Business plan and its analysis. We teach you to do the correct analysis of a business plan. Investment Specialist

You have drawn up a business plan and are looking for investors. Look at it through the eyes of a person who will decide whether to invest in your project. By what parameters do investors evaluate business plans?

An investor considers various investment objects (investment projects) in order to choose a method of investing funds that will provide the highest return at an acceptable level of risk for a given investor. The analysis of an investment project begins with a consideration of the characteristics of the investment environment (investment climate).

The investment environment in relation to a specific investment object is considered at the general economic level, at the sectoral level and at the local level, i.e. as the activity (business) of a company in a competitive environment. In accordance with generally accepted international practice, a survey and verification of the truthfulness of all information (due diligence) about the investment object is carried out in order to prepare for the implementation of the investment project and its financing.

1. General economic analysis of the investment project

The process of analyzing the investment environment begins with studying the state of the national economy as a whole. International investment and financial institutions are especially attentive to this when choosing countries for the implementation of investment projects supported by these institutions.

General economic analysis usually considers:

economic growth rate

level of socio-political stability

level of legal stability

inflation rate

stability of the national currency

state of the country's balance of payments

interest rate for a loan

the size and dynamics of government spending and investment

developed market infrastructure

2. Industry analysis investment project

The industry in which the investment project is supposed to be carried out should be considered from the following positions:

industry growth rates and prospects

the state of sales markets

level of competition

the presence of special tax regimes and other elements of state regulation

3. Microeconomic (local) analysis of the investment project

An analysis of all material aspects of the company's activity, which is a promising investment object, is presented in the form of either a business plan or a feasibility study (feasibility study - an analogue of a “feasibility study”) and reflects the following aspects:

history of the company

legal status

financial condition

status of contracts

state of production

manufactured products

managment structure

state of the social sphere

marketing policy

The completeness of the conducted microeconomic analysis depends on how the investment project is planned to be implemented: with the creation of a new legal entity or within the framework of an existing one. In the first case, a detailed consideration of all the indicated aspects of the company's activities will be required, in the second, it is enough to get by with a more concise description of the prospective participants in the project.

The analysis of the investment project itself includes verification of the initial data, analysis of the organizational and legal form of the project implementation, construction financial model and project evaluation according to the selected criterion. If the project meets the selected criterion, then the information obtained forms the basis for drawing up a business plan.

Along with the preparation of a business plan, an analysis of possible ways of raising capital (issuing shares, bonds, obtaining a loan, etc.) is carried out in accordance with the existing practice of corporate finance (corporate finance), as well as with the terms of placement of securities (underwriting).

Investment project analysis

1. Verification of the initial data

The information used in the analysis of the investment project must be verified. This especially applies to the following data:

the volume of investments in the project (construction costs, R&D, etc.)

costs of production and sale of products / services

depreciation rates

interest rates for a loan

available and projected prices for products manufactured under the project

2. Marketing analysis

The project may turn out to be untenable if there is no demand from potential consumers for the products manufactured under the project. Therefore, the construction of a financial model should be preceded by work to determine the demand and market opportunities (marketing analysis). The latter is carried out in the following stages:

1) assessment of competition and other external factors:

degree of competition

potential sources of competition

presence of state regulation

2) defining a marketing strategy:

sales strategy

pricing strategy

company location analysis

subsequent marketing strategy

3) market research:

search and analysis of primary information

market reaction assessment

4) sales forecast:

sales volumes by period

sales volumes by product and service

sales volumes by consumer groups

market share

The reliability of the information obtained in the course of marketing analysis determines the reliability of financial calculations for the project.

3. Analysis of the organizational and legal form

The organizational and legal model for the implementation of the project may vary depending, first of all, on the following initial prerequisites:

1. The project is implemented on the basis of an existing enterprise - an investment object, and the investor's funds are provided through the sale of securities of this enterprise or within the framework of lending.

2. The project is being implemented on the basis of a newly created enterprise, the founders of which include a potential investor, contributing the agreed amount to the authorized capital.

