FA-201a · Module 1

Assumption Documentation

3 min read

Every forecast is a collection of assumptions wearing a spreadsheet. The forecast is only as good as the assumptions underneath it, and the assumptions are only useful if they are documented, visible, and testable. When a forecast misses, the first question should not be "what went wrong?" It should be "which assumption was wrong?" If you cannot answer that question, you did not have a forecast. You had a guess with formatting.

Revenue Forecast Assumptions — Q3 2026
───────────────────────────────────────────────────
Assumption              Value    Source       Confidence
───────────────────────────────────────────────────
Win rate (enterprise)    22%    Q1-Q2 avg      High
Win rate (mid-market)    28%    Q1-Q2 avg      High
Avg deal size (ent.)   $185K    Trailing 4Q    Medium
Avg deal size (MM)      $42K    Trailing 4Q    High
Sales cycle (ent.)     142 days  Trailing 4Q   Medium
Sales cycle (MM)        58 days  Trailing 4Q   High
Net retention rate      108%    Trailing 2Q    High
New rep ramp time      7 months  Historical    Medium
Pipeline gen rate      $320K/rep/mo  Q2 avg    Low

Low-confidence assumptions flagged for
monthly review and scenario testing.

Do This

Document every assumption with its source, confidence level, and review cadence
Use trailing actuals as the baseline — adjust from reality, not aspiration
Flag low-confidence assumptions for monthly review and scenario sensitivity
When forecasts miss, trace back to the specific assumption that failed

Avoid This

Embed assumptions in cell formulas where nobody can see or challenge them
Use "management judgment" as the source for critical assumptions — that is opinion, not data
Set assumptions once per year and never revisit — markets shift quarterly at minimum