Before ordering the services of consulting companies it is worth deciding on terms. After all, an incorrect interpretation of the names of documents, the development of which you order, can significantly affect the cost of services and the method of using the results obtained.

So, let’s deal with the most common names of documents, or their parts, which are ordered by project initiators to work with an investor, partner or lender.

Before defining the terms, it should be warned that there are many different interpretations of these names, but we took the most common of the options. Let’s start with the broadest concepts:

• An investment project is a set of activities carried out by the investor, or the initiator of the project in order to implement his plan for increasing capital. The actions of the investor should be optimal for achieving the goals with limited time, financial and material resources. Consequently, the concept of an investment project is quite broad and covers the organizational, legal, managerial, analytical, financial and engineering activities that are carried out by the subjects of investment activity.

The concept of “investment project” is much broader than the concept of “business plan”. A business plan is an integral part of an investment project.

The development of an investment project may be preceded by the development of a project (investment) proposal.

• A project (investment) proposal is the result of a study of investment opportunities for the implementation of an investment project, which is in the form of a proposal. This may be a small presentation in which some problem is considered, its relevance is proved, a way to solve the problem is given, and the probable amount of profit that an investor can get by investing money in this project is calculated.
• A business plan is a document that provides detailed instructions for the implementation of a plan to achieve a project goal. The business plan reveals all aspects of the project that is planned to run. It describes the idea of the project, analyzes the market, describes the production and operational plan, describes the investment attraction sources in the investment plan, and identifies areas of investment costs. The most important thing is that in the business plan the calculation of financial indicators is done, by which it is possible to determine the payback period of the project, the future cost of the project and profitability. Practically, a business plan can be considered a form of expert assessment of the feasibility and effectiveness of the implementation of an entrepreneurial idea.
• The financial plan is one of the main sections of the business plan. The financial plan contains a cash flow plan (schedule of cash inflows and expenditures during project implementation) and a statement of financial results. This is the most vulnerable part of a business plan and the development of a financial plan should be approached very carefully. It is the financial plan that gives clear answers to the main questions of investors, including when and in what forms the return of invested capital will be ensured.
• Investment memorandum (investment declaration) – a document containing structured information that demonstrates the investment attractiveness of the project for potential investors. Investment memorandum is developed for a specific investor. If the investor is a non-resident, the memorandum is drawn up in two languages. The investment memorandum contains information about the project, investments are needed, investment investments, marketing research, a description of the team is given, calculations of the project’s profitability are made, possible risks are described, and so on. The main difference of the business plan from the investment memorandum is that the business plan describes the company’s activities from a management point of view. Investment memorandum of the project is prepared from the point of view of the investor. Most often, a business plan is drawn up taking into account the specifics of writing a memorandum for each investor.

So, be aware of the terms, since the calculation methodology for preparing these documents is the same, but you get completely different forms of presentation of the results, which can be used in different ways.

The company’s quality specialists are guaranteed to help you figure out your project and select the correct form of presentation.