How to open an investment company? Business plan, types and stages of development
When faced with services in the financial market, many wealthy businessmen ask the question of how to open an investment company. Most of them abandon this idea, deciding that this is simply impossible. In fact, realizing such a dream is not at all difficult. Any investor has a chance to create such an institution that will meet all the most modern requirements, providing high quality financial services. Such companies are organizations involved in investing funds of investors in various projects, and in the stock markets as well.
Stages of development from scratch
Let's figure out how to open an investment company from scratch.
To launch such an organization, it is necessary, as in other cases, to go through the following several stages. In general, the whole process will look like this:
- The stage of comprehending the basic idea, and at the same time the mission of the planned organization.
- Carrying out the development of the project business plan.
- Selecting the organizational legal format of the institution's ownership.
- Assessment of available resources and ways to develop the intended business.
- Making a decision to open an investment project and achieving direct implementation of the idea.
Stage of comprehension of the general idea of the company and its mission
As part of their communication with investment brokers, many businessmen probably came up with the idea that the services provided could be of higher quality. It is this circumstance that will be able to push you to launch your own organization and resolve the issue of how to open an investment company.
The mission of the institution is the main goal of the company, and in this case it can sound, for example, as "providing the provision of brokerage services and investment advice at a high level, which allows taking into account all the interests of clients." Next, let's talk about the development strategy.
Business plan of the project
To understand how to open an investment company, you should start by working out a business plan.
Organization chart enables:
- Consideration of the strengths and weaknesses of the future organization.
- Marketing plan definitions.
- Consideration of financial strategy.
- Analyzing the existing external and internal environment.
Everything else is tinsel that is necessary in the business plan, but does not have much impact on the decision. For clarity of the above, let's take the business of one of our clients - selling lenses through vending machines.
The main thing is the idea!
Non-professional investors often do not even read the following points after describing an idea. They either like the idea or solution you are proposing or they don't. And no amount of financial calculations will be able to convince him. Therefore, it is important for a person to believe in this idea, which means the first point: "It needs to be sold." And you need to sell an idea with an understanding of the market. Let's take an example with lenses. If you just present the idea: "We came up with a brilliant idea: to sell lenses through automatic machines", there is a high probability of skepticism. Therefore, it needs to be served a little differently.
- 1. The lens market is growing by 20% annually.
- 2. The main points of sale are optical stores and the Internet.
- 3. People are used to using coffee machines, payment terminals, ATMs.
- 4. Lenses are an essential commodity, so the 24-hour opportunity to buy lenses in any residential area will be in demand.
The most important thing is that the idea is supported:
- A real need for a product or service;
- An analysis of the gaps in solutions to this need now;
- Examples of successful similar solutions or approaches to a solution;
- An assessment of the prospects for either a growing market, or the reasons for the redistribution of existing shares.
The most unpredictable article in a business plan. With its help, they pull out a business plan into a quick payback. To attract an investor, this article must be clearly justified. Take our example: Population 150 million, of which 40% have poor eyesight. Of these, 30% use lenses. This is an economically active population under the age of 35. Considering that there are about 20% of innovators in this category, we can identify a potential niche of consumers in the amount of 3,600,000 people. And it will constantly grow due to the involvement of conservatives and an aging population. One consumer uses 2 packs of lenses per month. Based on this, we can calculate the number of potential consumers for each city or region. A very good move would be to reduce the calculated figure by 2 times. Or use an optimistic and pessimistic scenario. In a pessimistic scenario, the numbers should be quite satisfactory. In fact, any forecast will still be approximate and no one can accurately predict sales. Most investors understand this, the main thing is that there is a clear logic in the forecast of the number of buyers, purchase volumes and pricing.
If the income plan shows the investor your adequacy of market perception, then the expense plan shows your experience, a rational approach to the investor's funds wasting. The costs in each situation will be different. An important point is the validity of the costs. If the business plan includes costs for contractors, quotations from those contractors must be attached, or mid-market prices or salaries can be referenced. An important point is the salaries of the management staff. They should be at the level of your living wage. If they are raised to quite acceptable salaries, the investor will decide that you have a desire to find a warm place and get comfortable money. A good move when drawing up a cost plan can be funding in several stages, when a solution is created on the knee, testing is done, and then the main money is invested. But in general, you do not need to immediately cut your costs, you need to find solutions that have proven themselves in the market and are justified by quality. First, the investor wants to invest in a serious business with serious decisions, so that later this business can be sold. Therefore, the initial decision must show the solidity of the entire event. And secondly, if he nevertheless decides to cut, then you will have at the expense of which to reduce the amount of investment.
Summary and experience of the participants
Having a real team with shining eyes is the biggest proof for an investor about the possibilities of implementing an interesting idea. The team must have people capable of implementing:
- Commercial and marketing component;
- Technical solution.
