Did you know that nearly 60% of stakeholders feel disconnected from the financial models and projections presented to them?
Despite these numbers, the message often gets lost in translation, making it difficult for stakeholders to fully grasp the data’s significance.
Presenting financial models effectively is a crucial skill. It can make or break your project’s approval and future success.
Thus, in this blog, we’ll guide you through the essentials of crafting a financial model presentation that captures attention and drives understanding.
You’ll learn:
- What a financial model truly is?
- How do you present a financial model?
- What are 6 effective ways to communicate with stakeholders?
Whether you’re preparing for a high-stakes board meeting or aiming to gain investor buy-in, these tips will help you present your financial statements confidently and effectively.
Let’s dive in.
What is a Financial Model?
A financial model is a tool that represents the financial performance of a business, project, or investment over time.
It’s like a roadmap for understanding how different variables (like revenue, costs, or market conditions) will impact the financial outcomes of a company or project.
It helps decision-makers see if a project or investment will be profitable or not.
Let’s say, you’re planning to open a new coffee shop.
You’d create a financial model to predict how much money the business will make and spend over the next year.
This model could include:
- Revenue assumptions: How many cups of coffee do you expect to sell each day, and at what price?
- Costs: Rent, salaries, ingredients, and utilities.
- Profit calculations: Subtracting the costs from the revenue to see if the business will make a profit.
By building this model, you can analyze different outcomes, like how much profit you’ll make if you sell more coffee or if costs increase.
It helps you make better decisions and show potential investors if the business is a good opportunity.
How do you Present a Financial Model?
Presenting financial models effectively is all about clarity and storytelling.
While the data is important, how you communicate it can make all the difference in gaining buy-in from stakeholders.
Here’s a simple guide on how to start a financial presentation and present your financial model with impact:
1. Start with a Clear Overview:
Before diving into complex numbers, start your financial presentation by giving a brief overview of the model.
Explain:
- What it is?
- What is its purpose?
- How does it align with your goals?
2. Highlight Key Assumptions:
Stakeholders want to know what assumptions you’ve made.
- Are you expecting a 10% growth in sales next quarter?
- Or maybe you’ve factored in a rent increase?
Clearly outline these assumptions up front, so the audience knows the basis of your projections.
3. Show the Numbers Clearly:
Use visuals like charts, graphs, and tables to present your financial model.
A well-designed chart showing revenue growth, expense breakdown, and profit margins can speak volumes compared to a slide full of raw numbers.
This makes the model more digestible and easier to follow.
4. Explain the Scenarios:
Present different scenarios, such as the best case, worst case, and most likely outcomes.
This will help stakeholders understand the range of possibilities, and it shows you’ve thought through the risks and opportunities.
For instance, “If we can increase sales by 15% this quarter, we’ll see a 20% boost in profits. But if costs rise unexpectedly, we might break even instead of hitting our targets.”
5. Address the Bottom Line:
End your financial presentation by focusing on the key takeaway: the impact of the model.
What’s the decision or action you want the stakeholders to take based on the financial projections?
Whether it’s securing funding or approving a project, make sure they understand what the financial model means for the business.
6. Invite Questions and Feedback:
After presenting, invite your audience to ask questions or provide feedback.
This can help clarify any concerns and further build trust in your model.
By following these steps, you’ll not only present a financial model but also ensure that it’s engaging and easy for your audience to understand—giving you a better chance of getting the support or approval you need.
What are 6 Effective Ways to Communicate with Stakeholders?
Effective communication is key to ensuring that your financial model is understood and your message resonates.
Here are 6 strategies on how to communicate financial information to stakeholders:
1. Simplify Complex Data:
Financial models can often be filled with jargon and complex calculations, which might overwhelm non-financial stakeholders.
→ To communicate effectively, simplify your data.
Break down complicated financial terms into easy-to-understand language.
Using simple terms ensures your message is clear and accessible.
2. Use Visuals and Graphs:
Visuals such as pie charts, bar graphs, and trend lines can turn a sea of numbers into an engaging story.
Stakeholders often respond better to visuals because they are quicker to interpret and retain.
This makes it easier for your audience to see the trends and understand the key takeaways from the model.
3. Focus on Key Insights, Not the Details:
Stakeholders typically don’t need to see every line of your financial model.
→ Focus on the key insights that drive the business forward.
Highlight the most important metrics such as:
- Profitability
- ROI
- Cash flow
How to communicate financial information to stakeholders effectively means giving them the data they need to make decisions, not overwhelming them with too many details.
4. Tailor the Message to Your Audience:
Not all stakeholders have the same level of financial literacy.
→ When presenting your model, consider the background of your audience.
For example, investors might want to focus on growth potential and ROI, while operations managers may be more interested in cost savings or resource allocation.
By tailoring your presentation to each stakeholder’s interests, you make the message more relevant and impactful.
5. Highlight Risks and Opportunities:
Stakeholders need to understand both the potential risks and rewards.
Don’t shy away from discussing uncertainties or challenges, such as fluctuating market conditions or unexpected expenses.
Presenting these risks along with the opportunities will make you seem more transparent and trustworthy.
6. Be Ready to Answer Questions:
Effective communication is a two-way street.
Encourage stakeholders to ask questions and be prepared to answer them in detail.
→ This shows you’re confident in the financial model and are open to collaboration.
If a stakeholder is unclear about a particular assumption or projection, explain it in more depth, offering examples or further clarification if necessary.
By adopting these strategies, you’ll learn how to communicate financial information to stakeholders, fostering better understanding and stronger relationships.
Clear and concise communication will help ensure your financial model gets the attention it deserves.
Conclusion
When you know what financial models are and understanding how to communicate them effectively is key to securing stakeholder buy-in and making informed decisions.
Knowing how to present a financial model and how to start a financial presentation with a clear overview will set the stage for engaging discussions.
When you focus on how to communicate financial information to stakeholders, you ensure your audience grasps the insights that drive your business forward.
Whether you’re explaining how you present financial statements in a presentation or highlighting key metrics, the ability to distill complex data into clear, actionable insights is crucial.
By applying the 6 effective ways to communicate with stakeholders, you can make sure your financial message resonates with your audience.
Remember, financial models are powerful tools, but their true potential is unlocked when presented with clarity and purpose.
