How Business Plans Work

Financials: Revenue Model, Assumptions and Comments

Depending upon your business, you may also want to include a section describing your revenue model. This should describe the various revenue streams your business will be putting in place and how each will bring in money. If you've come up with a unique revenue stream then be sure to describe it clearly. (You may also want to make sure you have confidentiality forms signed.)

When writing your assumptions, you are essentially setting the scene for what is about to follow. Explain the techniques you came up with to arrive at the information in your financial statements. For instance, you may want to state that all sales and purchases are assumed to be cash based, certain inventory levels are maintained and paid for on specific terms, your sales commissions are based on x% of sales totals, etc. You can also include information about the general climate of your industry. This can be a bulleted list of short statements, or written in paragraph form.

For your own internal use, it is helpful to put together an assumptions spreadsheet that lists individual salaries (including costs of benefits), marketing expenses, other known budgeted business expenses, as well as revenue projections. This spreadsheet can help you identify when your expenses are going to peak due to marketing activity and planned hiring schedules.