Preparing to Plan

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Financial Modeling & Business Planning > Preparing to Plan

Before using a financial model to help plan the future of a business, a manager or entrepreneur should:

Decide at the very outset on the central purpose of the modeling exercise (raise funds etc.); the target audience (co-directors, financial institutions etc.); and the time horizon (one year etc.). 
Identify and think through all the critical assumptions. Prepare outline projections to confirm their overall direction, examine the critical elements in detail and consider strategic issues relating to sales, profitability, funding etc.
Check that all key assumptions (e.g. sales forecasts) and data (e.g. opening balance sheet and any prior-year financial results) are to hand and have been adequately researched.
Recognize the danger of presenting too much detail or too many reports. Most senior managers, investors and financiers seek simple financial statements, which they can readily see to have been based on detailed analysis and realistic assumptions. Detail can be provided on request or relegated to appendices in a report or business plan. Make use of Exl-Plan's summary reports, including its Textual Summary Report, and numerous charts to present the highlights of a plan or projections.

See Also:

Computers & Modeling

Uses of a Model

Pitfalls & Dangers

Very Quick Start

Getting Started with Exl-Plan

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