Business planning tool
This sub-section of e-Tools provides business planning tool which is to calculate annual costs and revenues for seven years and monthly costs and revenues for the first year of a project aimed at bio-based business development.
Grey fields in both forms of the tool, i.e. in income budget and cash flow form, are editable. Please enter your data. Once project-specific data is entered, an assessment of economic feasibility of planned project will be provided.
Completed information can be printed, saved in PDF format or shared via social media channels.
For inspiration on how your new project could work (product portfolio, needed resources, etc.), please visit our virtual library of good practice bio-based business models and real-life inspiring examples.
This tool was developed in the preparation of “Report on good practice business models and example small and medium scale pilot business projects for sustainable bioenergy and side bio-products production in the BSR”. You can download the tool and fill it in Excel format as well (click here to download).
Projected income statement and project profitability assessment
The amount of the investment | 1000000 | € | |||||
The liquidation value of the investment at the end of the project | 200000 | € | |||||
Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Quantity of product 1 sold, kg | 200000 | 500000 | 500000 | 500000 | 500000 | 500000 | 500000 |
Price of product 1 | 17.0 | 17.0 | 17.2 | 17.4 | 17.6 | 17.8 | 18.0 |
Quantity of product 2 sold | |||||||
Price of product 2 | |||||||
Quantity of product 3 sold | |||||||
Price of product 3 | |||||||
Quantity of product 4 sold | |||||||
Price of product 4 | |||||||
Quantity of product 5 sold | |||||||
Price of product 5 | |||||||
Income from sales | 3400000 | 8500000 | 8600000 | 8700000 | 8800000 | 8900000 | 9000000 |
Other operating income, including grants | |||||||
Total earned income | 3400000 | 8500000 | 8600000 | 8700000 | 8800000 | 8900000 | 9000000 |
Operating costs | |||||||
Goods | |||||||
Raw material | 2400000 | 6000000 | 6000000 | 6000000 | 6000000 | 6000000 | 6000000 |
Material | 18000 | 50000 | 55000 | 60000 | 65000 | 70000 | 75000 |
Services, incl. rental costs | 40000 | 50000 | 52500 | 55000 | 57500 | 60000 | 62500 |
Fuel | 170000 | 300000 | 315000 | 330000 | 345000 | 360000 | 375000 |
Energy | 140000 | 300000 | 310000 | 320000 | 330000 | 340000 | 350000 |
Wages and salaries | 180000 | 240000 | 247200 | 254616 | 262254 | 270122 | 278226 |
Labor taxes | 59400 | 79200 | 81576 | 84023 | 86544 | 89140 | 91815 |
Depreciation of fixed assets | 75000 | 100000 | 100000 | 100000 | 100000 | 100000 | 100000 |
Insurance | 8000 | 10000 | 10000 | 10000 | 10000 | 10000 | 10000 |
Administrative costs | 5000 | 6000 | 6500 | 7000 | 7500 | 8000 | 9000 |
Other costs | 8000 | 15000 | 15500 | 16000 | 17000 | 18000 | 19000 |
Total operating costs | 3103400 | 7150200 | 7193276 | 7236639 | 7280798 | 7325262 | 7370541 |
Operating profit | 296600 | 1349800 | 1406724 | 1463361 | 1519202 | 1574738 | 1629459 |
Financial expenses | |||||||
Interest expenses | 12000 | 10000 | 8000 | 6000 | 4000 | 2000 | |
Other financial expenses | |||||||
Total financial expenses | 12000 | 10000 | 8000 | 6000 | 4000 | 2000 | 0 |
Profit on economic activities | 284600 | 1339800 | 1398724 | 1457361 | 1515202 | 1572738 | 1629459 |
Income tax | |||||||
Net profit | 284600 | 1339800 | 1398724 | 1457361 | 1515202 | 1572738 | 1629459 |
Net cash flow | 359600 | 1439800 | 1498724 | 1557361 | 1615202 | 1672738 | 1729459 |
Discount rate | 9 | 9 | 9 | 9 | 9 | 9 | 9 |
Discounted net cash flow | 329908.2569 | 1211850.8543 | 1157289.9140 | 1103273.7951 | 1049770.4750 | 997399.0158 | 946073.2981 |
Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Business profitability % | 8.7235 | 15.8800 | 16.3573 | 16.8202 | 17.2637 | 17.6937 | 18.1051 |
Net present value (NPV)= | 5995565.6092 | € | |||||
The project should be undertaken if the NPV> 0. | |||||||
Example which data is initially provided in the form: | |||||||
