Bankers Archives - Consilue https://consilue.com/en/tag/bankers-en/ Consulting professionals Mon, 22 Nov 2021 11:30:56 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://consilue.com/wp-content/uploads/2019/10/favicon.ico Bankers Archives - Consilue https://consilue.com/en/tag/bankers-en/ 32 32 Business plan formulation – here’s how to write a business plan https://consilue.com/en/business-plan-how-to-write/ Thu, 10 Oct 2019 06:50:27 +0000 http://consilue.com/?p=1500 Business plan is about the business opportunity potential and the execution risks. Read about the winning structure and success hints!

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]]> Business plan is a document intended to check the potential of the business and the level of risk of the business idea. It is often the first step towards the realization of business ideas.

Preparing a business plan is advised to all companies regardless of their size and market presence – startups as well as established mature companies.

Business planning allows you to increase the chances of success in the market, ensure further growth and development of the company.

The purpose of preparing a business plan can vary, but most often it is related to:

  • Expanding the product / service portfolio
  • New market penetration
  • The launch of a new project
  • Reorganization and revitalization of the company
  • Collecting sources of financing (debt, equity, grants)

Well-prepared business plan discloses the feasibility of the business idea and foresees its success. Growth and development of business ideas also depend heavily on strategy, therefore development of the business model has to be approached carefully and in line with guidelines provided by experts.

The role of the consultant in the process of business plan preparation could be simply to provide a feedback regarding the quality of the business idea, or also to connect stakeholders such as potential customers, partners and investors, provide strategic business guidance, link technical and business knowledge and look for opportunities to develop new ideas.

It is wrong to think that a business plan in any way inhibits or restricts creativity and flexibility. It is strongly recommended solely due to the fact that prior to realization of a business idea one has to check its viability and get acquainted with the path and the obstacles that have to be overcome.

Elements of a good business plan:

  • Analysis of the environment
  • Market research
  • Organisation
  • Product/service plan
  • Research and development
  • Human resources
  • Timeline
  • Key risks and problems

Mandatory components of the business plan, connecting the above mentioned elements, refer to financial projections and scenarios of success. Together they form a realistic assessment of the business idea potential based on the business and its risks. Well prepared financial projections relate to future returns, required investments in working capital and fixed assets and the extent of non-monetary categories.

Based on the financial projections bankers and various other funds decide whether to support a business idea and thus provide sufficient sources of funding for its success.

Contact us for the counseling program and engagement proposal!

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]]> Bank specifics and value creation https://consilue.com/en/bank-specifics-value-creation/ Mon, 19 Mar 2018 11:32:40 +0000 http://consilue.com/?p=763 In order to understand banks & their specifics, you need to first understand how they generate value, the role that they play and systematic limitations.

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Banks represent a crucial element of the modern economy. Often we read about bank specifics. What exactly is it about? How do banks operate and what kind of risks and regulation are they facing? Do the risks and regulation impact the value creation?

Generally speaking we divide banks into four groups according to the source of the bank’s income:

  • Net interest income is income generated as a difference between funds attracted in the form of customer deposits and debt and funds provided to customers in the form of loans such as mortgages, credit card loans, and corporate loans.
  • Fee and commission income is income charged for services such as transaction advisory, underwriting and placement of securities, managing investment assets, securities brokerage, and many others.
  • Trading income is income generated from trading financial instruments such as equity stocks, bonds, foreign exchange and exotic financial products.
  • Other income is income generated from wide variety of nonbanking activities, including real estate development, minority investments in industrial companies, and distribution of investment, insurance, and pension products and services for third parties.

Ideally, any activity involving financial advisory service should consider businesses and dependent value drivers separately according to the source of income.

Besides value drivers, a very good understanding of the business activities and value creation is required. In contrast to non-banks institutions, most of banks create value on both sides of the balance sheets – on the equity and liabilities side, due to the customer deposits costs that are below the market interest rate, and on the asset side, due to the value added to financial products. By definition, financial obligations carry operational meaning for banks and are not meant only as a source of financing as for non-financial companies.

One should also account for risks related. In last decade the volatility of profitability of the banking industry has increased, causing the impact on market-to-book ratios. Banks deal with interest rate risks, due to the mismatched maturities of loans and deposits. High leverage causes a bank to be highly vulnerable to even small changes in interest rates. Besides that, banks take on significant risks inherent in balance sheet items (such as proprietary trading activities) and also risks related to off-balance sheet positions (such as swaps, forward deals and options on foreign currencies or securities).

Furthermore, the way modern banks operate in the financial markets result in a general dependency on exogenous factors such as the economic cycle or trends in money, capital or real estate markets, showing up through changes in a bank’s credit losses. Financial planning and other financial advisory services thus require a thorough analysis of several parameters and forecasting future trends.

Last but not least, law and regulation is also crucial. Banks are subject to various bank-specific rules. High regulation is necessary due to specific role within the financial system, risks they face and dependency on economic cycles. Regulation is imposed at the state level and occasionally at the international level, as in the case of bank capital requirements. Six types of regulation seek to enhance the net social welfare benefits of financial intermediaries’ services: (1) safety and soundness regulation, (2) monetary policy regulation, (3) credit allocation regulation, (4) consumer protection regulation, (5) investor protection regulation, and (6) entry and chartering regulation. The regulation that significantly influences the value of a bank is capital adequacy.

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