Business Modeling & Pro Forma Projection

Development Management Group has extensive expertise in business modeling and the creation of pro forma analyses and projections. Business modeling articulates the rationale of how a business creates, delivers, and captures value in its enterprise. This process is an essential part of generating the business strategy for the company going forward. It reflects management’s hypotheses about: what customers want; how they want it; how the enterprise should organize to best meet those needs; how it will get paid for doing so; and, therefore, how it will make a profit.

The process of generating a pro forma for an enterprise requires a detailed analysis of the business and identifies key relationships between its various internal functions. Ultimately, it delineates areas for management focus and the critical success factors of the operation.

A well-prepared pro forma imposes a discipline on analysis that compels management to address the underlying assumptions of the business and evaluate the reasonableness of these assumptions. It requires management to articulate the relationships, interaction and inter-dependence between units within the organization. Often, the process of pro forma preparation stimulates measurement of components that have not previously been a focus of attention.

Properly crafted, a pro forma allows management to test hypotheses about alternative approaches and to perform a variety of “what-if” scenarios. It becomes a device to assist in the current budgeting process as well as a means by which management can project into the future.