How do you know when your business is ready for a new development? Whether you’re expanding from your existing property into a new space or adding another property to the roster, commercial developments are major business investments and require a close reading of your finances to ensure they don’t trip up your company’s trajectory.
A standard solution for businesses contemplating a new development is a financial analysis. Financial analyses examine a company’s financial data to assess the viability of a new commercial development, among other reasons. Past and current financial information is processed alongside market trends to develop projections of future success. This empowers businesses to take on new investments without risking the business’s bottom line.
Financial analysis is crucial when considering a new commercial development. Continue reading to learn how it can assist yours.
Methods of financial analysis
The two primary methods of financial analysis are horizontal and vertical. These are complementary rather than competing forms of analysis. Both are necessary to paint the fullest possible picture of your business’s finances.
Horizontal financial analysis is the comparison of several years of financial records. By comparing financial performance from year to year, analysts can develop trends both positive and negative so the company can highlight points of interest and optimise the company’s business model. Horizontal analysis is often used to determine if a business’s current trajectory is stable enough to endure a new commercial development.
Vertical financial analysis takes a top-down look at a single year’s financial data, breaking down each form of revenue and expense as a percentage of the whole. These analyses are often compared with similar companies to determine the ideal balance. Vertical analyses assist commercial development by breaking down the expenses and revenue streams that can tapped to finance a new development.
What does a financial analysis mean for your commercial development?
In seeking out the top financial advisor Auckland has to offer, you’re positioning yourself for a smooth transition into your next major commercial development project. Developments are a major business expense. From a business perspective, you must consider more than just the cost of the investment. You must also account for the period between the investment expenses and the time when it finally begins to pay dividends. This period is when you will likely need to consider bridging finance, and a thorough analysis can ensure you borrow the right amount for the right reasons.
A comprehensive analysis of your current business finances and the potential business advantages of your planned commercial development can help forecast how much the investment will cost you before it begins to turn a profit. This is called the bridging period. Bridging finance is a form of borrowing that accounts for this temporary period. A bridge loan will empower your business by allowing it to operate at its current capacity until your commercial development is generating the revenue necessary to pay for itself.
Build a bridge to a better business
Business owners and developers have been using bridging finance NZ wide to make the new investments they need to take their businesses to the next level. Why should yours be any different? At CFS Bridge Finance, we do more than just provide the capital. We help you determine the ideal bridge loan by providing comprehensive financial analysis and expert investment advice. Contact CFS Bridge Finance today to learn more.