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Establishing Reasonable Assumptions

When you draft a business plan, you have to make many different types of assumptions. Some of these are so basic that they remain, appropriately, unstated. Realistically, there is no point in worrying about cataclysmic or other events that can render all your planning moot. You have to start with the assumption that it's going to be "life as usual." For example, retailers assume that consumers will continue to make most of their purchases during the holiday season.

Beyond that, there are several broad types of assumptions that you're going to have to make. These assumptions are what support and quantify the projections that you'll make in the plan.

  • First, you're going to have to make some assumptions about the general business environment. By and large, these assumptions tend to focus on issues such as interest rates, demographics, and other factors that all businesses face.
  • Second, you're going to have to make some assumptions that are specific to your business. These assumptions focus on specific capabilities that your business must develop or maintain.
  • Third, you can make alternate assumptions that explain how you will shift gears, if necessary, in response to events outside your control