1

When do I need to have a business plan? What can I use it for?

Conscious planning should be part of every individual’s and family’s financial life. Financial awareness, defined as precious time spent on considering financial decisions enables a company in determining and reaching short-term (e.g., the purchase of new workstations and laptops) and long-term goals (e.g., the establishment of a new factory, launch of a new service). 

For these purposes it is essential to build and maintain a business plan, because the lack of such may drive the company into severe financial problems (e.g., over-indebtedness, bankruptcy). In many cases we are not aware of the necessity of a business plan, because we do not fully understand its usefulness. In the life of every business, as in individuals’ or in families’, it is necessary to plan to be able to carry out the operation, expansion, and other steps of the business (e.g., launching an investment) with due care.

The preparation of a business plan is essential when a company is launched, when it seeks new investors, when it applies for a loan, when it would like to get funds from European Union tenders and when it participates in public procurement tenders. A business plan shows a potential investor or a lender the growth opportunities of the company.

 

The budget assumptions are not only interesting during the planning for the future, but it is also worth checking continuously whether the company is still on track. And if there are divergencies, a thorough check could shed light on the reasons (whether or not revenues increased, expenditures decreased). By doing this the corporation can easily prevent financial crises and avoid debt traps; hence, budgeting – planning and awareness – is an important factor in a company’s financial success. 

 

In case of unexpected events (e.g., coronavirus crisis) the quick redesign of the operation can be easier achieved if there is a base for comparison. Awareness of the processes can contribute to proper implementation.

Based on the future financial data in the business plan, the financial value of a company can also be determined, which can be crucial in attracting new investors and potential increase of capital.

2

What does business planning mean?

For every company – as for every individual and family – it is essential to have a business plan, which contains a thorough description of the corporation’s products and services, details of the ownership and capital structure, and a detailed marketing, operational and financial plan focusing on a 3–5-year time horizon.

A business plan includes forecasts of revenues, expenditures, receivables, liabilities, and other financial items for the upcoming 3-5-years, which also require proper projection of macroeconomic indicators (e.g., inflation, changes in average wages).

If a business plan is not available, Danube Capital’s professional team could build the company’s business plan based on interviews with the management and on the forecasts of its own sectoral and macroeconomic experts.

3

How business plans and the macroeconomic forecast related to it are conducted? What do I, as a potential client, have to contribute to the process?

A detailed financial plan cannot be prepared without current and future knowledge of the national and international macroeconomic environment, since the financial developments do not happen in the world separately, independently; international and national macroeconomic developments have a significant impact on money and capital markets. The national and international economic outlook partially determines the demand for a company’s products and/or services. 

In addition, it is worth considering real economic developments, such as inflation or the growth dynamics of average wages. We have drawn the attention of several of our corporate clients to the fact that when compiling their business plan, they should not consider the rate of inflation only, as the wage dynamics may exceed its rate, according to our forecast. The rise in commodity prices is different than the rate of inflation, for which additional adjustments must be considered. And interest rate forecasts are crucial for companies with savings and/or loans.

The accuracy of the forecast is also determined by the quality of historical business data the company provides. As a result, the information needed for business planning is provided by the company’s financial statements and interviews with members of management.

When planning a business, it is worthwhile to make forecasts for several scenarios under different risk assumptions. For macroeconomic and money market forecasts, we use a structured macroeconomic model based on past developments and the model’s self-learning method. In terms of its complexity, few domestic institutions and organizations have developed such a detailed model, which also meets international standards. The coronavirus pandemic highlighted the importance of a regular review of the model to ensure that forecasts are consistent with the empirical findings of the latest central bank and other institutions.

4

What does Danube capital offer me?

In case of a business plan and a macroeconomic forecast we offer a simpler and a more complex possibility: 

  • The basic business planning and macroeconomic package contains the description of the national macroeconomic developments and economic forecasts for the given year and for the following two years, including these in the company’s business plan. As part of the basic business planning and macroeconomic outlook, the client receives the material in the form of a detailed document within 10 working days and we provide a personal consultation of up to two hours, too. 
  • The complex business planning package contains a detailed description and outlook of the national and international economies (i.e., external environment) and relevant forecasts for the given year and for the following 5 years, as well as a mapping of the company’s area of operation (considering future challenges, opportunities and risks). The research includes a detailed document, and we provide a personal consultation of up to two hours, too. In this case, the process takes approximately 3-4 weeks.
5

Why is it worth involving an (outsider) expert in the process of the making of a business plan?

An outsider can view the operation of the company in a more objective way, therefore he or she can also highlight risks that are not apparent to an internal party. The preparation of a business plan and in particular the related macroeconomic forecast requires specialized macroeconomic, financial and econometric knowledge as well as financial market experience, which is provided by the experts at Danube Capital.

6

How long does a business plan and the complex macroeconomic forecast take? What will it cost me?

The duration of a business plan coupled with the relevant macroeconomic forecasts is between 1 week and 1-2 months, depending on the data and the complexity of the company. Remuneration is always based on an individual agreement, you can request an offer at our contact details on danubecapital.hu or at dc@danubecapital.hu

7

Why should I choose Danube Capital? What kind of references do they have and where can I find them?

Throughout the years, Danube Capital’s professional team has prepared and reviewed several business plans (for enterprises), and has made a great amount of macroeconomic analysis, forecasts (our references can be seen below). Macroeconomic analysis also covered industry trends (e.g., construction, real estate, industry, retail, tourism and hospitality, agriculture).

 

Highlighted references:

 

  • Exchange rate and yield forecasts (in cooperation with MKB Bank Nyrt): https://bit.ly/MKBEK2020apr
  • Review of the business plans (2020) of nine domestic companies (mostly companies operating in agriculture and construction)