Unit 3
Promotion of venture
Q1) What do you mean by promotion? Explain the concept of project. 5
A1) Promotion simply means an act of producing or developing or starting an enterprise. Venture means a business project or an undertaking especially a commercial one involving certain degree of risk and uncertainty.
Promotion of a venture is the process of starting an enterprise. It begins when an idea of forming or establishing a venture conceived either by a person or a group of persons and thereafter, go for identifying the scope, nature and size of the proposed enterprise.
Concepts of Projects
Projects generally refer to new attempts with a specific purpose and change so much that it is very difficult to define them accurately. Some of the commonly cited definitions are:
A project is a temporary effort to produce a unique product, service, or result.
(American National Standard ANSI / PMI99-001-2004)
A project is a unique process that consists of a set of coordinated and controlled activities, including start and end dates that are carried out to achieve the goal of confirming a particular requirement.
Includes time cost and resource constraints.(ISO10006)
Examples of projects include basin development, irrigation facility development, new crop development, new animal development, agricultural processing center development, farm building construction, concentrated forage plant puncture wounds. Of these projects, the configuration, type, range, size, and time are different.
Q2) Explain the steps involved in project formulation. 5
A2) Project Formulation involves the following steps (Figure 1).
Figure 1. Project Formulation –Schematic view
- Opportunity research
Opportunity surveys identify investment opportunities and are typically conducted at the macro level by institutions involved in economic planning and development. There are three types of common opportunity studies: area studies, sector and subsector studies, and resource-based studies. Opportunity and support surveys provide a good foundation for identifying projects.
2. Pre-feasibility study / opportunity study
Pre-feasibility studies should be considered as an intermediate stage between project opportunity studies and detailed feasibility studies. The difference is primarily in the range of details of the information obtained. This is the process of gathering facts and opinions about the project. This information is then scrutinized to tentatively determine if it is worth furthering the project idea. Pre-feasibility studies focus on assessing market potential, investment size, technical feasibility, financial analysis, risk analysis and more. The breadth and depth of pre-feasibility depends on the time available and the trust of decision makers. Pre-feasibility studies help prepare project profiles for presentation to various stakeholders, including funding agencies, to seek assistance with the project. It also sheds light on aspects of the project that are inherently important and require further investigation by feature support research.
A supportive study is conducted before commissioning a feasibility study for a project that requires pre-feasibility or large investment. These studies also form an integral part of feasibility studies. These cover in detail one or more important aspects of the project. The content of the support survey depends on the nature of the survey and the project under consideration. The conclusions must be clear enough to give direction to the next stage of project preparation, as it relates to important aspects of the project.
3. Feasibility study
Feasibility studies form the backbone of project development and provide a balanced overview that incorporates all aspects of possible concerns. This study explores practicality, how to achieve goals, strategic options, and methodologies, and predicts the expected outcomes, risks, and outcomes of each course of action. It provides the basis for the definition and rationale of the project so that quality is reflected in subsequent project activities. Well-performed research provides a sound foundation for decision-making, clarification of purpose, logical planning, minimal risk, and successful cost-effective projects. To assess the feasibility of a proposal, you need to understand the STEEP factors. These are social, technical, ecological, economic, and political.
Feasibility studies are not an end in themselves, but a means of reaching investment decisions. Creating a feasibility study report is often difficult due to the number of choices (technology choice, plant capacity, location, financing, etc.) and the prerequisites for which decisions are made. The feasibility study of the project
-Economic and market analysis
-Technical analysis
--Market analysis
--Financial analysis
--Economic benefits
-Project risks and uncertainties
-Management aspect
Economic and market analysis
In recent years, market analysis has undergone a paradigm shift. Forecasting demand for products / services and forecasting supply-demand gaps can no longer be based on extrapolation of past trends using statistical tools and methods. You need to consider multiple parameters that affect the market. Forecasting should take into account all possible developments. A review of projects carried out over the years suggests that many projects failed not due to technical and financial issues, but primarily due to the fact that the projects ignored customer demands and market power. I am.
Market analysis needs to consider many factors such as product specifications, pricing, distribution channels, trade practices, alternative threats, domestic and international competition, and export opportunities. It should be aimed at providing an analysis of future market scenarios. Project investment decisions can be made objectively, taking into account market risk and uncertainty.
Technical analysis
Technical analysis is based on product and specification descriptions and quality standard requirements. The analysis includes the alternative technologies available, the selection of the most appropriate technology for the optimal combination of project components, the impact of technology acquisition, and the contractual aspects of the license. Special attention is paid to technical aspects such as project selection. The technology of choice must also take into account the requirements of raw materials and other inputs from a quality standpoint, making production costs competitive. Simply put, the technical analysis included the following aspects:
Technology-Availability
-Alternative proposal
-Latest / State-of-the-art
-Other impacts
Plant capacity-market demand
-Technical parameters
Input-Raw Materials
-component
- Power
- water
--Fuel
-others
Availability Skilled personnel
\ Location Logistics
Environmentally friendly – building / foundation of requirements such as pollution
Other related details
Environmental impact survey:
Almost all projects have some impact on the environment. Current concerns about environmental quality require environmental clearance for all projects. Therefore, an environmental impact analysis should be performed before starting a feasibility study.
Purpose of environmental impact assessment:
• Identify and explain the environmental resources / values (ER / V) or environmental attributes (EA) affected by the project (in the most quantified way possible).
• Explain, measure and evaluate the environmental impact of the proposed project on ER / V.
• Describe proposed project alternatives that can achieve the same results but have different sets of environmental impacts.
Environmental impact assessments will facilitate providing the necessary corrective actions for the equipment and facilities provided in the project to comply with environmental regulatory specifications.
Financial analysis
Financial analysis examines the feasibility of a project from financial or commercial considerations and shows the return on investment. Some of the commonly used techniques in financial analysis are:
• Repayment period.
