ASSUMPTIONS: THE BUILDING BLOCKS OF YOUR FINANCIAL PROJECTIONS
Your financial projections are well-educated guesses. While developing the assumptions, it is important to remember that your financial projections do not exist in vacuum. They must be tied in some fashion to the data you provided throughout your business plan. By utilizing the data you have presented in your market research, you can create some well-reasoned guesstimates on certain financial data, such as:
- Sources of revenue
- Sales projections
- Basis of all variable costs (such as manufacturing costs)
- Basis of all fixed costs (such as personnel salaries)
- Investment requirements (start-up costs and working capital)
- Sources of investment
- Fixed, one-time start-up costs
- Costs of office space and related services (such as telephones)
- Costs of professional services (such as legal, accounting, etc.)
The above list is only a sample of the many different financial assumptions you may need to include. Since every business plan will be unique, you will need to incorporate the financial assumptions you feel best strengthen the narrative of your business plan.
IF YOU REMEMBER ANYTHING, REMEMBER THIS…
Everything you find here is designed to help you write a better business plan. Take what you like, ignore what you do not. The most important thing to remember is that there is no single “right way” to write a business plan.