In addition, it is necessary to determine the organizational and legal form of the enterprise created for the implementation of the project (LLC, OJSC, CJSC, etc.).

The use of one of these or other organizational and legal models and forms in the future leaves an imprint on the entire further process of investment planning.

4. Financial analysis

Financial planning is an integral part of the investment planning process and represents the modeling of future financial results the activities of the enterprise at the given forecast values \u200b\u200bof the main parameters and the corresponding restrictions. Financial planning is carried out by creating and using a financial model and interpreting the calculation results.

The use of the financial model allows:

analyze and predict financial results

perform sensitivity analysis

reduce the time and money spent on storing and processing information

reduce the risk of human error

reduce the time for calculations

The financial model framework is designed to take into account all factors that have a significant effect on the entity. In its most complete form, the financial model allows not only to calculate the results for the given forecast parameters and to draw up forecast financial reports, but also to choose the most appropriate investment schemes and types of funding sources in accordance with the established criteria. Some models include statistical forecasting techniques used to trend trends in key parameters based on historical data from the enterprise.

The financial modeling process has several stages:

Conceptualization (the goals of creating a model, parameters of input and output information are established).

Model creation.

Trial run and model check.

Making changes to the model (if necessary, based on the results of the check).

Using the model.

When building a financial model, such elements are usually taken into account as, for example,

management methods accounting

depreciation procedure

calculation of tax payments

debt repayment schedule

stock formation strategy, etc.

When performing work on financial modeling, all information, assumptions, document format should be presented in such a way that it would be easy for a specialist to reflect the specific characteristics of the enterprise in the model, and then calculate the projected results when the given conditions are met.

The main difference lies in the use of various methods of financial analysis when evaluating investment projects and business (calculation cash flow, calculation of the present value, risk assessment, etc.), since accounting methods do not provide an adequate description of the processes occurring and expected in the future. However, the application of the methods of financial analysis is often not possible without the use of accounting documents, appropriate forecasts made in the framework of financial planning of the enterprise.

For example, for any enterprise, it is important to estimate the amount of receipts and expenditures of funds, based on an analysis of the company's activities for previous periods and forecasts. For these purposes, cash budgets are drawn up - forecasts of receipts and payments for future periods (month, week). The calculation of the company's cash flow is based on the cash budget.

Compared to a cash budget, a cash flow is usually built for an individual investment project, and not for an organizational unit of an enterprise. The calculation of cash flow is carried out most often in order to assess the return on investment, and the cash budget is used in the planning process. This is one of the many points that demonstrate the need to clearly think over the goals and scheme of the financial model being created, the relationship between the elements, to take into account the specific conditions for the functioning of the enterprise, the implementation of the project.

Diagram of the main relationships between the input and output parameters in the financial model

* When building a financial model, information on the required capital investments and the amount of financing is a special type of initial information, since, depending on the purpose of building the model, the available initial initial data, the amount and use of this information will be different. For example, the calculation of the amount of taxes payable when implementing an investment project is based on the assumption that the project will be financed by share capital... Interest on a loan is not included in the calculation of income tax on this investment project.

** Analysis of resource flows includes the construction and calculation of various types of cash flows (cash flow after taxes, net cash flow, ordinary cash flow, etc.), calculation of the corresponding indicators when building a financial model for evaluating an investment project, business or a report on sources and use of funds, calculated on the basis of the profit statement and balance sheet of the operating enterprise.

5. Criteria for comparing and choosing investment projects

To compare and select investment projects, an investor usually uses the following criteria:

net present value

internal rate of return

profitability index

average accounting profitability

payback period

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Implementation of a preliminary expert assessment of a business plan

At this stage, the assessment of the state of the industry of the economy set out in the business plan (the first assessment parameter), to which the organization that submitted the business plan belongs, and the position of the organization within the industry (the second assessment parameter) are verified.

The analysis of the state of the branch of the economy is carried out by referring it to one of the following provisions:

Embryonic;
developing;
mature;
old.

