Why Use Assumptions?
Many reasons exist for stating your business strategy as a set of assumptions:
Fastest and most concise way to define a strategy. Rather than capturing your strategy in reams of paper, it is much more efficient to define just the key elements of your strategy in a list of assumptions.
Think through all aspects of your business. Offtoa's assumptions screens walk you through a complete list of assumptions that a typical business needs to make. By following such a checklist, and stating all corresponding assumptions explicitly, you will force yourself to think about every aspect of your business. You really don't want to (a) be embarrassed by a question from a potential investor or lender for which you had not even thought about an answer, (b) run out of money because of an unforeseen expense, or (c) value your company at a price at which nobody will purchase stock, and so on.
Ratify, refute, revisit, revise. At no point during your company's life, will you ever have all the knowledge necessary to make perfect decisions. By stating all assumptions on which you base your business strategy explicitly, you can enter each phase of your business with your eyes wide open. Flag all those assumptions that are fully confirmed in green. Flag all those for which you still need confirmation in red. As you proceed, watch for ratification of your original assumptions. As assumptions are ratified, change them to green. If any are refuted, revisit the business decisions you made based on those assumptions and pivot your business strategy accordingly.
Financial analysis. The above three benefits can be derived by stating your assumptions in any format. However, once you decide to record your assumptions in Offtoa, it is possible to derive financial reports automatically, which enable you to perform fairly sophisticated what-if analyses of your assumptions. For example, it is possible to create:
Pro forma income statements
Pro forma balance sheets
Pro forma cash flow statements
Per unit cost analyses
Pro forma capitalization tables