• Return on investment (ROI)
• Net Present Value (NPV)
• Profitability Index (PI) / Cost-Benefit Ratio
• Internal rate of return (IRR)
Repayment period
This is the simplest of all methods and calculates the time required to recover the initial project investment from subsequent cash flows. It is calculated by dividing the investment amount by the sum of the annual income (income-expenditure) until it is equal to the cost of capital.
Return on Investment (ROI);
ROI is the annual return as a percentage of the initial investment and is calculated by dividing the annual return by the investment. The calculation is easy if the returns are uniform. For example, the ROI of a fishpond is (5000/10000) x 100 = 50%. If the returns are not uniform, the average annual return over a period of time is used. The average rate of return for horticultural orchards is (1,30,000 / 3) = 43333. ROI = (43333/100000) X 100 = 43.3%.
ROI calculations have the same restrictions as the payback period. Does not distinguish between the two projects. One is a project that provides immediate return (lift irrigation project) and the other is a project that returns after about 2-3 years of gestation (development of new varieties of crops).
Both the payback period and the ROI are simple and suitable for rapid analysis of the project, and the feasibility of the project may be poorly measured. These methods should be used in combination with other discounted cash flow methods such as net present value (NPV), internal rate of return (IRR), and cost-benefit ratio.
Discounted cash flow analysis:
The principle of discount is the opposite of compound interest, which takes the value of money over time. To understand him, let's first look at the compound interest example. Assuming a return of 10
%, Rs100 grows to Rs110 /-in the first year and to Rs121 in the second year. Conversely, with a 10% discount rate, the next year's Rs.110 revenue is equivalent to the current Rs100. In other words, the present value of next year's earnings at a discount rate of 10% is Rs.90.91, or (100/110). Similarly, Rs 121 in the second year is now equivalent to Rs 100 /-or the present value of revenue two years later. The year is rupees. 82.64 (100/121). These values Rs.90.91 and rs.82.64 are known as the present value of future annual revenue Rs.100 in the first and second years, respectively. Mathematically, the formula for calculating the present value (PV) of the cash flow "Cn" for the "nth" year at a discount rate of "d" is:
PV = Cn / (1 + d) n
The calculated discount factor table is also readily available. In financial analysis, the present value is calculated for both investment and return. The results are displayed with three different measurements. NPV, B-C ratio, and IRR.
Net Present Value (NPV)
Net present value is considered one of the key indicators in determining the economic feasibility of a project. The sum of the discounted values of the investment flow in the various years of project implementation indicates the present value of the cost (eg C). Similarly, the sum of the discounted earnings yields the present value of the earnings (eg B). The net present value (NPV) of a project is the difference between these two values (B-C). In a project, it is always desirable to have a high NPV value.
Cost-Benefit Ratio (B-C Ratio) or Profitability Index (PI);
The B-C ratio, also known as the Profitability Index (PI), reflects the profitability of the project and is calculated as the ratio of the total present value of earnings to the total present value of investments (B / C). The higher the ratio, the higher the return.
Internal rate of return (IRR):
Internal rate of return (IRR) indicates the limit or discount rate at which the total present value of a project (B) is equal to the total present value of an investment (C), or B-C.
= Zero. In other words, the discount rate at which the NPV of the project becomes zero. The IRR is calculated by iteration. That is, calculate the NPV at different discount rates until the value is near zero. A project with a high IRR is desirable.
Risks and uncertainties
Risks and uncertainties are associated with every project. Risk is associated with the occurrence of adverse effects and can be quantified. Analyze with the probability of occurrence. Uncertainty, on the other hand, refers to an essentially unpredictable dimension and is assessed through sensitivity analysis. Therefore, these aspects need to be analyzed during the program development and evaluation stages. Factors resulting from project risk and uncertainty fall into the following categories:
• Technology – Related to project scope, technology changes, input quality and quantity, activity time, estimation errors, and more.
• Economical-related to markets, costs, competitive environment, policy changes, exchange rates and more.
• Socio-political-including aspects such as labour and stakeholders.
• Environmental – Factors can be pollution levels, environmental degradation, etc.
Economic benefits:
Apart from the economic benefits (in terms of return on investment), the economic benefits of the project are also analyzed in the feasibility study. Economic benefits include job creation, economic development in the area where the project is located, foreign exchange savings in the case of import substitutions, or foreign exchange acquisition in the case of export-oriented projects.
Management aspect:
Management aspects are very important in project feasibility studies. Management aspects cover promoter background, management philosophy, organization establishment and staffing for project implementation and operations stages, decentralization and delegation aspects, systems and procedures, practices, and finally accountability. To do.
Project implementation time frame:
Feasibility studies also offer a wide range of timeframes for project implementation. Timeframes affect preoperative and cost escalations that affect project profitability and feasibility.
Feasibility report:
Based on a feasibility study, a techno economic feasibility report or project report is created to facilitate project evaluation and evaluation and investment decisions.
4. Project evaluation
Project evaluation is a process of critical review and analysis of the entire proposal. The assessment goes beyond the analysis shown in the feasibility report. At this stage, additional information is edited and further analysis of the project dimensions is made as needed.
Start. At the end of the process, evaluation notes are created to facilitate decisions regarding the implementation of the project.
The appraisal process generally focuses on the following aspects:
• Market Assessment: Focuses on demand forecasting, adequacy of marketing infrastructure, and the capabilities of key marketers.
• Technical assessment: Covers product composition, capacity, manufacturing engineering know-how and technical cooperation processes, raw materials and consumables, locations and locations, buildings, plants and equipment, personnel requirements and break-even points.
• Environmental assessment: Land use and micro environmental impacts, natural resource initiatives, and government policies.
• Financial Valuation: Capital, rate of return, specifications, contingencies, cost forecasts, capacity utilization, and funding patterns.
• Economic valuation: Considered a supportive valuation, it reviews the rate of return, effective protection, and domestic resource costs.