The second parameter assumes an assessment of the competitiveness of an organization within the industry, by referring it to one of the following provisions:

Dominant;
strong;
favorable;
unstable;
weak;
unviable.

When comparing the obtained parameters, the matrix is \u200b\u200bformed life cycles organizations.

Industry status / competitiveness assessment	embryonic	developing	aged
dominant

favorable
unstable

unsustainable

Projects from among the promising ones will be in the upper columns of the matrix, on the left side. If you are at the bottom right, the project is unsuccessful.

Marketing Analysis

The purpose of the analysis of the commercial viability of a business plan is to study the issues:

Will the organization be able to sell the product in the analyzed business plan?
will the company receive sufficient profit from the sale of the product?
is the project compatible with internal and foreign policy states?

If the answer is no to at least one of these questions, the business plan is rejected.

Carrying out a technical assessment of the effectiveness of a business plan

At this stage, the correctness of the conclusions made in the business plan on the following issues is determined:

On the application of technology suitable for the implementation of the project;
on the analysis of regional conditions, including in terms of prices and availability of materials, energy, labor resources.

Financial assessment of the effectiveness of the business plan

The implementation of a general algorithm for carrying out financial analysis of a business plan is a real business school:

Assessment of the financial position of the organization within 3-5 previous years of the organization's work;
project payback assessment.

Estimating the payback of the project, the analysis of the planned cash flows is carried out within the boundaries of the expected period of its implementation. These volumes should cover the size of the total investment.

From the point of view of financial parameters, the project can be accepted if the total cash flows generated from the issue of securities provide coverage of the required rates of return.

The economic efficiency of capital investments is analyzed by the following methods:

- Method for assessing the payback period of investments:

where PP is the payback period, years;
I0 - initial investment;
CFt is the net cash receipts from the implementation of the investment project in year t.

- The method for determining the average annual profit:

Where T is the duration of the investment period;
Рt is the cost estimate of the results obtained from the project during the time period t;
Зt - total project costs during the period of time t;
m is the number of intervals during the investment period.
A business plan can be considered economically attractive if this parameter is positive.

- Simple rate of return (ARR) method:

where EBIT (1-H) - income after tax, but before interest, equal to the product of income before interest and tax payments (EBIT) and the difference between the unit and the tax rate of profit H;
and - the value of assets at the beginning and end of the period under review.

- By the method of net income (NP) (net value, NV):

where: D - total project revenues;
З - total project costs.

- By the method of net present value (NPV):

where E is the desired rate of return (discount rate);
I0 - initial investment of funds (investment costs),
CFt is the net cash flow at the end of period t.

- The method of evaluating the return on investment:

- Internal rate of return (IRR) method:

The issue of assessing the quality of tools for determining economic efficiency is the subject of numerous scientific discussions. In the most general and simple form, the system of parameters for selecting a reasonable business plan option can be presented as follows:

Acceptable values \u200b\u200bof the payback period are characterized by a period that is shorter than the settlement period and a shorter return on investment;
if NPV\u003e 0, then the project is effective and can be accepted: the larger the NPV, the more effective the business plan;
if the value of the profitability index PI\u003e 1, then the project is effective;
if the value of the IRR indicator\u003e the discount rate, then the project is expedient.

Institutional analysis

The institutional analysis assesses the possibility of successful implementation of a business plan, taking into account organizational, legal, political and administrative factors.

Conducting an impact assessment internal factors is carried out within the following blocks:

1. Management capabilities:
seniority and qualification indicators of the first persons of the organization;
motivation of top managers;
factors of compatibility of top managers with the goals of the business plan.
2. Opportunities of labor resources.
3. The capabilities of the organizational structure of the organization with a thorough analysis of decision-making processes and delegation of authority.

Risk assessment

A consistent assessment of the following types of risk is carried out:

Production - associated with the possibility of default on obligations to consumers of products;
financial - related to the possibilities of default on credit obligations;
investment - associated with the potential for devaluation of investment and financial portfolios;
market - associated with the possibility of fluctuations in prices, rates and exchange rates;
political - associated with possible losses from political changes.

