In this tutorial, we see how to use the feasibility plan of a production company.
The link to download the template is in the description below.
The file is open source, and you can modify it according to your needs.
You can add and modify items.
If you don't need an item, just leave the value empty.
If you still have questions by the end of this video, please feel free to ask.
The tables are designed for easy printing.
Let's save it as PdF.
Although this study was initially made for food production company,
it can be used for all other production and manufacturing purposes.
The forecast is made for 7 years.
Moreover, we have monthly projections.
You can add more years or adjust for smaller period.
This template can help you design your own plans.
Let us get started.
The first sheet provides an overview of the study.
All fields are adjustable except for these as they are the final outcome of your study.
As in the other studies, all you need to change are the assumptions.
Since it is a production company,
we have more parameters to make.
These 4 sheets contain our assumptions.
Let us start with the first one.
The first things we need to think about are the start-up costs.
This table contains them.
The first item is the amount we need to set up the working place.
This item depreciates as per the rate we specify below.
The working capital is the cash we need to handle daily short term transactions.
These are the delivery cars.
We assume we will buy them in the second year.
They also depreciate.
At the end of this video, we will adjust this item so it starts in the first year.
It will serve as an example on how to change the template.
The remaining costs are intangible assets.
We assume they will not have a salvage value by the end of the study.
The equipment is the machinery we need for production.
There is place for 56 different machines.
You just need to fill the fields for the equipment you need.
If you have 5, then you only use 5 and leave the remaining empty.
If you need more, you can insert rows and add below.
This is the total cost for equipment.
You may want to show the original price as well as the discounted price
that you will likely get if you buy many production tools from one supplier.
We assume that these are paid in cash at year 0, but you can adjust this
, so you either add it under liabilities or payables in the balance sheet.
Next, we have the fixed and variable costs.
We have the monthly costs for communication, rent and auditing.
We assume these to be fixed amounts.
on the right hand, we have the variable costs for utilities, transportation,
promotion, damaged goods, and others.
These are percentages of the total turnover of each period.
You can exchange the variable costs with the fixed ones or add more.
We also have the financial statements figures.
The accounts receivables are percentage of sales.
The accounts payables are percentage of direct costs.
The depreciation rate is 14%,
so that all items depreciate over 7 years.
The inflation rate is used for adjusting the costs.
This is the rate of increase in sales in each of the following years.
This is the tax rate.
Last in this section, we have the discount rate through which we calculate the net present value.
The last table in this sheet is about payrolls.
We have four employees, but you can have additional 4. If you need more, just add below.
Salaries increase at the same rate as per the inflation above, but you can create a new field
for increase in salaries and adjust the formulas in the income statements.
The second sheet contains the capital structure.
The capital requirement is calculated as the total start-up costs,
that is the first two tables.
We have few parameters for the loan amortization schedule.
We can set the loan life to be between 1 and 7.
Interest rate is a static value.
We can also decide when to make the first payment as some financing firms
allow for few months before the first payment.
Let's try to alter these values.
If we change the loan life to 2 years, then all will change automatically.
If we change first payment to the 4th month,
values will also change.
You can check the formulas to see how "if statements" work.
To the next sheet, we have the parameters for the production and raw materials.
We have the name of the product.
Some products have multiple sizes, but you can treat these
as separate products and change the share to 100%.
We have the code for each.
The size in grams. The price we determine, and the production share of each size.
Some products don't have different sizes, so we have the production share set to 100%.
the last seven products are beverages
The size is in milliliters.
In the next table, we have the raw materials.
These are the ones we use in the production.
We have jars, bottles and stickers.
These items are to be used for most of the goods we produce.
The remaining are only used if a product requires them.
We have the unit of measurement of each item as well as the market price.
We will see more about this in the next sheet.
Next, we have the production parameters.
We decide on how much we will produce in each month of the year.
This offers more dynamics.
If you wish to produce the same quantity throughout the year,
just use the same across all months.
In the next table, we have the raw materials needed to produce each product.
You only need to change the parameters for the base product.
The others are calculated based on their size.
For example, for the first product,
the 600 grams is the base.
To produce 600 grams of product 1, we need 1200 grams of raw material 1,
50 grams of raw material 2 and so on.
The next tables all include the same for different products.
These are all the assumptions we need to change.
The remaining sheets are calculations.
You can click on the cell to see how the calculations are made.
The first sheet contains the costs of producing each product.
The second sheet contains a summary of the profitability per each product.
The next contains two tables, one for the monthly revenues,
and another for the costs.
The remaining sheets contain the financial statements and net present value.
The balance sheet is your reference if something goes wrong upon modifying the template.
Assets must always equal liabilities and owners' equity.
For example, if we increase the production,
Most calculated figures will get affected, however,
the balance sheet will close.
Let us get back to the vehicles and add them to the first year.
If we navigate to the balance sheet,
we notice it does not exist in the first year.
To make the changes, we have many options,
but this is the fastest.
We just add it in the first year as for the others.
Same for the depreciation.
We reflect these changes in the yearly statements.
Additionally, we need to change it in the capital structure as
we need more money to buy it at the start.
That is it.
The figures will change now,
but the vehicles are purchased upfront.
Most important, the balance sheet is correct.
At the end, I hope that this study will be useful to you.
If you have any questions, please let me know.
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