• Management Assessment: Focuses on promoters, organizational structure, management, and human resources management.
• Social Cost-Benefit Analysis (SCBA): Social Cost-Benefit Analysis is a methodology for assessing a project from a social perspective, focusing on the social cost and benefits of the project. In many cases, the financial costs and benefits that SCBA incurs from a project may be based on the UNIDO method or the Little Millil (L-M) approach. In the UNIDO method, the net profit of the project is considered in terms of economic (efficiency) prices, also known as shadow prices. According to the L-M approach, project outputs and inputs are categorized into (1) traded goods and services (2) non-traded goods and services. (3) Labour. Currently, the focus is on SCBA-based economic rate of return (ERR) around the world, including India, which is considered important in project development and investment decisions.
5. Detailed Project Report (DPR)
Once the project is evaluated and investment decisions are made, a detailed project report (DPR) is created. It provides all relevant details, including blueprints, specifications, detailed cost estimates, etc., which serves as a blueprint for project implementation.
Q3) Explain feasibility study in project formulation. 5
A3) Feasibility studies form the backbone of project development and provide a balanced overview that incorporates all aspects of possible concerns. This study explores practicality, how to achieve goals, strategic options, and methodologies, and predicts the expected outcomes, risks, and outcomes of each course of action. It provides the basis for the definition and rationale of the project so that quality is reflected in subsequent project activities. Well-performed research provides a sound foundation for decision-making, clarification of purpose, logical planning, minimal risk, and successful cost-effective projects. To assess the feasibility of a proposal, you need to understand the STEEP factors. These are social, technical, ecological, economic, and political.
Feasibility studies are not an end in themselves, but a means of reaching investment decisions. Creating a feasibility study report is often difficult due to the number of choices (technology choice, plant capacity, location, financing, etc.) and the prerequisites for which decisions are made. The feasibility study of the project
-Economic and market analysis
-Technical analysis
--Market analysis
--Financial analysis
--Economic benefits
-Project risks and uncertainties
-Management aspect
Economic and market analysis
In recent years, market analysis has undergone a paradigm shift. Forecasting demand for products / services and forecasting supply-demand gaps can no longer be based on extrapolation of past trends using statistical tools and methods. You need to consider multiple parameters that affect the market. Forecasting should take into account all possible developments. A review of projects carried out over the years suggests that many projects failed not due to technical and financial issues, but primarily due to the fact that the projects ignored customer demands and market power. I am.
Market analysis needs to consider many factors such as product specifications, pricing, distribution channels, trade practices, alternative threats, domestic and international competition, and export opportunities. It should be aimed at providing an analysis of future market scenarios. Project investment decisions can be made objectively, taking into account market risk and uncertainty.
Technical analysis
Technical analysis is based on product and specification descriptions and quality standard requirements. The analysis includes the alternative technologies available, the selection of the most appropriate technology for the optimal combination of project components, the impact of technology acquisition, and the contractual aspects of the license. Special attention is paid to technical aspects such as project selection. The technology of choice must also take into account the requirements of raw materials and other inputs from a quality standpoint, making production costs competitive. Simply put, the technical analysis included the following aspects:
Technology-Availability
-Alternative proposal
-Latest / State-of-the-art
-Other impacts
Plant capacity-market demand
-Technical parameters
Input-Raw Materials
-component
- Power
- water
--Fuel
-others
Availability Skilled personnel
\ Location Logistics
Environmentally friendly – building / foundation of requirements such as pollution
Other related details
Environmental impact survey:
Almost all projects have some impact on the environment. Current concerns about environmental quality require environmental clearance for all projects. Therefore, an environmental impact analysis should be performed before starting a feasibility study.
Purpose of environmental impact assessment:
• Identify and explain the environmental resources / values (ER / V) or environmental attributes (EA) affected by the project (in the most quantified way possible).
• Explain, measure and evaluate the environmental impact of the proposed project on ER / V.
• Describe proposed project alternatives that can achieve the same results but have different sets of environmental impacts.
Environmental impact assessments will facilitate providing the necessary corrective actions for the equipment and facilities provided in the project to comply with environmental regulatory specifications.
Financial analysis
Financial analysis examines the feasibility of a project from financial or commercial considerations and shows the return on investment. Some of the commonly used techniques in financial analysis are:
• Repayment period.
• Return on investment (ROI)
• Net Present Value (NPV)
• Profitability Index (PI) / Cost-Benefit Ratio
• Internal rate of return (IRR)
Repayment period
This is the simplest of all methods and calculates the time required to recover the initial project investment from subsequent cash flows. It is calculated by dividing the investment amount by the sum of the annual income (income-expenditure) until it is equal to the cost of capital.
Return on Investment (ROI);
ROI is the annual return as a percentage of the initial investment and is calculated by dividing the annual return by the investment. The calculation is easy if the returns are uniform. For example, the ROI of a fishpond is (5000/10000) x 100 = 50%. If the returns are not uniform, the average annual return over a period of time is used. The average rate of return for horticultural orchards is (1,30,000 / 3) = 43333. ROI = (43333/100000) X 100 = 43.3%.
ROI calculations have the same restrictions as the payback period. Does not distinguish between the two projects. One is a project that provides immediate return (lift irrigation project) and the other is a project that returns after about 2-3 years of gestation (development of new varieties of crops).
Both the payback period and the ROI are simple and suitable for rapid analysis of the project, and the feasibility of the project may be poorly measured. These methods should be used in combination with other discounted cash flow methods such as net present value (NPV), internal rate of return (IRR), and cost-benefit ratio.
