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Address:
177,Nezavisimosti ave., room 1a 220125, Minsk, Belarus
business center PORT

Email: info1@eneca.by SiteMap

Phones:

+375 17 393 27 88 +375 29 117 38 63 +375 29 671 97 36 +375 29 255 78 33

Главная страницаEconomyAbout CompanyCompany NewsBusiness plan. Your favourite questions. Our accurate answers

Business plan. Your favourite questions. Our accurate answers

Economics is a subtle thing and works for you only under the leadership of experienced specialists. Since we make our family budget every month and analyse, when we can afford to rest on the sea, then it is even more important for business to plan competent development of your company with a glance to manufacturing, organizational, and financial situation. The more careful and effective planning is, the more stable the income and growth of your business will be.

If you are an entrepreneur who is going to start own business, or a manager who would like to expand the business through the increasing of the range of the products, etc, then a business plan will help to define the projection of possible problems and the methods of its solutions, the amount of investment, and the net income.

In ALC “ENECA”  the economic department fulfils the development of business plans.  For seven years we have been developing business plans for diverse industrial sectors:  manufacturing enterprises, energy, petro chemistry, machine building, construction, processing industry, woodworking, metalworking, housing and public utilities, and agricultural enterprises, which attract investment in fixed capital in the form of bank loans, direct investment, and subsidies from the state budget.

 

 

The head of economic department Marina Mikhailovskaya, Master of Business Administration with the awarded degree, will answer the questions which often arise among our clients and investors.

Information for clients:

-Marina, tell us, please, what types of business plans can we offer to our clients?

M Mikhailovskaya:  At first, I would like to say that a business plan is not the work which is fulfilled by our organization and then will be collecting dust for a long time. It is a useful economic analysis of your production for many years forward with the indication of the financial leverages of influence on the development of the enterprise or business project, taking into account the economic situation in Belarus.

The last business plan I carried out showed the client that the new manufacturing line, which he wanted to implement in his enterprise, was inefficient and would be compensated in 10 years. We developed the plan of implementation of the same production line and the payback period was 3 years.

We carry out the following types of business plans:

• Calculation of cost efficiency of projects: the estimation of measures of efficiency of various investment projects in design specifications and estimates.

• Business plan of investment projects: it is developed to determine the efficiency of implementation of the proposed measures with a glance to manufacturing, organizational, and financial situation, existing in the enterprise.

• Business plan of development: it allows to compare the alternatives of your business development to stabilize the situation, entry into new markets or to reduce production costs for the development of existing business, and to specify the way of achievement of planned result of the activity.

• Business plan to build up a new business: it is made to understand whether your business idea is viable or not.

• Monitoring and support of a business plan: the specialists of our company will analyze the business plan, compiled by you or other organizations, to receive a 100% guarantee of correctness of the calculations. They also help in passing of expert evaluation to obtain a positive expert opinion on the business plan.

• Assistance in organization financing: the implementation of the financing of your activity.

-What qualification is required for business plan developers? Can the client develop a business plan on his own?

M.Mikhailovskaya:  there is a delusion that a business plan for a specific industry should be developed by an economist with a proper particular speciality. However, the people, who develop business plans, should have knowledge of economics. Other qualifying requirements are not obligatory, but desirable. For example, when calculating business plans for power-generating facilities, the knowledge of this specific activity is desirable.

A business plan can be performed by the Client himself, by an individual or a sole trader. There is no licensing of this type of activity. But if you build a house, then most likely, you won"t carry out construction work yourself, and turn to specialized organizations. Any manager can profitably spend his time on other things.

If you decide to perform such work yourself, then economic education (preferably higher) and the knowledge of the Disposition on business plans development will be enough to develop business plans. The knowledge of a foreign language is required when developing a business plan for a foreign business or investor. In the Republic there are courses and workshops, which help to understand specifics (nuances) of the development of business plans. However, the best skills development can be obtained only through experience.

Information for Clients and investors:

-What standard methods, tools, and techniques are commonly used for a business plan development? Are there any tools, which can be used in specific industries?