The algorithm for analyzing the degree of risk impact of a business plan is implemented according to the following scheme:

The outcome of the risk analysis is a description of the uncertainties inherent in the business plan. Further carried out evaluation of the effectiveness of the business plan for the limiting values \u200b\u200bof each risk parameter, the NPV and IRR indicators are calculated for various conditions of the business plan implementation.

The next step is to analyze scenarios for the implementation of a business plan:

Optimistic;
standard;
pessimistic.

The conclusion about the possibility of successful implementation of a business plan can only be based on a pessimistic scenario.

* Calculations use average data for Russia

Step 6: Prepare the "Market Analysis" section of the business plan

Any business plan should have a section dedicated to describing the target market, analyzing its general trends and conditions, and determining how these trends affect the results of your operations and the profit of the new company.
If you professional marketer with extensive work experience, this part of the work will not cause you any difficulties. For everyone else, we provide detailed recommendations with illustrative examples.

Market characteristics

First of all, collect as much information as possible about the current market situation, the main trends in the industry, forecasts and prospects for its development. Investors are interested in the size of the market you are going to enter with your products - regional, Russian, in the CIS or around the world, the level and trends of the industry, price dynamics over the past five years.

Answer the question, what trends in the sales of your main products or services have been observed in the market over the past five years? Describe what the trend analysis is forecasting for the next five years and indicate sources of information. Explain how these changes may affect your company in the future.

For instance:

The industry engaged in the production of goods or marketing a product or service in ____ showed a rapid growth from ___ rubles. up to ____ rubles, which is ___% for ___ years.

According to specialized publications (research companies, trade organizations, reports, marketing agencies), over the next ___ years, the market is expected to increase by ___%. It is expected that by the end of ___ the volume of the industry will amount to ____ million rubles.

The most promising and rapidly developing segment of the market for a product or service is ____, which allows us to consider this direction as optimal for opening a new type of business.

The level of attention that needs to be paid to market and industry analysis in your project depends on the size and perspective of your business.

Of course, if you are going to open a shoe repair shop on your street, it is hardly worth describing in detail the volumes and forecasts of the development of the world market for such services.

However, even if your business will cover only a district or city, an assessment of the situation in this area on a large scale will not only give solidity to your business plan, but will also allow you to assess the prospects for expanding the company, developing new areas of work in the future, and the range of goods and services offered.

Ready ideas for your business

If your business does not require large investments and / or you do not have accurate data on the new industry, then you can do without in-depth analysis, accurate data and links to authoritative sources. Moreover, you can use your own estimates and predictions of the situation based on your research.

For instance:

Since the product we offer has appeared on the market relatively recently, and the market for its sales is just beginning to form, it is rather difficult to accurately assess the volume of its sales for the next few years. The size of potential sales can range from ___ to ____ rubles. Nevertheless, it is safe to say that the market is expected to grow rapidly.

At the moment, sales in monetary terms are increasing by ____% annually, and the number of products sold is growing by ___ units per year. No slowdown in growth is expected over the next few years.

Moreover, since the market is just beginning to be developed by an increasing number of large manufacturers, experts predict a further increase in sales by ____% per year.

In a business plan for large enterprises, it is necessary to describe what market share the company will be able to occupy and assess its export potential (plans to expand the business outside the country).

It is also worth mentioning here the specifics of the chosen industry (entry threshold, seasonality factor), as well as the special goals of your market presence, if any.

When assessing market share, try to be as objective as possible and not wishful thinking. To do this, substantiate your forecast with the results of your research and expert estimates.

Determine the total market size, its growth rate, the market size in one year, three years, five years, the percentage of profit you expect to get in one year, three years, five years, and the percentage of profit that competitors have.

For instance:

According to data obtained by __________, local / regional / federal / international market product or service generates annual sales of ____ rub. (dollars or euros). We estimate that _________ will be able to occupy ____% of the market over the next ___ years.

Characteristics of product consumers

Determine if your target market is consumer or industrial (the so-called B2B market - "business to business").