Discounted cash flow analysis:
The principle of discount is the opposite of compound interest, which takes the value of money over time. To understand him, let's first look at the compound interest example. Assuming a return of 10
%, Rs100 grows to Rs110 /-in the first year and to Rs121 in the second year. Conversely, with a 10% discount rate, the next year's Rs.110 revenue is equivalent to the current Rs100. In other words, the present value of next year's earnings at a discount rate of 10% is Rs.90.91, or (100/110). Similarly, Rs 121 in the second year is now equivalent to Rs 100 /-or the present value of revenue two years later. The year is rupees. 82.64 (100/121). These values Rs.90.91 and rs.82.64 are known as the present value of future annual revenue Rs.100 in the first and second years, respectively. Mathematically, the formula for calculating the present value (PV) of the cash flow "Cn" for the "nth" year at a discount rate of "d" is:
PV = Cn / (1 + d) n
The calculated discount factor table is also readily available. In financial analysis, the present value is calculated for both investment and return. The results are displayed with three different measurements. NPV, B-C ratio, and IRR.
Net Present Value (NPV)
Net present value is considered one of the key indicators in determining the economic feasibility of a project. The sum of the discounted values of the investment flow in the various years of project implementation indicates the present value of the cost (eg C). Similarly, the sum of the discounted earnings yields the present value of the earnings (eg B). The net present value (NPV) of a project is the difference between these two values (B-C). In a project, it is always desirable to have a high NPV value.
Cost-Benefit Ratio (B-C Ratio) or Profitability Index (PI);
The B-C ratio, also known as the Profitability Index (PI), reflects the profitability of the project and is calculated as the ratio of the total present value of earnings to the total present value of investments (B / C). The higher the ratio, the higher the return.
Internal rate of return (IRR):
Internal rate of return (IRR) indicates the limit or discount rate at which the total present value of a project (B) is equal to the total present value of an investment (C), or B-C.
= Zero. In other words, the discount rate at which the NPV of the project becomes zero. The IRR is calculated by iteration. That is, calculate the NPV at different discount rates until the value is near zero. A project with a high IRR is desirable.
Risks and uncertainties
Risks and uncertainties are associated with every project. Risk is associated with the occurrence of adverse effects and can be quantified. Analyze with the probability of occurrence. Uncertainty, on the other hand, refers to an essentially unpredictable dimension and is assessed through sensitivity analysis. Therefore, these aspects need to be analyzed during the program development and evaluation stages. Factors resulting from project risk and uncertainty fall into the following categories:
• Technology – Related to project scope, technology changes, input quality and quantity, activity time, estimation errors, and more.
• Economical-related to markets, costs, competitive environment, policy changes, exchange rates and more.
• Socio-political-including aspects such as labour and stakeholders.
• Environmental – Factors can be pollution levels, environmental degradation, etc.
Economic benefits:
Apart from the economic benefits (in terms of return on investment), the economic benefits of the project are also analyzed in the feasibility study. Economic benefits include job creation, economic development in the area where the project is located, foreign exchange savings in the case of import substitutions, or foreign exchange acquisition in the case of export-oriented projects.
Management aspect:
Management aspects are very important in project feasibility studies. Management aspects cover promoter background, management philosophy, organization establishment and staffing for project implementation and operations stages, decentralization and delegation aspects, systems and procedures, practices, and finally accountability. To do.
Project implementation time frame:
Feasibility studies also offer a wide range of timeframes for project implementation. Timeframes affect preoperative and cost escalations that affect project profitability and feasibility.
Feasibility report:
Based on a feasibility study, a techno economic feasibility report or project report is created to facilitate project evaluation and evaluation and investment decisions.
Q4) What is Project Appraisal? 5
A4) When an organization wants to find a solution to a particular business problem and identify the best way for implementing that solution, it needs to plan and develop a project that might provide an effective action plan for addressing the problem through implementing the solution. This organization will need to give an appraisal of the potential project to make sure the project is really effective because it supports the right solution and solves the required problem. In this context, project appraisal management serves as the major process of analyzing and approving the project. In this article, I am going to write about the project appraisal process and its key steps. I hope my article will help you learn how to evaluate and appraise projects. At the end of the article I give a link to the project appraisal template, which is a more structured way of explaining the appraising process.
Before we talk about the definition of project appraisal, I would like to tell one interesting story from my life. Here’s that story.
As I’m a PMP and have a broad experience in managing various types of project, I always wondered how my neighbour, who is a truck driver and thereby not experienced in project appraisal management, could do all those “projects” without preliminary assessment and analysis of the initial concept, problem, and solution. By the “projects” I mean the activities my neighbour did when he was building the garage in his backyard, renovating the kitchen, repairing his truck, even speaking with the postman, and so on. My wonder was that this person has no idea of project appraisal and management yet he can do successful “projects”, even without understanding that these are projects.
One day I took all these thoughts with me and went to my neighbour. I wanted to find out how he reached success without using project, appraising or whatever else which I might regard as the evaluation process. When I met him in his renovated kitchen, I was surprised to see that he was creating a preliminary plan for his next project: Purchasing New Car. He was sitting at the small kitchen table and writing something on a large sheet of some newspaper (“Daily News” if being more precise). I walked close to the table and saw many words and sentences underlined and crossed off, with multiple arrows and circles on the paper sheet. “What’re you doing,” – that is what I asked. “Don’t you see? I’m trying to plan my new purchase. Remember that big Mercedes I showed you last month in the Truck Driver’s magazine. I’ve decided to buy it. And now I want to plan everything ahead, to avoid failure, you know”.
I sat at the table near my neighbour and he told me about his plans. I found out that he always made a plan before doing something important or unusual for his daily life, for example garage building or kitchen renovation. He never used documents and templates but just a sheet of a newspaper because, as he said with a smile, “newspapers always lie but my records and plans will make the reality more “realistic” and pragmatic” (I still can’t completely comprehend what he meant indeed).
