Development of a business plan for expanding the activities of a construction company
Explains how and why a business plan is needed to run a business, especially for a construction company. Describes the content of this business plan, as well as discusses various ways to expand the activities of the firm.
“If you love business, love a business plan”, economists advise. American economists say: "With a business plan, you become a professional." If a business is an economic activity of an entity in a market economy, aimed at making a profit by creating and selling certain products or services, then a business plan is a plan for such an activity. Market and planning are integrated in this phrase. Practice has long proved that progress is achieved not on the path of opposing the plan and the market, but in conditions of a reasonable and appropriate combination of them .
A business plan is a working tool that is used in all areas of entrepreneurial activity and is the basis for assessing the prospects of newly created enterprises or planned projects for the release of new products. This is an economically sound analytical document showing the reality and feasibility of the planned business.
At the same time, a business plan is a program of rationally organized measures for the implementation of a business project with an estimate of costs and revenues. A business plan is needed to make decisions: to the entrepreneur himself; contractors of the entrepreneur; credit institutions to assess the borrower; to insurance organizations.
The structure and content of the business plan are not regulated by regulatory documents. The preparation of a business plan is usually carried out by specialists working in the enterprise or hired to carry out this work for a certain period of time. Small business leaders and individual entrepreneurs often take on this task themselves. The volume and content of the document, the degree of detail in the calculations are determined by the specifics of the industry, the size of the firm, the strategic goal and many other factors .
At the stage of preparing the assignment, the mission (philosophy, vision of the enterprise) is determined, that is, to briefly describe the future economic unit, its main goals, areas of activity, norms of behavior and the role in solving social problems of the municipality, region, society. The mission of the enterprise is to implement high-quality projects in the field of industrial construction at the national level; as well as in high standards of work, which are provided by many years of experience, an honest and open position of the company in relation to partners.
The objectives of the enterprise must be clearly and clearly defined. They should be real and understandable, take into account external and internal factors that can affect the activities of the company. At this stage, the company sets itself only one most important goal for it – to maximize profits. The assignment is prepared by the owner of the enterprise or a group of people, including owners, managers and specialists. Having received the task, its approximate structure is determined, and it is agreed with the customer, after which information is collected - this is a very important and time-consuming part of the work. Sources of information are industry reference books, instructions and standards of design organizations, statistics, special studies and observations, knowledge of economists working in this field of activity, as well as specialists and employees of the enterprise .
An exception is the "Summary" paragraph contained in the introductory part. It is written after all other parts of the business plan have been completed. It summarizes the key points of the entire document and the results obtained in the calculations. The task of the text "Summary" is to interest people who do not have the desire or time to read the entire business plan, to draw their attention to certain sections, to more detailed acquaintance. The paragraph shows: the advantages of the investment object in comparison with analogues; needs for all types of resources and their sources; data on the volume and quality of products; estimated price of products and sales markets; expected economic, social, environmental and financial results of the project. This stage is very important, since a clear vision of the final result helps to achieve the intended goal without being distracted by secondary things. Therefore, having decided on the mission, the goal, having fully formed the task, you can proceed to the analytical part - the analysis of the market situation, the collection of information about competitors, which are presented in the following paragraphs .
The condition for economic growth is expanded reproduction, which is impossible without additional investment and the construction of new production facilities and facilities. The main goal of the production and commercial activities of the enterprise is to maximize profits, increase production efficiency. One of the factors for increasing profits is the expansion of the production of goods and services. There are two ways to increase production: by increasing the number of factors involved in production (extensive path); by improving technology (intensive path).
Extensive development of an enterprise is an increase in production due to a simple quantitative expansion of the factors of production themselves, i.e. increasing the number of employees without advanced training, expanding the consumption of material resources without improving the efficiency of their use, due to the growth of capital investments without improving technologies. At the same time, the productivity (efficiency) of production factors does not change.
An intensive development path is an increase in production due to a more efficient use of production factors, i.e. by introducing new, more efficient technologies by updating fixed assets, by improving the organization of production (a new structure of economic ties, management and cooperation, etc.), by improving the use of fixed assets, working capital, accelerating their turnover, depreciation, for by raising the qualifications of the workforce and improving the scientific organization of labor. Productivity increases, material consumption and labor intensity of the main production decrease, which affects the increase in profits and profitability.
Based on these methods, one, more global definition can be formulated, which would include both development paths:
Expansion of an existing enterprise – the construction of additional production facilities at an existing enterprise (structure), as well as the construction of new and expansion of existing separate workshops and facilities for the main, auxiliary and service purposes on the territory of existing enterprises or adjacent sites in order to create additional or new production facilities. The expansion of existing enterprises also includes the construction of branches and production facilities that are part of them, which after commissioning will not be on an independent balance sheet. If, in the course of the design study, the need and economic feasibility has emerged, along with the expansion of the enterprise, to reconstruct the existing workshops and objects of the main, auxiliary and service purposes, the corresponding work and costs are included in the project for the expansion of the enterprise, but are highlighted in the consolidated estimate calculation as a separate line. When expanding an existing enterprise, an increase in its production capacity (productivity, throughput, capacity of a building or structure) should be carried out in a shorter time and at lower unit costs compared to the creation of similar capacities through new construction with a simultaneous increase in the technical level and improvement of technical and economic indicators the enterprise as a whole .
In the case of extensive development, an increase in the social product occurs due to a quantitative increase in the factors of production: the involvement of additional labor resources, capital (means of production), and land in production. At the same time, the technological base of production remains unchanged. Thus, plowing virgin lands in order to obtain a large amount of grain crops, the involvement of more and more workers for the construction of power plants are examples of an extensive way to increase the final product. With this type of economic growth, the increase in production is achieved through a quantitative increase in the number and qualifications of workers and through an increase in the capacity of the enterprise, that is, an increase in the installed equipment. As a result, the output per worker remains the same.
As a side effect of extensive economic growth, the employment of large numbers of workers results in a reduction in unemployment. But this is a temporary phenomenon, since the state of full employment cannot be sustained annually and the growth rate will soon return to its previous level. It is also important that with an extensive type of development, many workers are not highly qualified specialists.
The extensive path of development is stagnant - in fact, there is no influence of technical progress, the main production assets are worn out morally and physically, the capital-labor ratio of workers is decreasing. In addition, with this type of development, the enterprise is highly dependent on environmental factors. For example, an extensively developing enterprise will be overly influenced by government policies, in particular in the area of taxes and investment.
Extensive economic growth, being the first model of expanded reproduction, is also the basis for further economic development. It was the extensive path that served as the basis for the birth of a new type of development – intensive. In addition, in the conditions of market relations, far from the state of perfect competition, it is impossible to distinguish pure types of extensive and intensive development. The most advantageous seems to be their reasonable combination .
Intensive factors of production development are closely related to the concept of innovative activities of the enterprise. Intensification is the process of development of social production based on the use of more efficient tools and objects of labor, more advanced forms of labor organization and technological processes in accordance with the achievements of scientific and technological progress and on the fullest use of all factors of production.
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