Private Placement Investment Planning is a principle of the activity of any enterprise. The business – plan needs to be used with a view of perfection of economic efficiency decisions calculation methods and commercial expediency of investments in designing and construction of objects and town-planning complexes. The Business – plan acts as an objective estimation of the firm activity and necessary tool of the investment decisions according to the market requirements. Basic aspects of the commercial enterprise are characterized in it, problems which the firm will face are analyzed, and ways of their decision are determined. Hence, business – plan is a search, scientific, research and design work. It is possible to call business – plan a basis of management not only of the commercial project, but also of the enterprise itself. Due to business-plan management has an opportunity to look at the own enterprise as from the outside).
The process of business- plan development including the detailed analysis of economic and organizational questions, forces to be mobilized. The purpose of business -the plan may be the reception of the credit, or attraction of investments, definition of strategic and tactical reference points of the firm etc.
Present business plan is for the Private Placement Investment. Public Corporation “Cron” is going to manufacture electrotechnical engineering, namely welding transformers. Overall objective of the present business is the reception of the profit due to the manufacture and realizations of competitive production. Realization of business – plan will allow to solve the following problems: ” To satisfy needs of the market for the given electrotechnical engineering. ” To create new sources of reception of the profit for the account enterprises diversification. ” To provide congestion of capacities The purpose of the present business – plan is the analysis of prospective production and a substantiation of decisions of strategic planning of Public Corporation “Cron”. Necessary investments for the organization of a batch production of the electric engineering, the specified kind make 709.1 thousand dollars, including means of the investor at a rate of 222.2 thousand dollars.
Business Plan Interior Enterprises
Executive Summary The name of the business is Interior Enterprises located in Brookfield, Illinois at 17201 West 55 th Street. The business is a partnership between James Faitz and Michael Rohan, both from the Chicagoland area with extensive background in interior restoring, remodeling, and refinishing. Interior Enterprises will undertake jobs in the five to twenty thousand dollar ranges to make ...
Annual volume after getting the planned sales volume will make 611.1 thousand dollars. The investment credit is preferential (the interest rate makes 11.7 % annual).
The term of its repayment at the work of the enterprise on the planned diagram is 25 months. Source of repayment of the credit and interests is the profit from the manufacture of the specified engineering, and repayment of interests on the credit begins in 6 months after the beginning of investment. Participation of the investor in the authorized capital stock of the enterprise and reception of interests will allow him to receive by 2008 the income equal to 274.1 thousand dollars. Maintenance of the borrower under the given credit is the pledge of property of the enterprise and the profit received from all the directions of financial and economic activity. The carried out marketing researches on offered production testify of the existence of significant volume of demand for welding transformers. Potential consumers are civil engineering firms and physical persons.
Demand for given production is stable, as welding is the major component of technological process of construction. The marketing researches which were carried out on this market, testify that the market is oligopoly, and at an existing price level and qualitative parameters of production of Limited Society “Cron” may become the leading enterprise in this area. Prospects of development of the market of electrotechnical products allow to predict increase of sales volumes and the appropriate loading of capacities of the enterprise. The necessary sizes of investments are connected to the development of new manufacture and new technologies. In this connection realization of reconstruction and modernization of some manufactures is required. For this purpose the following is necessary: ” Equipment purchasing; ” building and assembly works connected to the installation and dismantling of the equipment; ” Necessary construction work; ” Technological preparation of manufacture; The plan of marketing actions includes a complex of actions, including a commodity, price, sales and service policy and strategy. The commodity policy of Public Corporation “Cron” includes maintenance of wide assortment of various offered transformers models updating and flexible adaptation to market conditions.
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Commodity strategy of the enterprise provides: ” Creation of various updating of the given electric engineering on the limited set of base models; ” account of requirements of the consumer to the characteristics of offered engineering; ” Various complete set during the delivery; ” Constant improvement of electrotechnical parameters and operational characteristics. The price policy on electric engineering is coordinated to overall aims of the enterprise and includes formation of the briefly and long-term objectives on the basis of production costs and demand for production, and also the prices of competitors. Price strategy should be based on a commodity policy and includes: ” Use of the flexible prices mechanism on updating and complete sets of electric engineering; ” High quality at the prices lower than foreign analogues; ” System engineering of privileges and discounts depending on conditions of delivery. In a basis of strategy of pricing there is a the method of average expenses which provides an establishment of a market price proceeding from production costs at loading capacities (80 %) and the predicted profit level, comparable with an average discount rate. The marketing policy of Open Society “Crone” is focused on formation and stimulation of demand for production. Marketing strategy consists in: ” Creation and regulation of commercial connections; ” Advertising activity in various forms; ” Participation in exhibitions and fairs and presentation of demonstration samples.