I’m not going to annoy you by retelling our conversion in this text. I just want to focus you on the key idea behind this story: often people unwittingly use the methods and techniques of project appraisal and evaluation to determine chances of success of their endeavours. Before I saw in my neighbour’s kitchen how newspapers could be used for the appraising process, I thought only formal documents and papers were the tools to assess a professional-drive project. But now I know for sure that every person can do an appraisal; the only thing to remember is that every kind of project requires the appropriate level of knowledge and competencies to generate a good project appraisal report. And that’s all… Let’s give the definition of project appraisal.
Project Appraisal is a consistent process of reviewing a given project and evaluating its content to approve or reject this project, through analyzing the problem or need to be addressed by the project, generating solution options (alternatives) for solving the problem, selecting the most feasible option, conducting a feasibility analysis of that option, creating the solution statement, and identifying all people and organizations concerned with or affected by the project and its expected outcomes. It is an attempt to justify the project through analysis, which is a way to determine project feasibility and cost-effectiveness.
Appraising a project means evaluating the proposed solution against its ability to solve the identified problem or need. Some PM methodologies and guides (e.g. PMBOK) regards the technical and financial project appraisal as a component of the initiation or pre-planning phase. PRINCE2 suggests developing the business case which is a form of project appraisal. The Method 123 (MPMM, which is based on PMI and PRINCE2 standards) also uses the business case for preparing a proposed project for feasibility analysis and assessment.
Project appraisal management is an essential stage of any project, regardless of its nature, type and size. This stage represents the first point of the pre-planning or initiation phase. Without having appraised a project, it is financial and technically unreasonable to proceed with further planning and development. No matter whether you are going to purchase a new car (e.g. My neighbour’s project), constructing a building, improving a business process, updating a network system, conducting a marketing campaign, building a garage, or any other initiative, you should make a preliminary assessment and appraisal of your undertaking in order to be sure that that you will do a required and necessary change to your environment.
Q5) Discuss the steps involved in Project Appraisal. 3
A5) Different PM methodologies use different approaches and techniques to develop project evaluations. In my practice, I consider the evaluation process as a series of four steps and use several methods that include different substeps and tasks. This checklist allows you to view the entire hierarchy and details. Here is an overview of the procedure. If you want to know more, please read the checklist.
Step 1. Concept analysis
The first step is to determine the concept of a future project (as a project evaluator or analyst) and perform various analyzes to provide a decision package to senior management (project sponsors) for approval. Is needed. This means that you need to perform a problem-solving analysis to determine if the problem / needs to be addressed and the solution you use to handle the problem. Solutions need to be analyzed for cost-effectiveness and feasibility (various project evaluation methods and techniques are available). You also need to identify stakeholders (people and organizations involved in or affected by the problem or solution) and analyze their needs (relationship to the problem or solution). After all, you need to create a decision package that contains a description of the problem, suggestions for solutions, a list of stakeholders, and a request for funding. This package will be sent to the sponsor for approval (or denial). If the sponsor approves the concept of the project, you can move on to the next step.
Step 2. Concept briefs
In this step, you need to create a summary of your project concept to define goals, objectives, broad scope, duration, and expected costs. All this data will be used to create the concept briefs. You need to create a project statement document that specifies the mission, goals, objectives, and vision of the project. Then create a wide range of statements that specify the boundaries, deliverables, and requirements of your efforts. Finally, create a preliminary schedule template that determines the estimated time period for your project, and create a cost forecast document based on cost estimates and calculations.
Step 3. Project organization
Use the concept briefs to determine the organizational structure of your project. This structure should be created and described in the project org chart. This document addresses issues such as governance structure (roles and responsibilities), team requirements and configurations, implementation approaches, performance measurements, and other information. The idea behind the project org chart is to create a visual representation of the roles, responsibilities, and their relationships, and the people / organizations assigned to which roles and obligations within the project.
Step 4. Project approval
In the final stage, you need to review all the previous steps and combine them into one document called project evaluation. This document summarizes all estimates and evaluations made to justify the project concept and ensure that the proposed solution addresses the identified issue. Financial analysis, cost-effectiveness analysis, and feasibility analysis serve as a method of project evaluation for approving a project. Documents are submitted to Snuper stakeholders (customers, sponsors) for review and approval. Once the evaluation is approved, the project moves on to the next phase, planning.
Q6) What are the limitations of project appraisal? 8
A6) The main restrictions on the performance evaluation method are as follows. (I) Employee defense (ii) Supercritical or "horn" effect (iii) Emphasizing human performance regardless of human values (iv) Central tendency and generosity (v) "Playing God" ( vi) Hello effect. !!
(I) Employee defense:
The evaluation process often creates protection among employees.
Employee defense during an evaluation interview makes the procedure unproductive for both the boss and his subordinates, as the boss's assessment affects the employee's most important work concerns such as promotion, transfer, and dismissal. I often do.
(II) Supercritical or "horn" effect:
It's the tendency of bosses to value people whose performance is lower than justified. An example of this effect is shown below.
(a) My boss is a perfectionist. His expectations are so high that he is often disappointed and rates his people lower than he should.
(b) A heretic or non-conforming person gets a low rating just because he is different.
(c) A man who has recently failed may wipe out the effects of many years of good work on his reputation and be undervalued for his recent actions.
(d) A man who is too meek, too passive, or lacks some of the features we attach to a good man can suffer his reputation.
(e) People who do not work enough to remember what we did when we did the work may suffer more than those who do work that is unfamiliar to us.
(III) Emphasize human performance regardless of human values:
George S. Odiorne blames all assessment methods for a single unique weakness value. They ignore the measurement of human values and focus on the similarity and suitability of human performance. According to him, all assessment methods are like a quality management system, forcing subordinates to comply with certain criteria of physical performance without worrying about human values.
As a result, these assessment methods rank both benevolent and tyrannical managers equally if they find that their physical outcomes are comparable, even if their values differ significantly. Therefore, Rudolf Les, who personally oversaw the execution of two million political prisoners in Germany, organized, planned and controlled.
