Financial Plan – Sensitivity Analysis

Your financial statements are based on a most likely scenario.  Potential investors, however, are also interested in how your new business will fare on a pessimistic (e.g. 20% lower sales) as well as optimistic (e.g. 20% higher sales) scenario.  You can generate these scenarios with EntreQuick, and present key financial variables from each, along with your conclusions.  A table such as this one will help you:

Pessimistic                     Most likely                      Optimistic

Return on equity

Return on invest.

Profit before tax

Gross profit

Lowest cash balance

Rule of success:  Trust only those who stand to lose as much as you when things go wrong.