M. Mikhailovskaya:  In Belarus all business plans are developed according to the one method of evaluation, described in the given Decree. In the world there exist several methods, for example, UNIDO, TACIS Standards of a business plan, KPMG Standards of a business plan, EBRD Standards of business planning, BFM Group Standards of a business plan. However, the basic principles of evaluation are the same in all the methods, but the list of indicators and availability of information differ in the narrative. All industries have their indicators, but when evaluating business plans, the rate of efficiency is the same in all industries. A payback period, net present value, internal rate of return, product and sales profitability, turnover ratio, and other indicators, evaluated in a business plan, are the same for any industries and their standard indicators don"t differ from each other. For example, the internal rate of profitability should be larger than the discount rate; the payback time should be less than the useful service of the equipment. Therefore, the end indicators will be the same when making a business plan according to any standards.

-What experience, opportunities, and needs in business planning training are there in Belarus?

M. Mikhailovskaya:  In the Republic of Belarus, all the business plans of investment projects are developed according to the Rules on the development of business plans of investment projects, approved by the decree of the Ministry of Economy of Belarus No.158 of August, 31, 2005 (was amended by the decree of the Ministry of Economy No.214 of December, 7, 2007). There is no development training as such. At universities students study general economic and technical subjects, and having learned them, they can try to develop business plans according to the Guidance. There are one-day courses of business plan development, which are generally meant for the people who have knowledge in this field. If you organize training seminars, you should define the field of development (agriculture, energy, and etc.). In Belarus there is a necessity of training according to international standards for business plan developers in order to develop business plans which will meet the requirements of both domestic banks and foreign investors.

-What does the term “investment contract” mean? Are there any business plans, connected with it?

M. Mikhailovskaya:  In Belarus the implementation of investment projects may be carried out via conclusion of an investment contract between an investor, or investors, and the Republic of Belarus under the procedure and the terms and conditions determined by the Investment Code of the Republic of Belarus, this Decree and other acts of legislation (Decree of the President of the Republic of Belarus No.10 of August 6, 2009 “On Creation of Additional Conditions for Investment Activity in the Republic of Belarus” (amended as of June 6, 2011).

In order to the Decree implementation the “Investor” means “the investor and/or the organization created in the established order in the Republic of Belarus by that investor or with his participation”.

The investment contract makes no mention of a special requirement for the development of business plans. The contract may or may not imply the development of business plans. The business plans under such contracts are developed according to the documents mentioned above.

Information for those who faced the verification of business plans:

-Tell me, please, if there are any standard sections which should be included in a business plan? Is there a standard layout which is used?

M. Mikhailovskaya:  When monitoring a business plan, I sometimes face the fact that the contest of the business plan doesn"t fully meet the list of recommended sections and tables in the calculations. Therefore, those who check a business plan should know what it should contain.

In Belarus there are Rules on the development of business plans of investment projects approved by the decree of the Ministry of Economy of Belarus No.158 of August 31, 2005 (amended as the Decree No.214 of December 7, 2007). This document describes the basic requirements (rules) of drawing up of business plans of investment projects, core phases and succession of research, and standard requirements to the structure, content and formatting of business plans of investment projects. In the Rules there are tables that should be filled in to grant them to a lending agency for capital raising, as well as for making a decision on the rendering of State support for investment project. The structure of a theoretical part of a business plan, its names and the recommended content of the main sections are also defined in the Rules:

  • “Resume”;
  • “Company and Industry description”;
  • “Definitions of goods and services”;
  • “Sales and Marketing”;
  • “Production Plan”;
  • “Operating Plan”;
  • “Financial Plan”;
  • “Evaluation of Project efficiency”;
  • “Company"s risks and warranties”.

Calculation tables of business plan are drawn up in two versions: calculations without regard to the project implementation and with account of the project implementation. The formulae for calculations and ties among tables are made by the developer of the business plan. The full version of calculations includes 22 tables.

Table 1  provides basic information about the business plan: the currency of the project, the date of evaluation, the taken currency rate, and the discount rate.

Table 2  gives the selling price of the production, sold and/or planned to sale according to the investment project.

The workload of production capacities, as well as the volume of production and sales according to the extend commodity nomenclature and markets, are given  in Table 3.

The earnings from the sale of products in the mentioned above sections are evaluated in the  Table 4.