(IV) Central tendency and generosity:
The boss is often guilty of giving all his workers an average or above average rating. He may give an "average" because it doesn't hurt the rate and at the same time it doesn't reveal his lack of clearer information.
The associated generosity limits reflect the desire to make mistakes on the generous side to avoid controversy by giving each rate a suspicious benefit. To handle this situation, a "forced distribution system" is used to indicate rates for the percentage of cases that fall into each category on the rating scale. So, for example, on the scale of work knowledge, the following percentages might be used:
Bad 10%, average less than 20%, average 40%, average over 20%, and very good 10%.
In most cases, the expected case distribution is provided as a rate guide, not as a strict rule.
(V) Resistance to "playing God":
Some managers do not want to judge other managers and "play God." Accepting the responsibility of becoming a future judge for others causes serious anxiety for some. To alleviate the anxiety of the evaluator as a "judgment," you may need to fill out the certificate at the last moment when the deadline is approaching and tend to feel free to handle the entire process. In addition, the affected employees always have the feeling that their boss is arbitrary. This is a very frustrating experience for an honest and impartial boss.
(VI) Halo effect:
It is the boss's tendency to allow his good impression of one or two important work characteristics of an individual to take over the overall assessment. In such cases, a good person will value all the characteristics of a person much more than they should. For example, if your boss is a person who loves punctuality, many factors have little to do with punctuality, but punctual workers can get high marks for virtually all factors.
Here is another example of this effect:
(a) People who have done good work in the distant past are said to be good in the recent past.
(b) Those who agree with us bow down when we are speaking, and skilled compliments get a better rating than their performance justifies.
(c) Men who did a great job last week or yesterday can offset the mediocre performance of the rest of the year with this single act.
(d) A person who blames his boss for getting the job done may be rated lower than a quiet and lonely man.
Q7) What are the different aspects of project appraisal? 8
A7) Various aspects of project evaluation
The various aspects of project evaluation are:
1. Location and location
The location and location chosen for the establishment of a company is very important for its success.
The choice of location and size of a company is influenced by several factors, including raw materials, labor supply, power sources, natural conditions and market conditions.
Therefore, entrepreneurs need to consider the right place and the benefits of the place.
2. Plant capacity
Plant size or plant capacity is an important aspect of technical feasibility.
The uneconomical scale tends to increase production costs, and the capital production ratio remains high.
Therefore, you need to consider the benefits associated with plant capacity.
3. Technology tools and equipment
Technical feasibility also requires consideration of tools and equipment and suitability, mechanization suitability and government policy.
Not only that, you need to explain the technology required for a particular project and focus on considering different alternatives and choosing the right technology.
4. Construction and layout
Building and plant layouts should also be accessed to ensure that they are suitable for meeting functional requirements according to specified criteria.
You also need to understand that it can promote efficient operations and security for your enterprise.
5. Availability of critical resources
The availability of critical resources such as raw materials, transportation facilities, water, energy sources, and land for future expansion is critical to the successful operation of a company.
6. Labor
In project evaluation, entrepreneurs need to analyze the available sources of skilled and unskilled workers and also determine the optimal number of them.
We also consider the ability and number of managers.
7. Project planning and scheduling
Projects need to be well planned and scheduled to save time and money.
To do this, you need to schedule your project, taking into account additional buildings and plants, delivery times for tools and equipment, and the availability of various factors and services.
8. Wastewater treatment
Disposal of wastewater, residues and waste is a major issue in some industries.
Therefore, in order to reduce industrial pollution, it is necessary to prepare for wastewater treatment in industries and factories.
The feasibility report should also include a wastewater treatment plan.
9. Cooperation with foreign countries
For projects in cooperation with foreign countries, it is necessary to clearly state the conditions and period.
Moreover, government policies in this regard should be adhered to in good faith.
10. Commercial feasibility
Evaluation of project proposals can also be based on commercial feasibility.
To do this, testing the marketing capabilities of the final product is essential.
The following points should be considered when assessing commercial feasibility:
The position of supply and demand of products in the market.
Market size and potential for future development.
The nature of competition.
Marketing strategy.
Pricing policy and future price compared to product type.
If the product is an import substitute, the location of the imported product in the country and its price.
Sales arrangements for the product capabilities of sales staff.
Marketing research may be conducted to predict future demand.
Market research techniques such as trend analysis, correlation, and regression can be used to assess the commercial feasibility of an industrial unit.
11. Economic feasibility
The main purpose of the financial evaluation of a project proposal is to see if the industrial sector can make a sufficient profit.
To test financial realizability, it is necessary to ensure the suitability and validity of estimated project costs, adequately determine appropriate sources of funding, and fully assess the entrepreneur's ability to repay.
Also, depending on the situation, it is necessary to evaluate whether the income and cost estimates are realistic.
Various other details such as capital structure, equity capital dividends, debt-to-capital ratio, future profitability estimates, and internal rate of return should also be carefully considered.
The information, data, and analysis needed to evaluate a project proposal can be divided into the following categories:
12. Project cost
Costs of various fixed assets of land buildings, plants and machinery, fees of various parties, reserves and working capital margins are components of project costs.
13. Production cost and profitability analysis
This analysis assesses the profitability of the project.
The average rate of return, net present value, and internal rate of return can be used to analyze the profitability of an investment.
14. Financial statement analysis
Some financial statements are used to estimate the financial requirements of new and developing companies.
These include cash flow forecasts, accounts, and income statements.
15. Financial ratio analysis
Ratio analysis is an important aspect of financial analysis and valuation.
Financial viability can be measured by using this analysis to assess the liquidity, redemption capacity, capital structure, and profitability of a project.
16. Break-even point analysis
The position of profits at various levels is studied by this technique by studying the inputs and costs of a company's financial volume.
17. Evaluation of management skills
Before approving financial assistance to an entrepreneur, the promoter's management skills need to be properly evaluated.
18. Legal provisions
The internal and external arrangements of a company must be in accordance with statutory provisions.
