I. WHAT SHOULD YOUR BUSINESS PLAN CONTAIN?
II. BUSINESS PLAN – PRACTICAL SUGGESTIONS
III. BUSINESS PLAN ASSESSMENT
II. BUSINESS PLAN – PRACTICAL SUGGESTIONS
The business plan should be objective. One should not promise too much. The document will become the basis for developing future budgets for the company and soon may come disappointment. A realistic description of the risk associated with the business plan and the methods of risk mitigation or avoidance is more reliable for an investor.
Hiding problems and overestimating the benefits may turn against the company in future – for instance, additional financing will prove insufficient to cover the actual needs.
It is not good when the CEO of a company seeking capital relies completely on a consultant while presenting the business plan. Even if the management board do not prepare the document on their own (and this is the best solution), they should get maximally involved in that process.
We advise you to focus on the contents instead of the form. The text should be concise. You do not have to retain the most expensive advisers or spend a fortune on multimedia presentations on CDs. This is not the most crucial thing.
III. BUSINESS PLAN ASSESSMENT
The required form of filing an investment project with Meridian Capital Enterprises Ltd. contains the key documents: summary of the business plan or the business plan and the financial model, including projections. Summary of the business plan should be concise and it should be created by persons directly involved in the project’s implementation on the basis of the complete business plan. The first review of the business plan’s summary focuses on its compliance with the investment strategy of Meridian Capital Enterprises Ltd., thus whether the project belongs to the sectors preferred by Meridian Capital Enterprises Ltd., or whether it is in an appropriate phase of development or whether the required investment’s amount remains within the scope preferred by Meridian Capital Enterprises Ltd. In this phase the first meetings with the project initiators are also held.
Upon an initial review, the complete business plan is analysed in terms of its subject matter, both in the aspect of the potential of a given product or activity, the conditions prevailing on the target market, and the competencies of managers. Upon obtaining a positive assessment of the business plan, the model and financial projections are analysed. The analysis covers several angles. First of all, the compliance and consistence with the data presented in the business plan are reviewed. The revenue analysis goes two ways - top-down, or starting from the market size where the company plans to operate and going to the level of the company and the position it may possibly take, considering the market conditions, and down-top, or examining the planned resources of the company and their potential, going up to verify those against the potential of the target market. The reliability and rationality of the planned costs are also analysed. The key financial elements analysed in this phase include the revenue, the result on operating activity, the speed of cash consumption and the break even point (revenue equals the operating costs).
