A business case is a document that outlines the profitability, analysis, calculation of indicators and the effectiveness of an investment project. The purpose of the project may be the purchase of machinery, equipment, construction or reconstruction of an industrial building, etc.
Instructions
Step 1
The main goal of the economic feasibility study is to bring to the investor the amount of costs for the project, the terms of its payback and the results of work. The difference between this document and a business plan is that it is drawn up for new products of an existing enterprise, therefore, issues related to market analysis, marketing research are not set forth in it. The business case usually contains a detailed description of technologies and equipment, as well as the reasons for their choice.
Step 2
There is a sequence to follow when preparing a business case. It starts with initial data, information about the market sector. It then describes the existing opportunities for the development of activities, sources of raw materials, material resources for expanding the business, the amount of capital costs required to achieve the goal, production plan, financial policy, as well as general information about the project.
Step 3
Thus, the economic feasibility study contains a description of the industry where the enterprise operates, the type of input products, the price level for it. The financial part of this document includes the conditions for attracting borrowed funds, sources of their coverage. Calculations are shown in tables showing cash flows.
Step 4
When drawing up a business case, it is necessary to study the current position of the enterprise, its place in the market, the technologies and equipment used. In addition, it is necessary to determine ways to increase the company's profitability and business development, predict the level of profitability that can be achieved during the implementation of the project, study the necessary technical data, and analyze the level of training of personnel. You will also need to draw up a project implementation plan, cost estimates and cash flow plan, as well as give an overall economic assessment of the investment.
