In order to increase the profit and profitability of work, the company must continually develop the projects that involve investment of resources in the creation of new technologies, the organization of new production facilities, the reconstruction of production facilities and equipment for production of competitive products on the domestic and foreign markets, the construction of offices and shops, close to the raw material sources and markets etc. Each of these projects must be justified in the business plan from the idea to the calculation of the specific amount of profit that would be got from its implementation.
Thus, the business plan is a program that describes the economic and organizational side of the project, which should bring the profit to the investor.
The business plan provides all the participants with the necessary information for analysis and evaluation of the project in terms of its reasonableness and realism, the viability and the effectiveness.
The business plan consists of three parts:
The project description (sections of marketing and production);
The financial information (balance sheet, financial plan, investment strategy, commodity and material security, credit, insurance and profitability calculations);
Accompanying documents (organizational and legal plans, foundation documents, copies of contracts, licenses, etc.).
The business plan includes the following sections:
General description of the project with the statement of the purpose of expenses, their necessity, the characteristic of the investment object.
Description of the goods, services, patents, know-how that can be offered to the market, or other outcomes that have been achieved after the completion of the project and have provided the income (e.g., reduction of production costs, increase reliability, improve other qualitative characteristics that may increase profitability of the production).
The marketing program which is being developed to study and predict the market.
Characteristics of the raw materials and the experimental facilities, staffing and other resource support for the parties of the project.
Calculation of economic efficiency of the financial results of the project and terms of cost recovery.
As usual, the business plan is being worked out if the company is experiencing a shortage of the financial resources to carry out the certain project, and it forces the enterprise to turn to investors or to the bank for a loan. Quality, validity, credibility and materials calculations, which are contained in the business plan, have the paramount importance for solving the issue about funding sources.
A key section of the business plan is the financial plan. For the investor, as well as for the enterprise, it is interesting because: it summarizes the results of all previous sections of a business plan; substantiates the overall requirements of the project investment, gives an indication of how this project generally acceptable from an economic point of view, shows the sources of financial resources and direction of their spending, evaluates the financial condition of the enterprise as a result of the project.
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