Business Plan Format

The Business Plan format is a systematic assessment of all the factors critical to your business purpose and goals.

Here are some suggested topics you can tailor into your plan:

Capital Budgeting

The process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing. Oftentimes, a prospective project's lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark.   

Also known as "investment appraisal".

NPV and IRR

Perils of the Internal Rate of Return

The two most-used measures for evaluating an investment are the net present value and the internal rate of return.  (Two earlier tutorials discussed these concepts.  See the tutorials list for links to tutorials for discounting future income and the internal rate of return.)

It is often assumed that higher is better for both of the net present value and the internal rate of return.  In particular, it is usually stated that investments with higher internal rates of return are more profitable than investments with lower internal rates of return.

However, this is not necessarily so.  In some situations, an investment with a lower internal rate of return may be better, even judged on narrow financial grounds, than an investment with a higher internal rate of return. This interactive lecture explores why and when this reversal takes place.

To review, both the net present value and