Stages of developing a business plan for an investment project from scratch
I. General characteristics of the business plan of the investment project
1. The structure, content of the business plan of the investment project
1. Concept and objectives of an investment project business plan
1. Calculation of the estimated project efficiency
II. Development of a business plan for an investment project using the example of the travel company "AMG Holidays"
2. Sections of a business plan for investment attractiveness
2. Potential risk, assessment and problems
List of sources used
A business plan acts as an objective assessment of the company's own business activities and at the same time a necessary tool for design and investment decisions in accordance with the needs of the market. It describes the main aspects of a business enterprise, analyzes the problems it will face, and identifies ways to solve them. Consequently, a business plan is simultaneously search, research and design work.
The process of developing a business plan, including a detailed analysis of economic and organizational issues, forces the mobilization of enterprise resources. The purpose of a business plan can be obtaining a loan, or attracting investment, determining the strategic and tactical guidelines of the company.
One of the important mechanisms for conducting effective investment activities is planning. In turn, the development of business plans for investment projects allows the investor to competently manage capital and predict the profitability of such a project.
Before considering the specifics of developing business plans for investment projects, we focus on the general concept of business plans.
Here are some of the most common wording:
- is a document containing information about an investment project that is necessary for its implementation;
- is a short, accurate and clear description of the proposed investment activity with reasonable conclusions made analysis of efficiency (see Investment efficiency: main criteria) and the feasibility of its implementation;
- this is a formalized presentation for the investor about the project;
- is the result of pre-investment research;
- it is the definition of goals, ways and methods of achieving any investment programs.
All of the above definitions complement each other and to form a general idea of what a business plan is, it is better to consider them together.
Goals and objectives
The business plan of an investment project is developed in order to solve or answer two main questions:
- Is it worth investing at all?
- Will the costs of the project pay off?
The main goals and objectives of business planning can also be divided into external and internal. What is meant and what relates to them?
Purposes of creation that are external in nature include:
- the need to obtain a loan;
- the receipt of investment.
Investments are funds that are "donated by investors" to generate profits in the future. Investments facilitate the development of the project, its promotion and implementation. To part with money, investors need a guarantee. To calculate the risk ratio, investors can use the formula: Risk = Maximum possible level of investment loss / total investor resources.
Main characteristics of the pre-investment business plan
Investors, before investing their funds in a particular area, choose a strategy.
In turn, investment strategies are divided into active and passive:
- Active investment strategy. The strategy applies new production methods, increases the demand for products, the competitiveness of the business.
- Passive investment strategy. Increases the overall performance of the product, the qualifications of employees through training, and ensures the replacement of old equipment.
The success of an entire business depends on predicting the financial and economic aspects of the plan. A pre-investment business plan allows you to study the goals of the business in advance, identify weaknesses and correct them. An important phase in the development of a business plan is the pre-investment phase.
The pre-investment phase includes several stages:
- analysis of project alternatives
- preliminary project selection
- project and investment assessment
- appraisal report
Functional studies - also refer to the pre-investment part of the business plan. Usually carried out separately, to further combine the studied aspects of the business into a single project.
Key indicators of the pre-investment business plan:
- Market research. Helps investors determine the best course of action.
- Search for stable investments. Helps the firm to maintain its business during unstable times.
investment section in the business plan - the part that describes the investment phase of the project. Should contain information regarding the main stages of the implementation of the described project, starting with the design and building of the project team (if necessary), the acquisition of land and construction of the premises, ending with the purchase of equipment, its commissioning and the full launch of production.
What is an investment project business plan?
A business plan is a set of activities aimed at economic and technical justification of the need to invest money. In the process of developing a document, specialists necessarily perform: analysis of the effectiveness of capital investments, an assessment of the current realities of the market and economic feasibility.
Moreover, the business plan presupposes a set of actions necessary to resolve problems arising in the process of project implementation.
In simple terms, a business plan for an investment project is a justification for the need for investments and taking into account all the subtleties of pouring money into a project.
In most cases, business projects allow you to evaluate:
The Action Plan is one of the most important documents for potential investors and lenders. The further viability of the planned business depends on the literacy of drafting the document.
An example of how an investment can be calculated.
There are many types of investment concepts. They are classified according to different indicators. There are several examples among the main categories of projects:
- Duration of implementation - projects can be short-term (less than three years), medium-term, as well as long-term (over 5 years).
- Amount of funding - small and medium, large and mega-large.
- Specialization - commercial, scientific and technical, industrial, environmental.
- Scale - from global and large-scale to local.
- The level of risks, for example, is low and overestimated.
In the new situation, investment projects have become especially relevant as a guarantee of increasing the competitiveness and value of companies in the market. Enterprises most often implement investment projects containing a huge amount of innovations that ensure the continuous development of the system.
Such programs help to achieve the set goals and problems in accordance with the strategic planning of companies. Investment projects are usually long-term and are associated with great risk. An important feature of the business plans of an investment project is the formation of an effective and functional innovative idea, which is further implemented according to the plan. More details about the goals, nature and criteria of such business strategies will be described below.
From the point of view of practical activities, investment projects are a whole set of documentation that characterizes a business from the planning stages to the final result. The investment project includes several periods:
A business plan for an investment project is a document that shows the main advantages of the program, including - profitability, compliance with existing legal and economic regulations, resistance to probable problems in the economy, criteria for its effectiveness, the difference with existing projects. It presents long-term investment prospects: the possibility of further development and an increase in production capacity.
The business plan shows the investors the feasibility study of the contributions. An analysis of the performance of a set of measures, monitoring the argumentation and the need for investments and solving the difficulties that arise during the implementation and implementation of ideas are certainly visible.
In other words, the business plan of the project acts as a consistent and structured argument for the usefulness and need for the investor to invest in this project.
A business plan is the motivation for such positions:
- The level of economic stability and quick implementation of the project.
- Possibility of refunding monetary contributions in case of project completion.
- Creation of shared enterprises.
- Necessary steps as suggested by government authorities.
- Focus on project development.