An investment project requires a business plan.
An investment project is a proposal for action that, based on the use of available resources, considers it possible to obtain profits . These benefits, which are not certain, can be achieved in the short, medium or long term.
It should be noted that a project (from the Latin proiectus ) is a set of coordinated and interrelated activities that attempt to achieve a specific goal . Generally, a period of time and a budget are established for the fulfillment of said purpose, so it is a concept very similar to a plan or program .
An investment , on the other hand, is the placement of capital to obtain a future profit . This means that, when investing, you give up an immediate benefit for an improbable one.
Characteristics of the investment project
Every investment project includes the collection and evaluation of the factors that directly influence the supply and demand of a product. This is called a market study and determines which market segment the project will focus on and the amount of product that is expected to be marketed.
The investment project, in short, is a plan to which capital and material, human and technical inputs are assigned. Its objective is to generate an economic return over a certain period of time. For this, it will be necessary to immobilize resources in the long term .
The stages of the investment project involve the identification of an idea, a market study, the decision to invest, the administration of the investment and the evaluation of the results. The project itself is usually evaluated by different specialists.
When evaluating an investment project, a risk analysis must be carried out.
Related studies
From another perspective, the four types of study that make up a project of interest are:
- Market study : it is made up, in turn, of several stages , first having the detailed definition of the product or service that is intended to be developed and offered. After having found the identity of the project, it is necessary to ask if there is a level of demand that justifies its implementation; On the other hand, if it is a "revolution" , then the question will be whether it could positively impact the portion of society to which it is directed. Once this part is over, comes the investigation of potential competitors and the characteristics of their offers, such as their success, prices and their sales history and presence in the industry.
- Technical study : dedicated to determining the way and resources with which production will be carried out, including the physical space that will be used for this purpose, the best options to obtain raw materials, machinery , work methods and the ideal profile of the employees to whom this stage will be assigned.
- Financial study : we must not forget the budget, since to reach a decision regarding each of the points just presented it is necessary to evaluate the inevitable economic impact . And this is the study that is responsible for carefully analyzing the viability of the project and deciding whether it can continue or whether it is advisable to redesign the strategy to avoid considerable losses.
- Organization study : as its name indicates, it is about finding the best way to start the company, finding the appropriate means to bring to reality all the ideas that have been evaluated and accepted so far.
It should be noted that in a work team you can clearly distinguish between the creative department and the administrative department , and that their communication must be clear and constructive to achieve objectives that satisfy everyone.
The most common thing is that the final product differs considerably from its initial conception, given the results of the four studies just detailed, which is why it is necessary to keep the spirit of the creatives alive, while asking them for modifications that they make. profitable and safe project ideas.
Strategic planning is key in an investment project.
Examples of investment projects
Let's take the case of two brothers who decide to open a Mexican food restaurant in a tourist city . First, they carry out a feasibility analysis and come to the conclusion that there is room for entrepreneurship since it is a destination that receives thousands of visitors every summer and, however, does not have a gastronomic establishment of this type. Then they develop a financial evaluation : they estimate that, with an initial investment of 1,500,000 pesos, they could recover that amount in three years and begin to obtain profitability from the fourth. With all these reports, they define a financial model and begin the execution plan to complete the project.
Let's now think about a technology company that aspires to grow . With this objective, the managers prepare an investment project and go out in search of financing sources . This way they reach an investment group that is willing to bet on innovation. In this way, after analyzing various performance indicators of the company, examining its future proposal and evaluating the sales forecast , they decide to allocate capital to promote its growth and even achieve international expansion.