Moreover, the provisions of corporate law and industry (development and regulation) should also be complied with, and for better control of the enterprise, the government would otherwise exercise the rights conferred by these laws and make mismanagement.
19. Management skills and evaluation
A company's management skills should be assessed by observing the promoter's background experience, abilities, organizational abilities, and qualities.
20. Observation
To assess the feasibility of management, for existing and new companies, the reputation of the board and foreign entrepreneurs, the level of labor relations, equipment, and the benefits provided to employees, etc. Also need to be observed. It needs to be reviewed properly.
21. Evaluation of promoter capacity
Promoter abilities can be assessed by their properties, abilities, and reliability.
22. Socio-economic feasibility
Evaluation of the project is also necessary from a socio-economic point of view, which may ensure that social interests are protected and not ignored.
The following points deserve consideration for the evolutionary assessment of the socio-economic feasibility of the project.
The country's profitability factor needs to be incorporated into each project.
Some additional costs and benefits of the business from a social perspective need to be evaluated.
The resources of scarce countries should be maximized for the benefit of society.
The project must be such that it can participate to achieve the socio-economic goals of the country.
The actual costs and benefits of the project for the country need to be analyzed and should not take into account only the direct financial consequences.
Assessment of the economic and social feasibility of the project contributes to the country, including fair distribution of income and wealth, foreign currency acquisition and savings, job creation, development of underdeveloped regions, contribution to quality and productivity improvement. Can be done based on. By contributing to the construction of infrastructure facilities and industrial structures, we will contribute to the revitalization of rural areas and the rear of society.
Q8) What is project selection? What are the steps involved in project selection? 5
A8) Starting a business venture is a huge investment in both material and human perspectives that require careful planning. There are a myriad of product and service options for entrepreneurs so that investment opportunities can be sourced from several sources.
Steps involved in the new product selection process
There are three basic steps / steps in product / venture selection. These are the generation, evaluation, and selection of ideas.
Idea Generation: Product ideas and investment opportunities come from a variety of sources, including business / financial newspapers, research institutes, consulting firms, natural resources, universities and competitors.
The starting point for idea generation can be a simple analysis of the strengths and weaknesses of your business. Ideas can also be generated through brainstorming, desk research, and various types of management consensus procedures.
Rating: Screening for product ideas is the first step in a rating. Criteria such as the potential value of the product, the time and equipment required, the potential product's fit to the business's long-term sales plan, and the availability of qualified personnel to handle its marketability need to be thoroughly considered. There is.
Each identified product / investment opportunity needs to be properly valued. Preliminary feasibility studies of product market, technical and financial aspects are required at this stage to clearly understand the associated costs and benefits.
Pre-feasibility is a preliminary version of the feasibility study. It is similar to a feasibility study, except that there are few details. This is typically done for large and complex products / projects to decide whether to proceed with a more detailed feasibility study.
Selection: Selections are made from products that are known to be commercially viable, technically viable, and economically desirable. At this stage, the necessary machines will start working.
Q9) What factors are to be considered while choosing a product? 5
A9) When choosing a product for your business venture, you need to consider the following factors:
- Supply gap
The magnitude of unmet market demand that constitutes the source of business opportunities greatly determines the need to select a particular product. The products that are reflected in demand and have the highest probability of success are selected. In essence, there must be an existing explicit demand for the selected product.
b. Fund
The size of the funds that can be mobilized is also an important factor. Appropriate funding is required to develop, produce, promote, sell and distribute selected products.
c. Raw material availability and access
Different products require different raw materials. The quality and quantity of raw material sources required is a serious consideration. Are the raw materials available in sufficient quantity?
Where are the sources of raw materials? Are they accessible? Can they be local or imported sources? You need to provide satisfactory answers to these and many other related questions.
d. Technical meaning
You need to consider the manufacturing process of the product. You need to know the technical impact of the selected product on the existing production line, the technology available, and even the workforce.
Selecting a particular product may require the purchase of a machine or the refurbishment of an older one. The product itself must be technically satisfying and user-acceptable.
e. Profitability / marketability
In most cases, the product with the highest profit potential will be selected. However, you can also select products based on their ability to take advantage of idle capacity or complement the sale of existing products. The product must be marketable.
f. Availability of qualified personnel
Must be available to qualified personnel to handle product manufacturing and marketing. Product manufacturing costs should be minimized by reducing waste. This can be achieved by competent hands.
g. Government policy
This is a factor that is very often out of control. The focus of government policy can have a significant impact on product selection.
For example, a package of government incentives for a product that contains 100% locally input content can change the direction of a company's R & D and therefore the product of choice.
h. Government purpose
The product's contribution to achieving the company's short-term and long-term goals should be considered before making a choice. For example, a company's goals are to achieve sales growth, sales stability, or increase in the company's social value.
Q10) What are the basic concepts to be kept in mind to raise as much money as possible? 5
A10) When planning big and small funding events, there are eight basic concepts to keep in mind in order to raise as much money as possible.
1. The fundraising event is still fundraising.
Many nonprofits focus on the event part of the fundraising event. They find great headliners, hire nice bands, find good venues and print nice invitations. Then they expect money to flow in. When they don't get paid, they wonder why.
The fundraiser is still a fundraiser and all fundraising rules apply. You need to build relationships (with sponsors, auction donors, guests, etc.). You need to train your donor. You need to ask a question (... Gasping! ... Directly and even by phone). Raising funds through an event does not eliminate the basic rules of financing.
2. Who is important on the team?
What is your event committee / host committee focusing on? Problems arise when it comes to logistics rather than financing. The same applies to your board. If your team isn't enthusiastic about raising money and has a personal network large enough to support it, it's unlikely that you'll reach your event's funding goals.
Find host committee and board members who will take ownership of some of the event funding by selling sponsorships and tickets. Then we will provide you with the training and materials you need to do so.
