A project profitability analysis is the first thing an investor should do after reading a business plan. The fate of the funds invested in the project will depend on the accuracy of this calculation. Therefore, such calculations should be approached with full responsibility.
It is necessary
- - analysis of the development of the sales market;
- - business plan of the project;
- - costings.
Instructions
Step 1
Evaluate the development prospects of the industry in which this project should operate. When conducting the analysis, one should rely on the requests and requirements of the sales market, therefore, first of all, it is it that should be analyzed.
Step 2
Determine the project lifetime based on market analysis. It is important to remember that those goods and services that are in demand today may turn out to be unnecessary in five years. And even if, as a result of the analysis, the enterprise promises to exist no more than a few years, it is not worth giving up on such a project. Changes can be made to the business plan to modernize the future enterprise, adding additional areas of activity to the future development of the project. At the same time, for each new direction of activity, it is necessary to draw up similar calculations of profitability.
Step 3
Create an estimate of the costs and expenses for the creation of the project, start and further development in the future. In these calculations, you should take into account the cost of the employee salary fund, the cost of ancillary materials and services of third parties. Two scenarios for the development of the project should be described: optimistic and pessimistic. These calculations will serve as guidelines for the managerial staff of the future enterprise.
Step 4
Calculate the approximate profitability of the enterprise at all stages of its development: start-up, first year of operation, first three years of operation, etc. These calculations should also be subdivided into optimistic and pessimistic scenarios.
Step 5
Make a list of force majeure costs that the project may incur in its activities. This includes paying for legal services to resolve possible litigation, the cost of paying for factory defective goods, or emergency repairs to equipment.
Step 6
Combine your calculations into a single financial model. To do this, create a table and enter in it all the data for the optimistic and pessimistic development scenario. Provide the results of the analysis of the sales and consumption market for the current period and its further development. Supplement the table with information on the life of the project, emphasizing the possibility of developing additional activities.
