4business plan- a detailed project report

8/6/2019 4business Plan- A Detailed Project Report

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BUSINESS PLAN- A DETAILED

PROJECT REPORT



Project report

It is meant for the entrepreneur and it is an

essential document for procuring assistance from

financial institutions and to fulfill other formalities for the implementation of the project.



Purpose of Business Plans

1. Guides the start-up activities

2. Study for evaluating the performance

3. Attracts investors4. Creates realistic expectations for entrepreneurs

5. Helps cash-flow forecasts

6. Helps forecast the growth projects & employeerequirements



Importance of project report

It forces to think and plan for future.

It helps to realize what you need for

implementing the project. It gives a general idea of your resource

requirement and means of procuring them.

It shows the feasibility of the project and

probability of profit.

It give indications of returns and benefits.



Project report composed of..

Assumption/Estimates: For production, sales,

raw material, manpower, price ect.

Projection: financial. Production, sales ect.

Information: on technology, competition price

ect.

Calculation: cost, profitability, cash flows

Documents: price quotation, partnership deeds,land and building titles, lease rent deeds ect«



Preparing a project report

Contents of a project report:

General information:

Information on product profile and

product details.

Promoter : Entrepreneur¶s personal

information, educational qualification, work

experience, project related experience.



Market analysis: market survey

Location: exact location of the project, lease or

freehold, location advantages.

Land and building: land area, construction area,

type of construction, cost of construction, detailed plan and estimate along with plant layout.

Plant and machinery: details of machinery

required, capacity, suppliers, cost, variousalternatives available.



Production process: description of production

process, process chart, technical know how,

technology.

Utilities: water, power, compressed air requirements, cost estimates, sources of utilities.

Transport and communication: mode of

transport, costs ect..



Raw material : list of raw material required byquality and quantity, sources of procurement of

raw material.

Products:

estimated sales, distribution channels,competitions and their capacities, product

standard.

Market: end users of products, sales promotion

devices, proposed market research.



Requirement of working capital:

working capital required, nature and extent of credit

facilities offered and available.

Requirements of funds:

break-up of project cost in terms of costs of land, building, machinery, preliminary expenses.

Financial requirement: own investment, long and

short term loans, finance from friends and relatives.



Repayment of loans:

Net profit, amount to be returned to financial

institutions ect.. Economic and other social variables:

Employment generation, Import substitution,

Exports, local resource utilization,

Development of the area.



Project Implementation planning

Preliminary survey of product

Market research and preparation of project report

Loan application, preparation and sanction Selection of place

Machinery requirement

Construction of factory building Machinery installation



Selection of personnel

Electricity and fuel application and formalities

Other necessary licenses and sanction letters

Electrification in the factory

Trial production

Necessary training Inauguration of factory



Enclosures Educational certification

Certificates of experience

Permission letters

Map of the factory

Expected cost of the building or rent receipt

Quotation for machinery and equipment from

three parties

Letters from raw material suppliers

Partnership deed or any other documents



Precautions should an entrepreneur take

Always estimate the cost

Do not include any cost/price without verification or information.

Do not take data directly from any other project

Consider the implementation time

Don¶t consider full utilization capacity in the firstyear.

Prepare a project report yourself

Cross check all calculation

Take advice or opinion of other experts



Errors in project formulation

Capacity utilization estimates:

The entrepreneurs usually make over-confidentestimates of capacity utilization.

The estimates are made in complete disregard of

present enterprise performance, market

conditions, etc.



Market study:

Product production is ultimately meant for eventual

sale, based on the vague ideas and very less and

scattered information on demand and supply of their

proposed product , they conclude that market is just

there waiting to be tapped.

Technology selection:

with the help of doubtful profit margins, theentrepreneurs sometimes plan for a technology not

possible to set up, within limited financial resources.



Location selection: The entrepreneur often makes

two types of errors while selecting location for their

enterprise.

-First, they are completely own by the govt. offer of financial incentives, and concessions to establish in a

particular location.

-Secondly, the entrepreneurs select a location for

their enterprises just because it is their home town or they own ancestral land.



Selection of ownership form:

Many enterprises fail merely because the

ownership form of enterprise is not suitable.