (scenarios) to produce an image of your company. It is this image that provides you with an advance view of the results of given hypothetical situations.
In sum, it’s a decision support tool that allows you to analyze a host of scenarios.
For example, do you ask yourself if you should:
- Buy out other market players?
- Invest more in the development and launch of new products or services?
- Restructure how you operate?
- Change how you sell or produce your products or services?
When important financial decisions need to be made, modelling becomes a valuable tool at your disposal.
It enables management, shareholders and the board of directors to make more informed decisions.
Generating model-based scenarios also enables us to identify potential risks and quantify the potential impacts of these risks.
How are these results generated?
Using IT tools, we enter your financial and operational data into customized software designed to provide you with answers to your specific questions and generate realistic results.
All of your data is processed in complete confidentiality, as required pursuant to our code of ethics and as stipulated in the legal agreements signed to this effect.
Our modelling specialist, Mr. Francis Paquet, eng., CBV, possesses more than 20 years of experience in this field. His approach and his tools developped in Excel and PowerBI have proven their effectiveness over the course of the many mandates he has completed.
BJC has you benefit from its competency, knowledge and experience.
Following up on your ideas
Entrepreneurs are very often creative people. We enjoy working with them to develop different scenarios, indicating the “how” and “how much” in the hypothetical materialization of their ideas.
We start off by asking questions to understand how your company generates profits. For example:
On what does your company’s survival depend?
- From where does the demand for your products originate?
- How is this demand generated or created?
- How do you sell your products? Online? Directly through a sales force? Through resellers?
- Do you sell parts that are used in the manufacturing of other products (“OEM”)?
- Do you build your products yourselves, are they preassembled or do you handle their assembly?
- How to you set the prices of your products?
- How do you determine your selling expenses?
- Where do you manufacture your products?
- And so forth.
Next, if the company is growing, we will ask questions such as the following:
- Do you need a legal, human resources or strategic and financial planning department?
- Do you need to hire more personnel? If so, how many people?
- Does your plant need to be expanded?
- Does your plant require new production lines?
- If your objective is to double your sales, how will your selling and operating expenses evolve?
- If your goal is to sell on the international market, how can you quantify the demand, assess the market, target points of sale and establish sales channels?
- And so forth.
What is the difference between financial projections, a profitability study and modelling?
A modelling exercise usually includes financial projections and a profitability study with a calculated return on investment.
Unlike financial projections that are basically static, modelling uses dynamic tools that make it easier to imagine several scenarios based on changing multiple variables and making it possible to view the results if two, three or four variables are changed. These results can then be compared to the expected results.
Modelling produces an even wider viewpoint seeing as it takes into consideration both financial and operational aspects. It also takes into account how the economy, industry and competition will probably evolve. It therefore becomes a hands-on decision support tool.
Why not just do it yourself?
We are aware that you do not necessarily have the IT tools or internal resources needed to successfully complete such a mandate. If you have competent employees to handle this type of mandate internally, they probably already have their hands full with other tasks.
Why not purchase a modelling software yourself?
It represents a significant investment and requires having the internal resources needed to operate the software and adapt it (sometimes to a limited extent) according to the different scenarios you are seeking to analyze.
The modelling service that BJC offers you generally represents a more affordable investment than purchasing the most robust software available on the market.
The required modelling expertise
- A much higher-than-average level of IT knowledge is required to use the software to process formulas and data. And it is essential to have a deep understanding of the IT tools’ capabilities.
- Work must be completed with integrity and attention to detail, the goal being to familiarize ourselves with your financial and operational data and use them correctly.
- An understanding of how your company operates and of what its existence depends on must naturally be part of the model’s implementation.
Modelling will enable you to determine whether or not your project is financially viable. In either case, you will have the information you need to make an informed decision.
Between your internal tools and the market’s high-end (onerous) tools, BJC offers you an intermediary solution through its modelling service that is adapted to your needs.
Contact Francis Paquet, eng., CBV, for more information. The first meeting is of an exploratory nature and offered free of charge.
Referrals and client testimonies are available on request.