(Optional) Describe the purpose of a financial model (pro forma).

Description should include the concepts that a financial model

• outlines expected expenses and revenues of a business over a certain period
• serves as a tool for planning and decision-making.

Process/Skill Questions:

• What types of financial information should be included in a budget? Why?
• How can budget preparation assist in decision-making?
• How does the budgetary process affect marketing mix decisions? Product mix decisions?
• How can a budget assist the business owner in planning for the future?
• What are potential consequences if a business owner does not prepare a budget?
• What resources are available to help an entrepreneur develop an effective budget?
• Why is the budgetary process important in the strategic planning process?
• What is the benefit of comparing budgets to historical business performance data?