Business Plan Basics
To start or grow a business requires investments in new equipment, physical assets, buildings, technology, marketing, and such, to launch, expand, or drive more productivity/sales. This often involves spending money upfront, which could come from cash from the existing business, or in most cases, it comes from borrowing/financing. Raising capital often requires a robust business proposal/sales pitch to get partners/investors on board, and to buy in.
8 important questions you should be asking to create a smart capital business plan!
Once you have all these assumptions ironed out and listed down all the costs and benefits, a simple NPV/IRR financial model that is readily available online should be able to help you in getting a fairly good picture of payback and ROI.
This simple analysis will show how your investment will perform and impact long-term profitability. If the benefits outweigh the costs, then NPV calculation in your model will be positive, indicating that value is being created long term for your business. By ensuring that you took all the necessary steps in analyzing the financial viability of your investment will go a long way in adding credibility to your business plan.