What is an investment plan and how is it structured?

The investment plan is the summary of all necessary costs that are included in the start-up phase starting a business or a clearly defined project. Together with the resource plan, the investment plan is included in the capital requirement plan and thus also in the business plan.

Between spending on investments and working capital is clearly differentiated on the basis of several criteria. Operating resources are, for example, expenses for marketing, sales, rent or personnel, i.e. costs that are incurred regularly and to which no exact equivalent value can be attached. Investments, on the other hand, are expenses for the purchase of goods that can be used permanently in the company.

The investments include example:

  • machinery
  • Furnishing of the business premises
  • licenses
  • fleet
  • Special industry software
  • company building

In the investment plan, a corresponding one is made for each planned investment time defined in order to be able to show several payments – for example a down payment when ordering the goods. In addition, the time of acquisition in connection with the expected useful life of the acquisition plays a decisive role in the depreciation options.

the useful life defines the period in which, for example, a machine can be used for production and when the entrepreneur expects to have to replace the machine in question. During its useful life, the machine must therefore not only earn the acquisition costs, but an imaginary reserve must also be formed in order to have sufficient funds available to replace the machine at the end of its useful life.

This imaginary reserve is in the annual financial statements or the balance sheet on the so-called depreciation educated. Depreciation reflects the reduction in value of the respective good over the course of its use. Capital goods are initially included in the balance sheet with their procurement costs. Using so-called depreciation lists, the entrepreneur can define how long the good can be used in the company. For example, if a machine can be used for 10 years according to the list, the value of the machine on the books will be reduced by 10% each year. The depreciation of 10% per annum then represents a cost to the business that is reflected in the income statement. However, they do not lead to any actual payment from the business account. There is therefore a balance sheet reserve that is available after the end of the useful life and depreciation period to replace the machine.

An exact investment plan is therefore important both over the course of the company and at the beginning. So the founder or the entrepreneur has to try the investment plan to create as precisely as possible. Since in most cases it is a question of tangible objects, specific offers should be obtained as far as possible regarding the amount and timing of the payments. Alternatively, the suppliers’ price lists can also be used in order to define a framework for the investment activity. A clearly structured and well-researched investment plan also helps to convince external investors of your own project.

Above all banks and credit institutions are very open to financing when examining a business plan, which is largely used for investments in physical assets. In addition to the good assessability of the individual items, long-term values ​​that are available to the company result from the investment activity. For banks, these values ​​represent collateral that, in the worst case, can be used to settle outstanding claims. Reading tip: KfW start-up loans

In addition, however, it is important to understand the scope of the start-up financing derived not only from the investment activity. Costs for operating resources, private living, taxes or social security contributions must also be taken into account and be part of the financial planning when creating a business plan. All costs incurred must be considered equally and summarized in a capital requirements plan. This is the only way to determine the actual financing requirements of the start-up project.

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