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Financial analysis in the business plan

I have a typical problem in the current business where I am the sales and marketing manager. My current turnover is $7M. My employers are asking for a growth of 20% for each of the next two years. I have been asked to show a Gross Profit of 20%. In my opinion it is quite a difficult task, but am forced to accept it.

1. Now how do I justify this growth in my proposed plan?

2. The nature of business is healthcare which includes pharmaceuticals, Over The Counter consumables, agency products, etc.

3. Revenue stream includes: OTC retail, wholesale, agency distributors, veterinary distributors, consumables, Govt. tenderings etc.

4. The growth has to be shown on a quarterly basis for the next two years.

Can you suggest the correct methods of justifications on the growth and the GP? I would appreciate that.

Question posted by Bplans User (488 points) 1 year ago. Answers: 1

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You have an interesting challenge ahead of you. Gross profit is a function of the selling price, cost of goods and related expenses. Are they providing you with a fixed cost of goods? Do you have any flexibility on the selling price?

It appears you need to run lean and mean. Has the company ever achieved a 20% gross margin? If so what were the ratios of revenue to expenses/costs?

I understand upper management loves throwing out numbers but are they coming from a realistic point? I would suggest you meet with your controller and talk to them about your objective.

You may not have a choice but you also do not want to be set up for failure but rather, provided real opportunities for success.

Jeffrey E. Edelheit

Answer posted by Jeffrey E. Edelheit (2,271 points) 1 year ago

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