The purpose of creating a spreadsheet in the Ultimate Startup Pro Forma model is to organize and predict financial data for a business. This includes listing past and future years of income and expenses, totaling all income sources and expenses, and determining the profit margin. It helps in making predictions for future income growth rate and future expenses, and in calculating the profit margin by subtracting total expenses from total income.
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Create a spreadsheet – where you list past and future years across the top columns, and income and expenses down the side rows. Total all income sources – create rows for every income source. After what you've made from each income source is itemized, total them up to determine your gross historical revenue. Lastly, make predictions of your income growth rate for future years by multiplying actual revenue by 2.5 or whatever percent makes the most sense based on your historical numbers. Total all income sources – add rows for every expense your company incurs. Next, total them up to determine your gross historical expenses. Then, predict your future expenses. Determine your profit margin – here, you'll subtract your total expenses from your total income to determine your profit margin. It is important to make allowances for major one-time purchases or gross expenses if necessary.