Are you putting a plan together and find yourself wondering, does a business plan have to have business ratio section? It's a valid question. Most business plans DO have a business ratio section as part of the financial model, but many plans get reviewed -- and yes, even receive funding -- without addressing the question of ratios. However, there is some real value in showing the business ratios. For investors and venture capital firms, it provides a quick gloss on the business model and its financial details and allows them to see that you have projected figures that are in line with your competitors or businesses with similar models. But the ratios are only one consideration -- the financial model should show all of the following:
• Start-up summary
• Use of funds
• Investor proposition
• Revenue forecast
• Break-even analysis
• Personnel plan
• Projected profit and loss
• Cash flow
• Balance sheet
• Sensitivity analysis
The business plan financials should also include a complete breakdown for Year 1 of the projections, that shows the monthly estimates for your operations. This is often included in an appendix though in some cases it will appear either in the body of the business plan or as part of a separate document available upon request. The ratios themselves are sometimes appended to the assumptions section provided you need to outline those details for the reader. If you need help putting together the pro forma, or have specific questions about how best to relate the details of your market analysis to the numbers that flow into the spreadsheets, call the experts at MasterPlans. We have made 10,000 custom business plans since 2002 and we have the ability to help you too. Call us at 877-453-2011.