Each activity has a planning stage; in the financial sphere, this issue is given special attention. An investment plan is a project that includes both a description of the stages of work in a business, and an analysis of potential risks, a scenario of behavior in a particular case. The development of an investment plan is a mandatory requirement, regardless of the volume of investments, therefore, each investor must have the appropriate skills to draw up it.
What is an investment plan and how it differs from a business plan
The essence of this document is that it is a complete strategy for achieving the set goals and objectives, as well as the expected results of investments. In a broad sense, any person can create an investment plan, and not only in relation to the financial side, but also in any other area of life.
In practice, this document is also called an investment (strategic) project, strategic investment plan or business plan. These concepts practically coincide, since in all cases we are talking about planning investments in the enterprise, the expected results of the investment and the specific timing of their achievement. However, there are some differences between an investment and a business plan:
- A business plan is a specific study of a newly created or ready-made business, a description of investments, a full estimate of the estimated costs, participants in the process and a description of the expected time frame for achieving results.
- The investment plan largely coincides with it in structure, but it is a long-term investment planning both in one and in several types of business.
Therefore, a plan is a strategic project, and a description of business development is often an integral part of it. Thus, we can say that a business plan is the most important part of a strategic project. And therefore, the concepts are often used in the same sense, which is not an error.
Purpose, objectives and functions
Each plan has its own goals and objectives. In a global sense, the goal of a strategic project is to determine the investment object, the timing of profit and the expected results from investment planning. That is, when setting a goal, the expert must clearly answer the question of whether the investor will be able to achieve his goals within the set time frame when investing a specific amount in the enterprise. Accordingly, the following tasks follow:
- attraction of investments;
- creation of new jobs;
- improvement of key economic indicators, business expansion;
- correct prioritization, highlighting the main and secondary areas of business development;
- analysis of the sales market (this requires a separate marketing plan).
Therefore, the development of a strategic project performs several functions at once:
The first and, probably, the most important stage of any investment project is the stage of preliminary market research, formation of the main idea, justification of the feasibility of its implementation. A well-designed investment plan at this stage, or, more precisely, a model of investment "behavior" in the future, reflected on paper.
Still, what definition of an investment plan is still accepted to use in financial practice? Here are some options.
An investment plan is a document that reflects all the information necessary for the implementation of a specific investment project. This information should fully answer the questions: "Is it advisable to invest in the project?" and "Will the costs pay off and in what time frame?"
An investment plan can also be called a business plan. The definition can be as follows - a clear, understandable description of the business for which funding is planned.
Functions, tasks and goals
Thus, from the above definitions of the general concept of a business plan, its main functions can be distinguished:
- a tool that allows an investor to evaluate the results of a business for a certain period;
- is used as a concept of doing business;
- a tool for raising funds.
In turn, a detailed plan of an investment project allows you to solve the following tasks:
- to determine the directions, markets and goals of activities;
- to assess the income and expenses associated with the project;
- to develop measures and ways to achieve investment goals;
- select the persons who will be responsible for the implementation.
- calculate and assess possible risks in financial and economic aspects.
Drawing up a business plan
The procedure and methodology for drawing up an investment plan presuppose a certain structure. Before proceeding to the consideration of the main points of the content, we will single out several methods used in practice for its preparation. The main ones are presented in the photo below.
These techniques differ from each other only in sections of content, which may be mandatory in one and optional in another.
An investment project is a multi-page document, which includes a descriptive and calculation part. To begin work on any investment concept, one should define its purpose. After that, it is necessary to assess the existing possibilities and concretize the program of action. Creation of a competent investment project is a rather difficult task. To facilitate the work, you can download a ready-made investment project with approximate calculations for free.
Example of business investment plan objectives
An investment business project is a combination of legal and financial documentation reflecting the economic benefits of investing in a specific object. The investment concept should contain design and estimate documents, as well as a detailed action plan for the expenditure of financial resources. Often, developers use an example of an innovative project with calculations and, taking it as a basis, make up their own.
When developing an investment project, you need to perform certain activities:
- Justify the business idea.
- Investigate an example of the potential of the project for the possibility of realizing all the invested funds.
- Develop and approve project documents.
- Conclude all necessary agreements.
- Provide the project with finances and resources.
- Carry out the commissioning of the object and start the production cycle.
Any investment business example has several features. They are important for the investor and should be well developed. The most significant among them are:
- An example of a cost estimate. Any investment plan can be presented in the form of a specific amount of cash.
- Payback. During the implementation of the business plan, it is important to recover all costs.
- Time loop. The profit can be obtained only after a certain amount of time.
- An example of a project idea should be expressed as concisely as possible, in a maximum of five sentences.
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, production, environmental.
- Scale - from global and large-scale to local.
- The risk level, for example, is low and overestimated.