Investment projects - what are they and what you should know
6. The approximate structure of a business plan for an investment project.
6. ... The structure of the business plan of the investment project.
The structure of a business plan depends on the nature of the business, the goals of the plan and the requirements of the potential investor. The business plan should contain the following sections:
- summary of the business plan of the investment project;
- general description of the company;
Summary of the business plan of the investment project - the section contains a short description of the company, the most significant points from the sections of the business plan, the main positive aspects of the business idea, the amount of necessary investments or credit resources and the estimated period of their return.
Description of the enterprise - this section should provide a description of the enterprise, including its organizational and legal form, main activities, market position, main financial indicators, differences from competitors, problems and goals of the business being created.
Products and services - the section should include a description of the goods and services offered by the company, compliance with standards, analysis of competitors' products, readiness of products or services to enter the market.
Marketing - the section should contain: marketing analysis with characteristics of the market, product consumers, competitors; marketing plan - strategy for promoting products to the market, sales volumes, pricing policy, advertising, sales system, after-sales service.
Production plan - the section should contain a description of the technological process, approaches to organizing production, a list of sources of raw materials and materials, the name and main characteristics of technological equipment, the company's need for engineering and transport support, the basic requirements for labor resources.
The word "investment" (English investmen) is used widely. They talk and write a lot about investments in business, education, science, healthcare, and the economy of the entire state. At the everyday level, this word implies a profitable investment of money.
In reality, investing means a risky investment requiring multifactorial economic analysis and complex mathematical calculations - investment planning. This will be discussed in the article.
What is an investment project in simple words
If you follow the letter and spirit of Russian legislation, then:
It is difficult to argue with the law, therefore many people believe that an investment project is a document developed with the aim of attracting investors. Some even equate an investment project with a business plan. Sometimes, in the simplest cases, it is, but more often everything is much more complicated.
In practice, we understand not just a package of documents, but a process.
An investment project is a set of activities, a set of ideas and actions aimed at achieving the planned goal in a limited time by managing investments.
Investment is the placement of money, other assets with a monetary value, in order to obtain financial profit or achieve another useful result.
An investment project is always finite both in terms of funds invested in it and in terms of time. The time of its realization is called the life cycle. The life cycle is usually divided into stages:
- Pre-investment (preparatory);
- Liquidation (optional);
The main subject of such a document is the assessment of the investment project, analysis of profitability, the possibility of attracting investments and forecasts in accordance with the economic situation.
Why does the project need a business plan?
This document is being developed to attract new investors to the project. When you come to a businessman with a request to give you money, you cannot attract his attention by promises alone. If this person understands at least something in business, he will ask you to provide him with a plan for your project, which will contain:
This option is far from the only one in attracting people, many, before referring the documentation to this or that person, look through business projects that he has already approved. As a result of the information received, the documents are altered in such a way as to emphasize those aspects that the businessman will definitely like.
The process of drafting the document itself may include the following aspects:
- Market research.
- Research of the project relevance.
- Analysis of the required funds.
- Payback period.
What does it include
There is no clear structure for drawing up a document, therefore it has a free form and content. Here is one of the options for the structure:
For more information on writing this document, see the following video:
For details on how to create a startup, see this article.
Recommendations for drafting
In order for a business plan to fulfill its purpose, the recommendations of experts on its preparation should be followed:
- The information and data provided in the document must be objective and confirmed. Don't credit yourself with false numbers for a better picture. If a businessman understands the topic of your project, he may notice mistakes, and then he will definitely refuse to participate in your business. All data with numbers should be referenced: name of the source, date of the information provided.
- Make sure that the data is not only truthful, but also correctly presented. No one wants to read misspelled text, so check all your documents for spelling and possible typos.
- The structure of the plan may differ, but the sections described above should be written in full. If one of them is missing, an explanatory note with the reason for non-compliance with the structure must be attached to the document. All these points are important, each of them can become decisive in the investor's conclusion, and therefore it is better to work hard and describe each of them.
- When you analyze the performance of your project, do it not abstractly, but in monetary units. It is this report form that will help you to more accurately represent the profitability of your business.
The modern pace of technology development and globalization necessitate a quick and high-quality organization of your own business. Most often, it is impossible to develop a certain project without appropriate capital investments, and in such cases investments come to the rescue. In the modern world, investment projects are a kind of guarantor of a significant increase in the competitiveness of an enterprise and its final market value.
Investment projects and business plan: main features
An investment project is a set of all documentation that characterizes a specific project from the very beginning (idea) to the final implementation (achieving the business performance indicators specified in the documents). As a rule, such a project covers several stages of implementation - pre-investment, direct investment, operation and liquidation stage.
