Developing,Realistic,Financial business, insurance Developing Realistic Financial Assumptions
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For instance, if the company is categorized as a networking infrastructure firm, and the business plan projects 80% operating margins, investors will raise a red flag. This is because investors can readily access the operating margins of publicly-traded networking infrastructure firms and find that none have operating margins this high.As much as possible, the financial assumptions should be based on actual results from your firm or other firms. As the example above indicates, it is fairly easy to look at a public companys operating margins and use these margins to approximate your own. Likewise, the business plan should base revenue growth on other firms. Many firms find this impossible, since they believe they have a break-through product in their market, and no other company compares. In such a case, base revenue growth on companies in other industries that have had break-through products. If you expect to grow even faster than they did (maybe because of new technologies that those firms werent able to employ), you can include more aggressive assumptions in your business plan as long as you explain them in the text.The financials can either enhance or significantly harm your business plans chances of assisting you in the capital-raising process. By doing the research to develop realistic assumptions, based on actual results of your company or other companies, the financials can bolster your firms chances of winning investors. As importantly, the more realistic financials will also provide a better roadmap for your companys success.
Developing,Realistic,Financial