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The Investment Analysis Section usually comes before the Financial Projections Section in a Formal Business Plan.

Below you can read, in detail, what the Investment Analysis Section should include, depending on the purpose of your Business Plan and the target audience.

Then, you can read about the last Formal Business Plan Section, the Financial Projections Section.

Contact us for support in assessing your Business Planning needs, and for the Preparation and Implementation of the appropriate Business Plan for your enterprise.

The following information should be included in the Investment Analysis Section
The Investment Analysis Section is an essential part of any Business Plan. It needs to include a thorough description of all the parameters of the proposed investment and to set specific measurable targets as a result of the investment.

Also, the Section should define:

  • The funds that will be required for the implementation of the investment plan.
  • The human resources that will be needed, specifying who will be responsible to do what and when, in order for the investment plan to be completed within the specified budget and timeframe.
  • The time Milestones to be met for the implementation of the investment programme within the specified budget and timeframe.

Analysing all investment parameters and defining specific measurable targets as a result of the proposed investment.
In general, an investment plan for an existing business may aim to achieve lower costs, increased sales, or a combination of the two.

In the case of a business plan for a Start-up, the goal would probably be to enter the market and secure a defined market share. In order to be successful in entering the market, the enterprise should forecast all expenses involved and still be competitive.

Depending on the type of your Start-up, this Section can also detail the technologies you will utilise, the intellectual property you own, and other key success factors for products you are currently building and those you are planning to develop in the future.


Cost Reduction
Cost savings can occur by improving various cost parameters, such as overheads, cost of supplies & raw materials and production costs.

Reduction in production costs can be achieved in various ways, such as increasing productivity through improved processes, improving staff training, introducing new production methods, using state-of-the-art equipment, machinery and facilities, and utilising new technologies.


Sales increase
Increase in sales can be achieved by boosting production capacity, enhancing the promotion and distribution of products/ services in existing and/ or new markets, improving product/ service quality, enriching products/ services, producing and marketing new products/ services offering enhanced added value.

The proposed Investment Programme in relation to the results of the Market Analysis Section
At the end of the Market Analysis Section, it is important to include a summary that outlines the results of the analysis at Macroeconomic and Microeconomic levels.

By analysing the results of the entire section at Macroeconomic and Microeconomic levels, you have already identified the existing and potential/ foreseen sector problems as well as the prospects for the business.

The content of the proposed Investment Programme, which is analysed in the Investment Analysis Section, should provide measurable solutions to the problems identified in the Market Analysis Section, so as to create the conditions for the enterprise to exploit and enhance the opportunities that have been identified.

Description of the parameters of the proposed Investment Programme and specification of definite measurable targets

Description of the parameters of the proposed Investment Programme
The first part of the Investment Analysis Section should provide a documented description of expenditure item included in the Investment Programme.

  • For any expenditure on equipment, including software and hardware, it is important to mention the following information:
    • Those technical characteristics which determine the performance of the equipment, and thus determine the measurable way in which each investment item affects the production capacity of the enterprise. Also, technical characteristics that determine contribution towards the protection of the environment, and in energy savings.
    • Also, it is important to include features demonstrating that the equipment meets all requirements set by relevant legislation, such as "CE Marking" harmonisation and certification, and so on.
    • Moreover, it is important to include information such as lead times, time needed for training, as well as other milestones for the equipment to become fully operational. In general, bear in mind that you should mention any information that will affect the implementation timeframe, and therefore determine cash outflows for the purchase and revenue inflow from the use of the equipment. Additionally, your timeframe and milestones should include securing space/ facilities for the equipment to be purchased, if required.
    • Also, information such as payment terms, including guarantees, maintenance, and so on, needs to be mentioned. This information determines the cost of the investment and the timeframe of cash flows.
  • For expenditures for buildings and facilities, it is important to include the following information:
    • The location, why the specific site was selected, and how it will contribute to the purpose and objectives of the investment programme.
    • The layout, space/ rooms, their use, and how they will contribute to the purpose and objectives of the investment plan.
    • The building and other required permits which have been obtained. If you have not acquired all required permits, you should mention when you expect to secure them and any potential problems that may arise in the process, along with a contingency plan and a corresponding timeframe.
    • A detailed Cost Estimate and/ or a quotation from a contractor for the implementation of the investment.

It is very important to include the following, as part of the Annexes of the Business Plan:

  • The architectural designs (floor plans, facades and planimetric).
  • The required permits and licenses, or applications to secure them if they have not been secured yet.
  • A detailed Cost Estimate indicating the nature of the work to be executed.
  • A detailed quotation from a contractor (For example, for studies aiming to secure a Business Loan).
  • Lease Agreement, when the property is not owned by the enterprise (For example, for Business Plans aiming to secure a Business Loan).


Defining specific measurable goals
The second part of the Investment Analysis Section should include a summary that determines the measurable benefit, quantitative and/ or qualitative, that each of the expenditures included in the Investment Programme will contribute to the purpose and objectives of the investment.

The example below refers to a business plan aiming to secure a business loan for the purchase of new equipment. Note that in this case, the essence of the Business Plan concerns the purchase of the equipment.

The purchase and use of a brand new, technologically advanced, packaging machine can reduce the time required for packaging, and thus reduce production costs by X%, also reducing energy costs and thus leading to an additional, measurable, reduction in production costs. Also, the maintenance cost for the new machine will be lower than the machine to be replaced, and since it is a new machine, it will not need repairs as often. Also, the features of the new machine, since it’s more advanced, will probably provide the opportunity for improved packaging and therefore the improvement of products and thus contribute to increased sales. Essentially, in order to make a decision to buy the new advanced machine, it should offer all or at least most of the above mentioned benefits.

