ANNEX II PRACTICAL APPLICATION OF ACCOUNTING TO GENESIS AND BUSINESS MANAGEMENT/BUSINESS PLAN
1.- METHODOLOGY OF A BUSINESS PLAN
A business plan doesn’t come up like ideas in comics, lighting a light bulb, is a much more complex process. In the future of a business project there are many phases, many laps back, unforeseen and there are also more. Unforeseen. But the above does not excuse us from trying to outline the process, and to put the maximum order in that process since this will make us understand it better and that thanks to that knowledge our reactions to unforeseen events may be predetermined or at least that our corrective actions are as coherent as possible.
During the business project everything will start with an idea, an intuition of an entrepreneur, maybe that entrepreneur has turned on the “light bulb”. But the idea does not necessarily have to be the quintessence of genius, it will surely be a better vision of the future, the detection of an opportunity that others are not able to grasp.
It is also possible that the new business project does not arise in the previous way, but is forced by having to adapt the company to new regulations (example environment) or the need to find new sources of funding (new partners, loans …) that allow the survival of a business project already underway.
Once the idea is mature it is time to translate it into numbers, to reflect the thought facts in data based on the present reality and coherent forecasts, in such a way that we turn the initial idea into a fictitious business unit that we can study, determining strengths and weaknesses, threats and opportunities, and therefore allowing us to discover the way forward
It is in the previous step where we should place the financial instrument that we have called BUSINESS PLAN.
The feasibility will be studied from all possible aspects, both separately and jointly, since the lack of one of these sections or the study separately without considering the joint effects would leave the study incomplete
And we will not hesitate to gather as much information as possible, whether based on market studies, previous experiences, or others. And of course, applying the best tools at our disposal, such as computer science (excel), external support from professional experts in each subject or others that experience will show us.
The business plan is made with a purpose but also with a recipient. These destinations can be:
We must not forget why a business plan is commissioned and to whom it is addressed, since the ultimate approach to be given will not be the same. We emphasize the latter because, although it is true that a BUSINESS PLAN will generally be commissioned to support a certain position with respect to the business project, it is no less true that professional honesty cannot hide some DATA that must be the same, no matter who commissions it and what it is commissioned for. In short, the best measure of professional honesty will be the professional satisfaction of the person carrying out the feasibility study.
The objective of a BUSINESS PLAN is to reach the decision to invest with as little margin of error as possible, that is, with the greatest information.
But the ultimate purpose of the feasibility study is not YES or NO to investment. Since if the decision is yes, the first steps of the business experience will follow the guide and deadlines determined by the study while being especially useful in:
- Hiring Human Resources
- Purchase of equipment, machines and facilities
- Commercial ‑ technical design of the product
We will also be served the BUSINESS PLAN in the combination of all these factors through the corresponding tests and tests, until the final launch of the business activity.
And if unforeseen events (or bad planning) take us away from the objectives by producing unwanted deviations, we must be able to detect them as soon as possible and mitigate them as best we can or otherwise adjust the original feasibility study by looking at the effects produced and the present viability..
2.- GUIDANCE INDEX OF A BUSINESS PLAN
2.1.‑ INTRODUCTION/SUMMARY
- COMPANY SHEET
- Denomination
- Social object
- Expected corporate address
- Date of incorporation
- Share capital and shareholders
- Summary
- General project data
- Genesis of the company
- Objectives to be achieved (social purpose)
- Social function to be fulfilled (needs to be satisfied)
- Promoters and their experience in the sector
2.2.-‑ ECONOMIC ENVIRONMENT AND BACKGROUND
- GLOBAL ECONOMIC POLICY
- Trends
- Support, assistance etc.…
- LEGAL REGULATIONS
- Trends
- Possibilities for change
- Legal forms
- LOCATION
- Regulations
- Availability
- Aid, incentives
- Workmanship
- Communications
- PROMOTER EXPERIENCE
- Curriculum of the management team
- Curriculum of company partners
- OTHER ASPECTS
- Board of Directors
- Linked companies
- External advisors and auditors
- Litigation and others
- STRENGTHS AND WEAKNESSES OF THE PROJECT AND THE COMPANY
2.3.‑ PRODUCT AND MARKET
- PRODUCT DESCRIPTION
- Crucial features
- Products replaced
- DESCRIPTION AND MARKET VALUATION
- Market segmentation
- Contracting conditions for each market segment
- Market trends
- Exports and imports
- NATIONAL AND FOREIGN MARKET
- Locating current and future markets
- Quantification of each
- HISTORICAL MARKET EVOLUTION
