Business Ratios
By the time you have your financial forecast complete, you have numbers available to do some standard business ratios. I can’t say that I’m a big fan of ratios, but they can look good in a full and formal business plan, even though they are projected ratios. Here’s an example. 
The real use of ratios, in my opinion, is watching them as they change over time. In the best of the plan-as-you-go business planning idea, you have some key ratios that are important to you. They are in your objectives and you review them in meetings.
Notice in this case that I’ve also added a reference to standard business ratios. This is a good touch in a business plan. They come from available industry data, which I discuss in the next section. Don’t expect your company projections to ever be an exact match. Be prepared to explain why they are different. And they are always different.
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Ratio analysis is very important, as you pointed out. I wish it and Break-Even analysis had at least 2 pages each in the book. Cash flows and break-even analysis can be extremely important during the first 12 months of a new small business.
Thanks Kenneth, I appreciate the feedback.
For more on the break-even analysis and ratios analysis, I’d recommend the break-even analysis and ratio analysis discussions there.
We may decide to include more on this in future editions. The only thing that worries me is generally people fear business plans because they are too big and too hard to do, so I don’t want to forget that it’s better to have a small, agile, frequently reviewed live plan-as-you-go plan than to never finish a larger more ambitious plan.
Tim