Most often, investment projects are those that require capital investments with subsequent income from the business. Projects vary depending on the target, the speed of the task and the size of the investment. This can include the creation of new legal entities and their divisions, and the involvement of the necessary technical means, and the release of new goods and services, and the reconstruction of the business.
At the level of a certain production, innovative projects are most often carried out, which are a set of innovations necessary for the continuous improvement of the economic system. With the help of investment projects, you can implement the strategic objectives of production. Note that most of these projects are long and high-risk.
A detailed technical and economic justification for the need for investment is set out in the corresponding plan. The business plan of an investment project has such a characteristic as the formation and presentation of an idea to investors, which is carefully developed and substantiated in the plan, and in practice is implemented through the necessary capital investments.
What is a business plan for an investment project?
The business plan for the investor represents the economic and technical justification for the need for capital investment. It is mandatory to analyze the effectiveness of the set of measures under consideration, assess the reality and need for investment and resolve problems that arise with the direct implementation and use of the idea.
In other words, a business plan for an investment project is a logical and structured justification for the need and feasibility of investing an investor's funds in a particular business.
A business plan is created to motivate the following positions:
- Degree of stability and economic liquidity of the project.
- Possibility of receiving funds, in case of liquidation of the project - their return.
- Proposals for organizing joint ventures.
- The need for a set of measures provided in the framework of support from government agencies.
- Orientation in the further development of the project being implemented.
A business plan is the most important package of documents both for potential creditors and for the businessman himself. The possibility of implementing the idea and its further economic viability directly depends on drawing up a plan.
How to draw up an investment business plan?
Investment project - what is it
An investment project is a predetermined set of measures aimed at achieving a certain financial result. Therefore, this requires a corresponding inflow of funds from investors.
Investments and investment projects are factors in the development of the national economy, because the actions of investors are aimed at creating or changing technical, social, scientific or other spheres.
The essence of the investment project is to develop activities that include design, purchase, in some cases - training. This entire process works in order to create, upgrade or resell a certain product with the aim of subsequent economic benefits. Therefore, an investment project is not only buying securities or opening a deposit in a financial institution, but also conducting market analysis, negotiations, hedging risks, etc.
Features of investment projects
The peculiarities of the investment project are that the whole process of forming a set of measures aimed at making a profit does not guarantee positive results. There are significant risks in investments and investment projects, therefore, there are two types of such activities:
- Risk-free ;
- Risky (venture).
The concept of a risky (venture) investment project indicates a high probability of losing money. For safety net, capital is distributed between different areas so that at least part of the money is preserved. The advantage of the latter form is high earnings. If the investor compiles the investment portfolio correctly, the amount lost will be insignificant in comparison with the amount received.
Types of investment projects
The features of the investment project listed earlier do not provide complete information about the types of deposits. Therefore, it is worth disassembling them separately.
An investment project is:
- Production. The investor's capital is used to modernize, build new or expand existing production facilities in order to profit from the creation of products. Applicable to all areas of the economy.
- Scientific and technical. These are investments in the development, creation and subsequent testing of devices, equipment, technologies and processes. Such projects can last longer than others, which is why they are called long-term.
- Commercial. A type of investment that involves the purchase and resale of movable and immovable property with increased value.
- Financial. These are economic investment projects where the investor buys securities to form his own portfolio with the aim of subsequent implementation on the stock exchange at an increased cost.
- Environmental. The result of such contributions is nature conservation objects. It is also a long term investment.
- Social. These are projects that recognize as an end goal not receiving money, but improving the state of education, sports, health care, culture and other similar areas of life.
Types of investment projects
In this section, we will talk about the types of facilities for placing funds. These are economic investment projects and other areas for investing finance.
So, types of investment projects have 5 selection criteria. Initially, they are divided by investment goals:
- Increasing the volume of production of a certain product;
- Increasing the product line;
- Improving the quality characteristics of the selected product;
- Optimization of costs for the production of the required products;
- Social orientation.
- Long-term placement of finance - from 3 years.
- Medium-term investment - up to 3 years.
- Short-term capital placement - up to 1 year.
- Large investment volume from $ 1 million. Huge enterprises act as directions for investment to saturate demand in the local and foreign markets.
- The average volume of investment funds is up to $ 1 million. Usually these are local projects aimed at modernizing the production of certain products.
- Small investments - up to $ 100 thousand. Most often they are intended to increase the volume of production. Usually placed for a short period.
- Commercial projects aimed at generating income. That is, economic investment projects.
- Social orientation intended to improve the life of the population.
- Projects related to ecology.
- Other projects.
- State. production organizations.
- Coalition production.
- Foreign investors.