Key Business Plan Assumptions Template

Key Business Plan Assumptions Template

Key Business Plan Assumptions Template -   In this are business planning assumptions, financial assumptions business plan template, business plan marketing assumptions, strategic business plan assumptions, and key assumptions  of financial forecast.

Whatever Type is Your Business Plan:

In doing your business plan, be it an elaborate one, simple or one or two page business plan, you make assumptions which give indications of what you would want to achieve within the specified period. This is what this post is all about. It aims at educating you on what these assumptions are, and in what aspect of the plan they apply and how it affects the entire business plan output.

What is Assumption and how does it apply to business?

An assumption is an opinion that is presumed to be true.  The evidence that supports such opinions at the time may not be concrete. In the business world today, assumptions are used in a wide variety of situations to enable companies to plan and make decisions in the face of uncertainty.

In fact, this is what business plan is all about.  It’s like a hypothesis with which the business man operate with.  Business plans are mostly done by accountants, therefore they use assumptions to facilitate financial measurement, forecasting, and reporting.

There is this other tool which is used in business planning -  forecasting. This post will marry this tool with planning  assumptions  to drive our discussions in this post.

What then do you mean by business forecasting?
Business forecasting is an estimate or prediction of future  business outcome. Businesses  forecast their sales, expenditures, profits etc. Forecast are made monthly, quarterly, yearly and for longer periods too.

Key Business Plan Assumptions Template

Key Business Plan Assumptions Template

What are those areas you make assumptions in business plan? 

In fact, every forecast of the business plan is based on assumptions. Majorly, for your business plan you must make assumptions to forecast your Purchases (Production), turnover (marketing), CAPEX, OPEX.  With these forecasts the business can now predict/forecast her Break-even Analysis, Profit or loss, Balance Sheet, cash flows and business ratios.

Specific Areas of Assumptions:

How do You forecast for your purchases/Productions?

  • Determine the source of your product
  • What is the unit cost? Where can you get it better?
  • Determine the procedure for purchases – transportation, handling etc.
  • Determine the storage/warehousing methods
  • If you are producing the product, the source, transportation, handling, warehousing and unit cost of the raw materials matters so much
  • In that regard, have a well  managed   production chain – to facilitate mass production to give the lowest unit cost of production.
  • Do you apply the principle of transfer prising in shifting the products to the marketing department?

Key Business Plan Assumptions Template


How do you make a sales forecast?

Use some of  these tips to get you started:

  • Develop a unit sales projection.  You must know from the production forecast, the unit cost of your product.
  • Use past data if you have it.  If you don’t have such date, make researches.
  • Consider good product mix
  • Break the sales  down into segments of the market
  • Ensure that the market is there. Determine your target audience/customers.
  • Have a marketing strategy – determine to get a reasonable market share.
  • Determine a reasonable mark-up – such mark-up must take care of your OPEX
An investor or partner will want to see that you’ve done you’re homework and can support more key assumptions 

With these you can now make good forecast for your sales.

Generally, this is how you can  do your  business forecasting? Do your forecasting in this order. One after the other. This is because you will be adjusting the related ones as you go on.
  • Start with expenses, not revenues. 
  • Fixed Costs/Overhead – your OPEX
  • Variable Costs -  Direct cost of production/cost of sales.  Conduct a contribution analysis to determine if your production positively contribute to the bottom line.
  • Now forecast  your revenues using both a conservative case and an aggressive case – this I because you are going to adjust the revenue forecast in relation to all the cost you have already derived.
  • Check the key ratios to make sure your projections are sound - Operating expenses ratio, Gross margin, Operating profit margin.  In fact  there could be a ratio for every variable on your operation template.

Key Business Plan Assumptions Template

Click here to get the details of CAPEX

Click here for details of OPEX

Finally, you have to make assumption on Environmental factors:

These include political stability, economic changes/variables variation, Foreign exchange rate, Availability of market, stable lending rate/cost of fund, time lines to be met, etc. Some of these could pose challenge for the smote running of the project and so must be addressed.

Can I ask you some questions in conclusion?

What is the assumption of your business plan? Are you meeting up with them? How do you do financial forecasting? What are assumptions in business? Why is it important for a business to forecast? What is an example of an assumption? Why is it important to forecast sale. Why financial forecasting is important to a business?

Key Business Plan Assumptions Template

The answers to these questions will give you a good advantage in preparing your business plan.

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