It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.
In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings.
The Financial Plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture. The Appendix is used to support the rest of the business plan.
Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan.
The description of your product or service begins with the way your product or service affects your customers.
This description includes details concerning the product life cycle, any intellectual property issues, and any research and development activities planned.
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Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.
Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.