Table 5  shows the volume and price of the purchased raw products and materials for the manufacturing of products; the amounts of recycling wastes are also given here.

Table 6  shows the need in energy resources to meet the electricity demand of the enterprise, and the energy evaluation of the investment project is given here. This table is basic for the enterprises of energy sector, because the expenditures and fuel consumption (gas, local fuel types, etc.) are adduced here.

The labour supply is evaluated in  Table 7 , and the necessity of involvement of new staff, and the job creation or modernization of existing work places is shown here.

The replacement, depreciable, and residual cost of the fixed and intangible assets is given in  Table 8 , as well as the depreciation rate based on the equipment service life. The depreciation method is described and proved here through the given calculations. These calculations are given both for existing and newly created production.

All the costs on production and sales, given in the previous tables, are summarised and described  in Table 9 . In Belarus there exist the methodological recommendations on the account of production costs and calculation of services for enterprises of various fields of activities.

The evaluation of the need in net working capital is made  in Table 10 . The increase in current assets and creditor indebtedness is calculated in this table, and then the need in net working capital is determined. The current assets include raw products and materials, finished goods, account receivable, and other assets. The increase in creditor indebtedness occurs because of the increase in debts to the suppliers, contractors, and buyers, as well as debts in salaries, taxes, and etc. The date of delay in the payment and the size of a one-day expense amount are determined here.

The financing of the evaluated increase in net working capital as well as the financing of the capital expenditure are given in  Table 11 . The way of investment (purchase of equipment, construction and installation work, customs fees and dues, and etc.), as well as its sources (organization"s own funds, loans from foreign banks or national funds, and funds of state or local budgets) are described in this table.

The lending terms of the investment project are described  in Table 12.

The evaluation of all lending amounts of the project is given  in Table 13.

In Table 14  credits are described according to their types and the credit history of the company is shown.

The consolidation of earnings, taxes on it, prime costs, estimation of profit before taxes, taxes on profit, the calculation of net income and its distribution, and net profit are given  in Table 15.

All the taxes paid out on income and profits are presented in detail  in Table 16.

The results of current, investment, and finance activity of the enterprise are shown  in the Table 17.  This table shows whether the company has funds to meet operating costs and whether it"s able to redeem its credits in full. Due to the analysis of this table, it"s possible to determine where the investments should be channelled and where the flow of funds should be corrected to achieve the required goals.

Table 18  is a design and balance sheet, in which the base period data of a balance sheet of the organization is recorded according to proper items; future periods are forecast under the terms of financial and economic activity of the enterprise.

The evaluation of the business plan of the investment project can be over  in Table 19.  Here, the leading indices of efficiency of the project are given: net present value, dynamic payback period, internal rate of return, and profitability index. To calculate these indices, the discount factor is used. The payback period is used to determine the degree of risk of the project implementation and the liquidity of investment. There are simple and dynamic payback period. The simple payback period is the number of years it would take to recover a project"s cost. The dynamic payback period is the period after which the capital invested has been recovered by the discounted net cash inflows from the project. The rates of liquidity, business activity, capital structure, and other indices are estimated.

The estimate of the state support payback of the project is made  in Table 20.

The currency recoupment of the project is calculated  in Table 21 .

Finally, the sensitivity of the project to the leading indices of the investment project is estimated  in Table 22.

Marina Mikhailovskaya
Master of Business Administration
with the awarded degree

According to the rules, a business plan should be evaluated in fixed prices, i.e. without taking inflation into consideration. However, the discount rate takes inflation into account to some extent. When financing a project with the help of bank assets, the crediting rate is estimated as the refinancing rate plus the margin of the bank. In turn, the crediting rate reflects inflation expectations in the Republic. Thus, the evaluation of a business plan at current prices doesn"t quite correctly reflect the economic solidity of the project, thereby understating it. Basing on the foregoing, we can conclude that when drawing up a business plan of an investment project, you should forecast the price on products, as well as the expenditures of the enterprise, taking into account at least annual inflation expectations.

Phones:

+375 17 393 27 88 +375 29 117 38 63 +375 29 671 97 36 +375 29 255 78 33

Address: 177,Nezavisimosti ave., room 1a 220125, Minsk, Belarus
business center PORT

Email: info1@eneca.by