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The service policy of the enterprise includes the service before and after selling Service before the selling is focused on constant studying, the analysis and the account of requirements of customers with the purpose of products perfection. Service after the selling provides a complex of works on guarantee (repair, delivery of spare parts, training of the personnel etc.).
The warranty period for this engineering is one year that exceeds the appropriate world standards. Potential risks of Public Corporation “Cron” are represented by industrial risks, commercial risks, financial risks and the risks connected to force-major circumstances. Industrial risks are connected to various infringements in industrial process or during deliveries of raw material, materials and completing products. Measures of decrease of industrial risk are the effective control above a course of production and strengthening of influence on suppliers by their duplication. Commercial risks are connected to the realization of production in the commodity market (reduction of the sizes and market capacities, decrease of solvent demand, occurrence of new competitors etc.) Measures on reduction of commercial risk are: ” Regular studying of market conditions; ” Creation of a dealer network ” Rational price policy ” Creation of a network of service ” Advertising etc. Financial risks are caused by inflationary processes, universal non-payments, fluctuations of a dollars exchange rate etc.
They may be reduced by creation of the system of financial management at the enterprise, work with dealers and consumers on conditions of the advance payment etc. The risks connected to force-major circumstances, are the risks caused by unforeseen circumstances (nature, change of political rate of the country, strike etc.).
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The measure of their reduction is working with the enterprises with a sufficient stock of financial durability serves. The purpose of development of the present financial plan is the definition of the production efficiency of the given kinds of electric engineering. The general need for investments which is determined in item 2.6 makes 709.1 thousand dollars, including in 2005 – 271.27 thousand dollars. Sources of financing are: ” Means of the investor in the amount of 222.22 thousand dollars with financing in second quarter of 2005; ” Own means of the enterprise in a total sum of 486.89 dollars, including – 49.05 thousand dollars in 2005.
(for the account of re-investment parts of the profit and depreciation charges).
The plan of incomes and charges and calculation of net profit is submitted in tab. 1. Manufacture of electric engineering will be unprofitable within one quarter from the moment of investment. Since 2 quarters, reception of the profit at a rate of 19 % from a sales volume is planned. In calculations the taxation is taken into account.
Table 1 Net income Income taxes Gross profit Taxes included in net cost Expenses on the sold products sale proceeds item -12,4167 1,583333 -10,8333 1,572222 60,69444 47,36111 2 quarter. 2005 19,91667 3,583333 25,16667 3,527778 91,16667 116,3333 3. 47,08333 5,083333 52,16667 4,977778 114,0278 166,1944 4. 32,91667 5,166667 38,08333 5,588889 152,2778 190,3611 1. 2006 44,75 6,861111 51,61111 7,572222 206,4167 258,0278 2. 75,80556 10,61111 81,19444 11,93333 324,75 405,9444 3. 75,80556 11,36111 87,16667 12,80556 348,6111 435,7778 4 161,4722 22,05556 183,5278 26,65 734,0556 917,6111 1 six months 2007 242,6667 32,61111 275,2778 39,97222 1101,111 1376,389 2 six months 625,1667 78,91667 704,1111 101,3333 2814,222 3520,5 year 2008 The balance of a monetary outlay and receipts is submitted in tab.
