Imagine what would happen if we started a journey by car to a place we’ve never been before, without evaluating the possible routes to the destination. Right away, we would run the risk of not having money for fuel, or that the vehicle was not prepared for such a long journey. Even if we managed to reach the destination, the journey would be much longer because we would surely get lost along the way.
Starting a business or making an investment decision without a Project is like starting a journey without a map, without a guide that allows us to reach our destination faster, with less costs and greater profitability.
Here are 5 reasons why the Investment Project is the essential roadmap for your new business idea.
1.Assess the Viability of your Business
Before a long trip, we have to define the path, the means and the necessary investment so that we don’t have to return home without reaching our destination.
The same is true with a new business idea. We may have excellent ideas, in which we deeply believe, but only by analyzing their viability will we know whether, from an economic and financial point of view, the investment will make sense.
The Project’s viability will depend on several factors, including the amount of investment required, business model, estimated turnover, competition, legal requirements, among many other variables.
Without the calculation of all the fundamental indicators and the estimation of the return on investment, the decision to start a business is a real leap in the dark.
2. It is essential to obtain financing and attract investors
If you are going to need financing or to attract investors, it is essential to have a rigorous and credible Investment Project, which allows you to estimate your profitability, taking into account the various possible scenarios. In addition, the Project will show that it is thinking seriously about its business and that it is taking care of all the challenges that it will have to overcome in order for it to succeed.
3. Defines objectives and an M/L Timeline Strategy
The preparation of the Investment Project requires the definition of objectives and a medium-long-term strategy that covers all areas of the business, including financial management, human resources management, commercial policy and investment plan.
4. Identify critical points
If well prepared, the Investment Project allows you to identify the critical points of your new activity and, in this way, boost growth and profitability, avoiding the inefficiencies that result from trial and error strategies.
5. It is an excellent management tool
The Investment Project is an excellent management tool in the first years of your business’s life. From the moment it starts its activity, the Investment project helps you to control the evolution of the main indicators, to identify opportunities and threats and to make the best possible use of the critical points that will give you a competitive advantage over your competitors.
Preparing an Investment Project is not a simple forecasting exercise. In order for it to be a real asset in the negotiation of financing and as a management tool, it is necessary to carry out a thorough analysis of all aspects of what the new business will be.
At EWP, we have a vast experience in the elaboration of Investment Projects in the different sectors of activity, in addition to the knowledge accumulated over 20 years in Supporting the Management of SMEs.
Contact us or send us your questions to [email protected]