If the product or service you offer is intended for end consumers, then give their age characteristics, educational level, family composition, gender, income level, describe their lifestyle, professional occupation, general needs, purchasing behavior.

For instance:

The target audience of our company includes men and women aged ___ unmarried (married / with children), with a secondary vocational / higher education, with an income of _____, working full-time (part-time / unemployed / students / pensioners).

They live in large cities (suburbs / medium and small towns / districts), as a rule, they read ____, listen to ____, watch ____ and often (occasionally / rarely) use the Internet.

Describe the factors that guide your potential consumers when purchasing products or services similar to yours. If your product is already on the market or if marketing research and testing on focus groups, include in your business plan their results and the opinion of potential buyers about the goods and services offered.

Marketing strategy

An effective pricing policy is important factor success marketing activities enterprises. In this section of your business plan, provide the calculation and justification for the prices you set for goods or services.

The prices you set for your products will directly affect your sales and profit margins. To determine your pricing policy, you need to set tasks, develop a pricing system taking into account all the costs of the enterprise, choose a pricing strategy to create a presence on the market.

For instance:

Before we set prices for our product, we calculated the cost per unit. We then examined the prices of similar products on the market.

If our product had a mid-market price and sales were at the minimum forecast volume, the company would have made a profit of ___ in ___ days / months / years.

But since the product developed by us has additional unique characteristics, including _____ (versatility, reliability, long service life, etc.), then we considered it possible to set a price for it ___% higher than the market average.

Before approving the cost, we conducted a survey among potential users of the product. The questionnaire included questions regarding the benefits associated with additional product characteristics and the relevance of new features.

Thus, we found out whether the price set is acceptable to consumers.

According to the results of the study, it turned out that 50% of those surveyed showed interest in the new product and considered its price to be fair. 20% of this group have already sent orders for our products. Thus, our proposed pricing and discount system for the product is _________.

Attach a price list to your business plan, if you have already approved it.

Describe the current distribution system for sales and the planned distribution scheme for the future. The secret to proper distribution is extremely simple: you need to provide your products and services to the people who need them in the right time, in the right quantity and at the lowest cost for you.

The traditional distribution scheme involves selling to consumers directly, through agents or a network of distributors, through a wholesale or retail operator. Sales volumes through each of these channels depend on the number of consumers your product is targeted at, market concentration, product price and complexity, financial resources, and the need for control.

For instance:

The main distribution channels of the company are ____. We chose to use Channel A because its target market has similar characteristics to our potential customers. Channel B was chosen by us for the reason that it has exclusive trading rights in the market of this region. Channel B provides high quality customer service and has the widest market coverage in the region.

Now you need make a plan to promote your products, which discusses the advertising tools you intend to use, sales promotion, service and warranty services, and public relations.

Write about what you want to convey to your clients and / or about the possible subject of advertising messages. List the advertising media you plan to use and explain why you chose these particular tools.

For instance:

During seasonal promotions and sales we will be ______. For special events, our company will use the services advertising agency to develop the whole concept advertising campaign or individual materials.

When choosing an agency, we plan to pay special attention to its professionalism (experience in related areas, client base, creativity, etc.).

Sales promotion is a combination of several types of activities provided by the promotion plan. The main purpose of sales promotion is to improve the wholesale and retail sales of products.

For this, methods are used such as selling through catalogs, distributing leaflets with information about promotions, decorating shop windows and expositions in the trading floor, placing banners and signboards (that is, everything that is not directly related to advertising, but contributes to sales growth and increasing awareness your company).

This also includes participating in trade shows and holding demonstrations.

Describe special promotions or your company's offerings that may increase the sales of the products or services offered. Indicate the duration and frequency of these offers, their target audience and ways of informing potential buyers about them.

For instance:

In order to increase the sales of our products or services, we plan to organize the following special offers and promotions (discounts, special events, exclusive offers, discount card system, sales, distribution of free trial products or services, contests, charity events).

These events will run weekly (daily, monthly, every three months, every six months, during a sales downturn) and will last ___ days on average. We plan to inform our clients about the next promotions using _____.

