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The Investment Plan at a glance

Investment Write for Us – Every business connects with investments. An investment is the long-term commitment of financial resources in tangible and intangible assets. Investments not only have an impact on a company’s fixed assets but also indirectly on current assets. Investment planning is, therefore, a central component of strategic corporate planning. Therefore, Investment planning flows into the business plan as part of financial planning.

Investments are not only associated with high capital expenditure and long-term capital commitment. Investment decisions also have a significant effect on the cost structure of a company. Before you invest money in a business project, it is, therefore, essential to determine as precisely as possible how much capital you will need to invest to realize your project.

However, the capital requirement of investment determines within the framework of an investment plan, which serves as the basis for investment calculations and the profitability forecast. Therefore, the list of all costs associated with an investment is the prerequisite for their economic evaluation.

What is an Investment Plan?

However, an investment plan is a tabular list of all investment objects associated with an investment and the respective costs. It should note that the investment plan only includes the expenses that arise as one-off costs as part of the investment and during the start-up phase. An overview of the ongoing monthly costs (for example, personnel costs) is created with the resource plan regardless of the investment plan. That is because the investment plan and operating resource plan comprise the capital requirement plan.

In business practice, an investment plan always draws up when an investment decision has to be made – usually for one of the following reasons:

Initial investment: An initial investment is the acquisition of all assets required for business operations in the context of setting up a business.
Replacement investment: If a new one replaces a business asset, it refers to a replacement investment.
Rationalization investment: Investments that result in cost savings are called rationalization investments.
Expansion investment: If the expansion of the business activity requires the acquisition of assets, it is an expansion investment.

As part of a comprehensive financial plan, the investment plan is the basis of the business plan and a guideline for financing projects. It is, therefore, a prerequisite for raising capital. Therefore, make the relevant lists transparent and clear so that potential investors such as banks or private investors can overview all the expenses associated with the investment. Therefore, as a rule, you will only receive an investment loan if your lender can understand what you want to use the borrowed funds for.

Structure and Content of the Investment Plan

In the investment plan, you record all one-off expenses for all investment objects associated with an investment, including the costs that arise during the start-up phase for order pre-financing. If it is initial financing within the start-up framework, the investment plan also includes all costs associated with the start-up.

However, there is no official reference scheme for the structure and content of the investment plan. Instead, use checklists published by authorized information centers such as the BMWi founder portal or the chambers of commerce and industry.

The Investment Plan as part of the Business Plan

However, the investment plan is part of the business plan as part of the financial plan. Therefore, it is included in the financial plan together with an operating resource plan as a rule.

While the investment plan only includes one-off costs and additional expenses during the start-up phase, the operating capital plan gives potential investors an overview of the running costs of your company.