2 where the estimation of receipt and an expenditure of money resources in dynamics is made. Expenses item, 2005 2006 2007 . 2008 2 quarter 3 4 1 2 3 4 1 six months 2 six months 1 2 3 4 5 6 7 8 9 10 11 Cash at the beginning of the period 0,00 -8,39 -2,72 4,94 0,39 0,56 0,17 0,39 1,17 87,44 Total cash inflow 270,06 119,86 171,22 195,78 263,44 411,36 441,19 928,42 1387,22 3542,17 Including sale proceeds 49,86 116,33 166,19 190,36 258,03 405,94 435,78 917,58 1375,28 3520,50 Investment credit 222,22 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Amortization 3,53 3,53 5,03 5,42 5,42 5,42 5,42 10,83 10,83 21,67 Total cash outflow 284,00 114,19 163,56 200,33 263,28 411,75 440,97 927,64 1300,94 3088,94 Including process costs 60,69 91,17 114,03 152,28 206,42 324,75 348,61 734,06 1101,11 316,42 Investment expenses 122,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Equipment purchase 57,17 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Reconstruction 60,78 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Other investment expenses 4,06 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Working capital Replenishment 99,72 19,44 27,78 30,69 44,44 33,33 277,78 69,44 97,22 125,00 Investment credit interests 0,00 0,00 16,67 5,56 5,56 5,56 4,61 6,81 3,33 0,00 Investment credit repayment 0,00 0,00 0,00 0,00 0,00 37,50 48,61 69,44 66,67 0,00 Investors guaranteed income 0,00 0,00 0,00 6,64 0,00 0,00 0,00 25,83 0,00 68,61 Income taxes 1,58 3,58 5,08 5,17 6,86 10,61 11,36 7,61 38,17 78,92 Cash at the end of the period -8,39 -2,72 4,94 0,39 0,56 0,17 0,39 1,17 87,44 540,67 Calculation of the need for a working capital is submitted in tab. 3. Table 3 Working capital elements Years 2005 2006 2007 2008 Total current assets 199,8611 433,3056 778,0833 1207,694 Raw materials 8,805556 34,83333 62,83333 100,4722 Manufactured Products 11,08333 43 76,44444 117,3333 Accounts receivable 132,9444 258,0278 458,7778 704,1111 Funds 40,13889 71,66667 134,1667 215,3611 goods in process, 6,888889 25,77778 45,86111 70,41667 Total current liabilities 52,91667 150,1111 328,2222 632,8333 account payable, 52,91667 150,1111 328,2222 632,8333 Total working capital- 146,9444 283,1944 449,8611 574,8611 Working capital change 146,9444 136,25 166,6667 125 turnover ratio 2,26 4,56 5,1 6,12 Thus calculation is made proceeding from planned specifications of turnaround means on elements in view of turnover acceleration of turnaround means. The term of recoupment of the project is 5.5 months from the beginning of investment at the rate of 11.7 %.for the credit Thus the investor will receive the income as interests in the sum of 48.8 thousand dollars and the guaranteed income as dividends in the sum of 101.08 thousand dollars.
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Besides, the participation in the profit of 2008 will allow to receive 125 thousand dollars. At discounting this income by the interest rate of 11.7 % annual, the investor will receive the income of 149.2 thousand dollars (in a nominal estimation of 274.2 thousand dollars).
Thus, the profit on realization of welding transformers will allow to carry out financing of development of manufacture, repayment of the credit and interests, and also payment of dividends to all the participants of the project, since 2007 (including the investor, since 2005).
The diagram of repayment of the investment credit and interests is specified in the tab. 4. Table 4 Item 2005 2006 2007 2008. Total 2 q.
3 q. 4 q 1 q. 2 q 3 q. 4 q. 1 six months 2 six months Credit interests 0,00 0,00 16,67 5,56 5,56 5,56 4,61 6,81 3,33 0,00 38,14 Repayment of the main debt 0,00 0,00 0,00 0,00 0,00 37,50 48,61 69,44 66,67 0,00 222,22 Total 0,00 0,00 16,67 5,56 5,56 43,06 53,22 76,25 70,00 0,00 270,31 The parameter of credit covering of investments makes 33 %, accordingly parameter of self-financing of investments is 69 %. The factor of a covering of financial and working costs makes 102 %. Thus, the full covering of financial and operational needs is provided.
Calculation of parameters of break-even and financial durability of Public Corporation Crone activity allows to determine volume of manufacture at which enterprise does not carry losses and does not receive the profit. Calculation of break-even and financial durability is provided in tab. 5 and illustrated with the circuit 1. Table 5 Item 2005. 2008 Volume of sales, thousand dollars. 402,78 4652,78 Conditionally constant expenses , thousand dollars 113,53 1028,56 Weight of conditionally constant expenses in sales volume, % 21,00 21,33 Break-even point, thousand dollars. 182,50 1669,72 Financial durability reserve, thousand dollars.
220,28 2983,06 Thus, the point of break-even (a threshold of profitability) in 2005 makes 182.5 thousand dollars; in 2008 – 1669.72 thousand dollars (i.e. accordingly the volume of proceeds should make not less than specified sizes).
The stock of financial durability makes 220.28 thousand dollars in 2005 and 2983.6 thousand dollars in 2002. Having considered the purposes and essence of planning, and also various aspects of practice of drawing up of business – plans, it is possible to draw a conclusion, that this plan is an integral part of the inside firm planning, one of the major documents developed in the enterprise. It is the effective tool of management that helps the enterprise to define prospects of growth of the affair, to supervise the current situation.