The direction of Public Relations (public relations) is closely related to the rest, but is usually considered as a separate component of promotion.

This includes issuing and distributing press releases, holding press conferences, participating in radio and TV programs, appearing company representatives at various public and commercial events, as well as creating other favorable news events that will attract the attention of the public and the press.

For instance:

The main goal of the ongoing public relations activities is to increase the general awareness of the population about our products and / or services.

In addition, we plan to highlight our competitive advantages and inform potential customers about the latest trends and new developments of our company and the industry as a whole.

As part of the ongoing PR campaigns, press releases, test samples, multimedia products are sent out, publications in the media are initiated, interviews with company top officials are organized, product reviews are prepared and press conferences are held.

Often this section contains information about the service and warranty service that you offer your customers. Don't copy the data from the previous section. Try to present these services as an additional competitive advantage that will grab the attention of consumers.

For instance:

Typically, the average warranty period for this type of product is one year. We are confident in the high quality of our products and are extending the warranty period to two years.

Characteristics of competitors

A description of the competitive landscape is an integral part of any business plan. Indicate who your direct and indirect competitors are. Estimate their market share and profit margins. Analyze their strengths and weaknesses, describe what technologies and equipment they use, what methods of promotion they prefer, what kind of staff they have, what kind of response can be expected from them after launching your product on the market.

Such research can be done independently. Look for information in directories and industry publications, talk with clients (including former ones) of a competitor company, conduct a survey among buyers, carefully study competitors' products, pay attention to their advertising and promotion methods.

For instance:

Our main competitors in the market for a product or service are companies A, B and C. Competitor A is known for its aggressive pricing policy.

Competitor B has developed and implemented the most effective service plan. Competitor B has been in the market longer than the rest and has a favorable reputation and a large number of loyal customers. However, none of the competing companies is expanding their range or offering additional services.

Our direct competitor in the region is _________________, located in _______.

It has the following advantages: favorable location (located at the intersection of major transport interchanges, close to suppliers), competitive prices, fast delivery, competent managers.

The disadvantages of a competing company include a low level of service (customer complaints about a long period of repair under warranty), outdated equipment, lack of partner programs, etc.

Here you can also describe your main competitive advantagecomparing your offer with those of other companies.

For instance:

Despite the fact that our company is still unknown on the market, we have two distinct advantages over our competitors.

We purchase goods in large quantities, which allows us to reduce the unit cost and transport costs and, therefore, set a lower retail price for the product than that of competitors.

We also offer the highest level of customer service, offer free telephone information services, carry out sales through our website and regularly hold promotions and sales.

It might be helpful to read:


Technical Specialist	providing general information about the industry and the launched product; determination of the reliability of analyzes and forecasts for the development of the industry; expert evaluation of information specific to the industry, product; determination of the phases associated with development, production, implementation, maintenance, operation
Investment Specialist	organization of professional calculations of investment indicators; risk assessment; issuing proposals for risk management; formation of investment models
Financier	providing information on providing the business plan with financing; selection of appropriate forms of financing; procedures for coordinating funding with the legal aspects of the project;
Lawyer	analysis of the compliance of the business plan with current legislation; study of issues related to tax optimization
HR-, PR-, GR-, IR-specialists	HR manager - providing information on the availability and quality of human resources; PR manager - implementation of PR support, assessment of changes in brand value; GR manager - providing information about the availability of GR resources; IR manager - actions to manage co-investor relations
Marketer	determination of the price level for materials and finished products; analysis of the industry, competitive environment, suppliers, customer behavior

Business plan and its analysis. We teach you to do the correct analysis of a business plan. Investment Specialist

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Similar documents

Implementation of a preliminary expert assessment of a business plan

Marketing Analysis

Carrying out a technical assessment of the effectiveness of a business plan

Financial assessment of the effectiveness of the business plan

Institutional analysis

Risk assessment

Step 6: Prepare the "Market Analysis" section of the business plan

Market characteristics

Characteristics of product consumers

Marketing strategy

Characteristics of competitors