- Historical product price developments
- Historic growth rates
- Expected growth rates
- EVOLUTION OF THE COMPANY’S MARKET SHARE
- Expected participation fee
- DESCRIPTION AND ANALYSIS OF COMPETITION
- Local, national, international
- Identifying competitors in each market segment
- Barriers to entry to new competitors
- Expected reactions from the competition
- Presence of multinationals
2.4.-. ‑COMMERCIAL AND MARKETING DESCRIPTION
- BUSINESS STRATEGY: COMPARISON WITH COMPETITION
- Pricing policy
- Commercial and Marketing Policies
- After-sales service
- DISTRIBUTION CHANNELS
- Sales policies in each market segment
- Distribution of sales by geographical area
- Remuneration to sellers
- Distribution policies
- PUBLICITY AND PROMOTION
- Campaigns: scope and quantification
- COMMERCIAL ORGANIZATION
- Management team
- Company training policies
- DIFFERENTIATING FEATURES
2.5.‑ TECHNOLOGY AND PRODUCTION
- TECHNOLOGY TO BE USED AND COMPARISON WITH THE COMPETITION
- Product
- Process
- TECHNOLOGY AVAILABILITY AND COST
- Licensed manufacturing
- Royalties
- Support contracts
- Turnkey projects
- Level of training required
- Protection of technology. Patents
- PRODUCTION PROCESS
- Description
- Alternatives and advantages over the competitors
- Raw materials clefs
- Direct workmanship
- Capacity and degree of use
- Quality control
- Personal
- Management team
- Hierarchical organization
- Research and development
2.6.- MANAGEMENT AND ORGANIZATION OF THE COMPANY
- ORGANIZATION CHART
- Functional distribution
- Task contents and functions
- Authority-Responsibility Levels
- FUNCTIONAL AREAS
- Description
- Accurate staff profile
- STRUCTURE STAFF
- TECHNICAL CAPACITY AND EXPERIENCE
- INFORMATION SYSTEMS: INTERNAL COMMUNICATION
- KEY STAFF
- REMUNERATION POLICY AND INCENTIVES
- MANAGEMENT
- Management
- Functionality
- Training level
- Experience
- Projection
- CURRICULUM VITAE OF THE MAIN PARTNERS AND DIRECTORS
- Presidency
- Council
- Commissions
- Management
- Directors
2.7.‑ INVESTMENT
- TANGIBLE FIXED ASSETS
- INTANGIBLE FIXED ASSETS
- Technology
- Bonds
- Other start-up expenses
- WORKING CAPITAL INVESTMENT
- Customers (according to the cases listed annexes)
- Stocks of M.P in-progress products and finished products
- Emergency treasury
- Suppliers
- Containers and packaging
- CONSTRUCTION PROGRAMMING AND COMMISSIONING
- Phases, Expected start and end dates
- Hotspots
- Detailed description
- Vacuum testing
- Adapting people
2.8.‑ FINANCING
- SHARE CAPITAL
- Cash and non-cash contributions
- Partner agreements
- Venture Capital Companies
- PLANNED GRANTS
- National
- Regional
- Local
- OUTSIDE FUNDING
- Conditions of:
- Amount
- Amortization years
- Years of lack
- Interest
- Special conditions
- Long-term loan
- Short-term loan
- Bridging loans for financing
- Bridging loans for grants
- Trade discount. Risk classification
- Leasing
- Self-funding
- DIVIDEND POLICY
2.9.‑‑ ECONOMIC-FINANCIAL PROJECTIONS
SALES
- By products or product families
- By destination (domestic/export)
- Unit prices
- Physical units
- Amounts
- Marginal income by product
PERSONNEL COSTS
- Salaries and differentiation between fixed and variables for:
- Production staff
- Commercial staff
- Structure staff
- PRODUCTION COSTS
- Raw Materials Cost
- Unit consumption
- Unit price
- Unit cost
- Energy costs
- Production personnel costs
- Variables (Officers, Specialists, Pawns…)
- Fixed (Director, Heads, Quality, Maintenance…)
- External services and subcontracting
- Others (packaging, containers,)
- Amortization of production elements
- MARKETING COSTS
- Commercial staff (Director, Representatives, Salesmen…)
- Distribution costs (transport of purchases and sales)
- Publicity
- Committees
- Other costs
- FINANCIAL EXPENSES
- Loan financial expenses
- Discounting effects
- Leasing fees
- OVERHEAD
- Structure staff
- Management
- Administration
- R&D
- Human Resources
- Representation and travel expenses
- Maintenance and small purchases
- Tributes
- Office supplies
- Communications
- Insurance premiums
- Council Expenses
- Other
- Amortization of depreciable expenses
- FIXED AND VARIABLE COSTS
- EXTRAORDINARY RESULTS
- Grants
- Cash surpluses
2.10.- SUMMING
- PLANNED OPERATING ACCOUNTS
- Sales
- Cost of sales
- Expenses by nature
- Personal
- Financial
- Jobs, Supplies and External Services
- Transports and freight
- Miscellaneous expenses
- Amortization and others
- Pre-tax profit
- PLANNED TREASURY
- Initial available
- Collections
- Payments
- Final available
- PLANNED BALANCES
- EXPLOITATION RATIOS
- Gross operating margin on sales
- Sales trade margin
- ECONOMIC RATIOSFINANCIEROS
- Financial return
- Return on Social Capital
- Economic profitability
- Indebtedness
- Cost of liabilities
- Margin
- Rotation
- COST-EFFECTIVE THRESHOLD
2.11. ‑ IDENTIFICATION OF STRENGTHS AND WEAKNESSES OF THE PROJECT/COMPANY
- PRODUCT QUALITY
- PRODUCT RANGE
- MARKETS SERVED
- PRICING POLICIES
- SERVICES
- MARKET SHARE
- ADVERTISING POLICY
- DISTRIBUTION EFFICIENCY
- PRODUCTIVE CAPACITY
- PRODUCTIVITY IN MANUFACTURING
- PURCHASING POLICY
- Technology
- RESEARCH AND DEVELOPMENT
- QUALITY CONTROL
- LOCATION OF WAREHOUSES
- FINANCIAL CAPACITY
- Profitability
- INFORMATION SYSTEMS
- INTERNAL CONTROLS
- STAFF MOTIVATION
- REMUNERATION POLICY
- ORGANIZATIONAL STRUCTURE
- MANAGEMENT’S ABILITY