The company "Bio-xxx" plans to start with production of bio-xxx. They rent a suitable building for this kind of production and plan to buy the necessary equipment in the spring of 2022 at a price of 1 million euros. In the first year, the production volume is 200,000 kg, hereinafter 500,000 kg per year. The production is sold at a price of 17 euros per kg. Production costs are entered directly into the table. The cost of raw materials per unit of production is 12 euros. The company has 10 employees with an average salary of 2,000 euros per month, 33 percent social tax is paid on the salary cost. The company plans to produce bio-xxx for 7 years. At the end of the planned period, the equipment can be sold at a price of 200,000 euros. The discount rate (WACC) is planned to be 9%. | |||||||
Conclusion: | |||||||
A positive NPV indicates that it would be prudent to launch this project under such conditions. | |||||||
Project feasibility assessment based on start-up cash flows
Cash flow forecast | Month | |||||||||||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Opening balance | 0 | 399600 | 395200 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Receipts | ||||||||||||
Capital contributions | 400000 | |||||||||||
Long term loans | ||||||||||||
Short term loans | ||||||||||||
Proceeds from sales | 150000 | 250000 | 300000 | 400000 | 500000 | 600000 | 600000 | |||||
Other receipts | ||||||||||||
TOTAL REVENUE | 400000 | 0 | 0 | 0 | 0 | 150000 | 250000 | 300000 | 400000 | 500000 | 600000 | 600000 |
Expenditure | ||||||||||||
Purchase of fixed assets, construction | ||||||||||||
Leasing payments | 200000 | 13300 | 13300 | 13300 | 13300 | 13300 | 13300 | 13300 | 13300 | 13300 | ||
Goods | ||||||||||||
Raw material | 50000 | 100000 | 200000 | 300000 | 400000 | 400000 | 400000 | 400000 | 400000 | |||
Material | 500 | 1000 | 1000 | 1500 | 2000 | 2500 | 3000 | 3000 | 3000 | |||
Services and rents | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | 4000 | |
Fuel | 5000 | 10000 | 15000 | 20000 | 20000 | 25000 | 25000 | 25000 | 25000 | |||
Energy | 500 | 3500 | 8000 | 12000 | 16000 | 20000 | 20000 | 20000 | 20000 | 20000 | ||
Wages and salaries | 20000 | 20000 | 20000 | 20000 | 20000 | 20000 | 20000 | 20000 | ||||
Labor taxes | 6600 | 6600 | 6600 | 6600 | 6600 | 6600 | 6600 | |||||
Insurance | 25000 | 25000 | 25000 | |||||||||
Administrative costs | 800 | 800 | 800 | 800 | 800 | 800 | 800 | 800 | 800 | 800 | ||
Other costs | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 450 | 450 |
VAT | ||||||||||||
Repaid short term loans | ||||||||||||
Interest of short term loans | ||||||||||||
Repaid long term loans | ||||||||||||
Interest of long term loans (leasing) | 1000 | 990 | 980 | 970 | 960 | 950 | 940 | 930 | 920 | |||
TOTAL EXPENDITURE | 400 | 4400 | 205700 | 103500 | 158490 | 274080 | 408570 | 488060 | 493550 | 519040 | 494080 | 494070 |
Closing balance | 399600 | 395200 | 189500 | -103500 | -158490 | -124080 | -158570 | -188060 | -93550 | -19040 | 105920 | 105930 |
It can also be impossible to start a very profitable project due to lack of money, because, as a rule, expenses precede earning income. The feasibility of a project can easily be assessed using the actual cash flows of the start-up year. If the cash balance does not turn negative, the project is feasible. To this end, the income and expenditure of the first year must be distributed between the months according to their actual occurrence. | ||||||||||||
Example which data is initially provided in the form: | ||||||||||||
In this example, we assume that the company will be established in January of the following year, the investment will be made in March by leasing, production will start in May, and the money for the sale will be received one month later. For the sake of simplification, we will initially exclude VAT from the calculations. | ||||||||||||
Conclusion: | ||||||||||||
Cash flow indicates a widening cash deficit until the end of October. In order to implement this profitable project, it would be necessary to find additional sources of financing in the amount of nearly seven hundred thousand euros (additional equity, short-term loans, etc.). |