a. Production plan, partial manufacturing
Production, the most important activity of an enterprise, because it is here that transformation of raw material into finished product takes place with the help of energy, capital, manpower and machinery.
Partial manufacturing: If some or all the manufacturing process is to be subcontracted or outsourced,
then the production plan should describe:
(i) Name and location of subcontractor(s)
(ii) Reasons for their selection
(iii) Cost and time involved
(iv) Any contracts that have been completed etc. In such cases, a clear mention of what the entrepreneur intends to do himself and what he plans to get it done from outside is required.
b. Financial plan, proforma financing decision
Financial plan is a projection of key financial data about:
(a) The potential investment commitment needed for the new venture, and
(b) Economic feasibility of the enterprise
Proforma financing decisions: This section summarizes all the projected sources of funds available to the venture to raise finance from, which you have already studied in previous class.
Typically, sources of funds are:
(i) owners i.e. Owner's funds
(ii) outsiders i.e. Borrowed funds.
The entrepreneur's job is to ensure the selection of the best overall mix of financing for the enterprise so that:
(a) the cost of capital and the financial risk stands minimized,
(b) return on investment and profitability stands maximized.