SME-Part B-Lecture 7-ageconbd.com
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Financial Feasibility Analysis
3 functions of a business plan
a. Guiding an entrepreneur: A business plan guides the time of applying the business plan
b. Attracting lenders and investors: Lenders and investors can get an idea about return on investment from the businesses plan
c. Representing or reflecting its creator
Elements of a business plan
a. Title page and contents: The title page denotes what activity is performed in the business and contents are used to see a summary of the business plan.
b. Executive summary: It is abstract of a business plan.
c. Vision and mission statement
d. Company history: Starting time of a company and profiles of partners and employees of the company are stated in the company history.
e. Business and industry profile: Industry size, growth, the number of working employees in the industry, etc are shown in business and industry profile.
f. Business Strategy: Manufacturing process, finance, management, HRM, supply, etc are stated in the business strategy.
g. Business Description
h. Marketing Strategy: It is a part of a business plan. The marketing department conducts marketing strategy.
i. Competitor Analysis: The number of competitors and descriptions about them etc is stated in the competitor analysis.
j. Description of Management Team: Staffing information, hierarchy position, etc are stated in the description of management.
k. Plan of Operation: Processing detail of a manufacturing company is given.
Merchandising Business:
a. Selling and Buying
b. No value add
Business Type:
a. Service
b. Merchandise
c. Manufacturing or Processing
Business Form:
a. Sole Proprietorship
b. Limited Partnership: i. Public, ii. Private
c. Corporation
Pro forma of a business plan means the financial statement of the business plan.
Pro forma is based on 6 months, 1 year, 2-3 years. Market size, cost of goods, profit, the time of break-even point, etc are stated in the financial statement.
The loan or investment proposal is dependent on the financial statement of a company.
5C
What do Investors or creditors look in a business plan?
a. Capital: Investors check the amount of investment in the business.
b. Capacity: Investors check the company's utilizing capacity for investment.
c. Collateral: Investors check if the business plan is established compared to the surroundings and if the business plan is established, investors check how much profit will become from the business.
d. Character: Investors check managers' profiles. Investors check the executing and maintaining ability of managers.
e. Condition: Investors check the return policy of the company where they will invest.
3 test of financial feasibility analysis
a. Reality Test
b. Competitive test
c. Value Test
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