In general, the purpose of the investment plan should reflect the outcome of the measurable objectives, such as "Modernisation and Upgrade of the Production Facilities/ Factory ....... of ABC Ltd" or "Production Process and Quality Control Upgrade of XXX LTD ".

The summary of the purpose and measurable objectives of the investment programme should include all expected Quantitative and Qualitative benefits, and provide parameters for their measurement.

The measurable goals included in the summary, Quantitative and Qualitative, should be quantified in the Financial Projections Section, which is an analysis of the future status of the proposed investment. Within the context of the Financial Projections Sections, specific realistic assumptions should be made regarding the Macroeconomic and Microeconomic facts, as analysed in the Business Plan, in relation to the implementation of the investment programme.


Capital Expenditures
The next step is to summarise the capital expenditures that will be required for the implementation of the investment programme, determining sources of funding.

Examples of sources of funding:

  • Own Capital/ Equity (e.g. deposits)
  • Current Accounts
  • Bank loan
  • Investors

In any case, the amount available and/ or expected to be secured from each source of funding should be clearly explained.

Funds reported as available, such as bank deposits or current account balance, in case the Business Plan is addressed to a Bank and depending on the policies of the specific banking institution, may need to be documented using Bank Statements or other official documentation.

Also, it is important to include an assessment - justification of the size of the investment in relation to the financial capabilities of the enterprise, especially in case the Business Plan aims to secure of Business Loan from a bank or to find Investors. In this context, you could include a Net Present Value ("NPV") Analysis and an Internal Rate of Return ("IRR") Analysis.


Timeframe for the Implementation of the Investment Programme & Human Capital Requirements
The timeframe for the implementation of the investment programme is an integral part of the Investment Analysis section.

As part of the Implementation Timetable, you need to record all milestones to be met for the successful, within specified budget and timings, implementation of the investment programme.

The Timeframe and generally any Implementation Plan, does not mean anything without strict implementation. For this reason, the Milestones and Measurements section of your Business Plan, needs to determine specific actions/ activities to be implemented, the sequence in which they will be implemented – specifying prerequisite activities for each of the activities, and timings for the start and finish for each activity. Also, it should define specific persons that will be responsible for the implementation of specific tasks to be executed at specific dates/ deadlines.

This section should also detail the key metrics you intend to use to track the implementation of your investment programme.

Well-defined Milestones will make your Business Plan a real Plan
The milestones table is one of the most important elements of your Business Plan. It determines your Plan in practical and specific terms, with real budgets, deadlines and management responsibilities. Hence, it defines essential points of reference that you need to focus on, in order to successfully implement your project.

The milestones table is the point where a Business Plan becomes a real Plan, with specific and measurable activities instead of just a document.

Set as many milestones as possible, based on the work to be done. Provide the following for each milestone:

  • Name
  • Starting date
  • Completion date
  • Budget
  • Person responsible for monitoring and implementation
  • Specify the individuals who will work for the implementation of the milestone and the specific responsibilities to be carried out by each of the individuals specified.

Then make sure that all the people involved in the implementation of the project are aware, each separately, of their responsibilities, of the timeframe for the work they need to perform, of what they have to receive and by whom, and of the deliverables they have to deliver and to whom they will deliver and when.

For the selection of the individuals to work for the implementation of the project, it is important to take their qualifications and experience into account, and assess and determine whether additional training will be required in order to enable each of them to fulfil their defined responsibilities to the level desired. If training will be needed, this should be incorporated into the implementation timeframe. The same applies for people to be recruited for the implementation of the project.

It is important to record the qualifications of each person selected to implement a specific job, specifying the selection criteria, i.e. why was the person considered suitable for the specific job.

In the Business Plan or as part of the Appendices, it is useful to record the qualifications that indicate the suitability of each person selected for a particular role.

It is also required that all individuals who will work for the implementation of the project understand that the implementation timeframe is actual, not indicative, and that they will have to maintain a proactive approach for its strict implementation.


Manage Milestones
You should use the specified Milestones in order to enhance implementation management. For example, during a meeting with all the managers, discuss the relevant milestones for that time period. Are you within the specified budget and within the specified timeframe? Do you need to make any corrections?

Organising and measuring your Timeframe
For the measurable organisation of your timeframe, you can utilise appropriate methods such as the "Critical Path Method" ("CPM") or the "Critical Path Analysis" ("CPA").

The basic technique for using the Critical Path Method ("CPM") involves constructing a project model that includes the following:

  • An exhaustive list of all the tasks required for the completion of the project
  • Dependencies between tasks
  • Duration estimation for the completion of each task

Based on the information above, the "Critical Path" can be identified, determining and measuring the longest period required for the completion of dependent activities, from start to finish.

Once you determine which activities comprise the Longest or Critical Path, it becomes easier to identify the following:

  • The shortest possible time for the project to be completed.
  • The tasks that if delayed will definitely increase the duration of the project.
  • The tasks that can be delayed, and for how long, without increasing the duration of the project.

Thus, utilising the above information, the timeframe of the project can be determined, and necessary resources can be allocated accordingly.

After reading about the content of the Investment Analysis Section of your Business Plan, you can study the last section of a Formal Business Plan, the Financial Projections Section.

Also, by clicking on the relevant link, below, you can read in detail about each of the remaining Sections of a Formal Business Plan:

Contact us for support in assessing your Business Planning needs, and for the Preparation and Implementation of the appropriate Business Plan for your enterprise.

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