3. The money saved is the money earned.
Event revenue goals should be viewed in terms of "net revenue" rather than "total revenue." Gross income is all the money you bring in at the event, regardless of the cost of the event. Net income is the money collected at the event minus the cost of the event. Your non profit needs money to pay for program and organization overheads – the only money you can spend on those items remains from the event after you deduct the event costs It's the money you have. Therefore, you need to focus on net income.
The money saved at your event is the money you earn for your non profit organization. Think of it this way. Raising $ 25,000 and spending $ 15,000 on venues, catering, promotional materials, and more for a great event in your organization will ultimately bring you $ 10,000 in net revenue.
On the other hand, you probably have some of your ingredients donated and it's still a great menu, but it's a bit cheaper to go. In that case, you raise $ 25,000 and spend $ 10,000 on the event. That means the final net revenue sent to your organization is $ 15,000. This means a 50% increase in funding revenue relative to revenue.
We spend most of our time bringing money to the event, but don't forget to carefully consider the costs and possible in-kind donations so that you can keep more of the money raised at the event.
4. Don't be distracted by the side show.
There are many "side shows" with non-profit events. There are colour schemes to choose from, wine baskets to put together, event favours to package, and flower arrangements to choose from. Do not be inhaled. Financing is important to your event.
Sure, you should have a nice event. Yes, you need to choose a colour scheme and flower arrangement. But do you need a committee of five to spend an hour doing so? Or can you choose something that looks good and do it? I would like the staff to spend 50 minutes making sponsorship calls and 10 minutes choosing flower arrangements. The reverse is also true.
5. Sponsorship> Ticket Sales> Added Revenue Stream
Focus on sponsorship. Next, focus on selling tickets. Then focus on the added revenue sources.Most of the event's efforts should focus on funding, and most of the funding efforts should focus on sponsorship sales. You spend less time selling tickets and need to spend less on additional revenue sources.
Use the 80/20 principle. Focus 80% of your time on 20% of the activities that raise most of the money for your event.
6. The biggest event of the year requires a year of effort.
Do you hold large hands-on deck fundraising events every year, such as gala and annual dinners? If so, you’re big annual event will require a year of effort to raise the maximum amount.
I used to work for a non-profit organization that hosts a major annual supper. Raised a significant portion of the organization's annual budget. When I arrived at the office the next day, one of the staff said, "It was a really good event, but I'm glad it was over. It was a lot of work! When will we start next year's event? A few months?" My answer was “Enjoy today. We will start working on next year's event from tomorrow. "
He exaggerated me, but it wasn't. A big annual event requires a lot of annual effort. We need to start training this year's event donors for next year's event. You need to go see them. Thank them. Ask them other people who may be interested in sponsoring the event. Stay in touch with them. Manage them. Add new prospects. Build a new relationship. Request an event before making an update. The event should take place 4-6 months after the event. It's a year-long effort.
7. Relationships are important.
Financing is all about relationships. All fundraising events are also about relationships. Many nonprofits have corporate sponsors who donate to events each year, but the organization nevertheless has no relationship with anyone in the company. Similarly, many charities do not contact event attendees or silent auction item providers, at least until it is time to request an event next year.
The best way to exponentially increase the revenue of a fundraising event is to start developing event donors in a systematic way. Hold a meeting. Add them to the mailing list. We will hold an event to thank the item providers of the silent auction. Invite event guests to join the volunteer committee. Fostering event donors will not only increase the revenue of next year's event, but also the overall donor base.
8. Event revenue will increase over time.
If you start an event and want it to be an annual event (a large annual gala or a small, simple annual event), the revenue of the event generally increases year by year, at least until you reach the plateau point. Please understand what to do. So if you hold an event that raises $ 50,000 this year and do all the right things to grow the event (that is, what we'll explain in this class), you'll get $ 60,000 ... Next year and $ 75,000 ... Next year. And the fourth year is $ 100,000.
This is to show a combined effect when the event is executed properly. If you hold a great event, your guests will talk to their friends and bring them to next year's event. If your silent auction is reported, more companies will want to participate in the auction next year. If you treat sponsors really well and grow them throughout the year, they will introduce you to other businesses in their network that may want to sponsor your event. With proper treatment of donors and guests, event revenues will increase year by year.
Q11) Why do we need to raise fund in business? 5
A11) The ultimate goal of financing is to raise money, but at least if your radar has long-term viability, it really has to be more than that.
Sure, you need cash to keep your organization up and running and to support your philanthropy and purpose, but financing actually offers some deeper benefits than that.
When done correctly, it helps reach more people, perform better operations, and most importantly, ensure the success of the organization longer than the current funding round. Method is as follows.
- Fundraising raises awareness
Financing allows you to be creative and force you to move out of your comfort zone. To be eligible for grants, sponsorships, and other free money, you need to prove that you are reaching as many people as possible in as many parts of the world as possible. This means digging into social media, refreshing your website to take advantage of the latest SEO and marketing tactics, and taking a new approach to outreach and maintenance.
b. Financing requires planning and prioritization
Raising money is not an easy task. It takes a lot of time, energy, and thinking to come up with a solid funding strategy that needs to take a step back to evaluate the entire organization. This can result in the need to actually evaluate operations such as resource allocation, staff, and time-consuming projects. As a result, you can optimize your work and maximize the funding you can get for them.
c. Financing empowers your team and provides a sense of unity
Fundraising is a great way to inspire your employees and be passionate about your goals. It gives them a common goal to lag behind and a single milestone to reach as a group. This can make all the difference, especially for large organizations and when team members are spread across different departments and departments.
d. Financing requires finding and maintaining new donors
It's not enough to run a fundraising campaign and find new donors. Finding new donors to raise money is one thing, but maintaining donors is just as important. Organizations need to run a series of paid campaigns and storytelling events to keep donors involved with charities. Nonprofits need funding to run engagement campaigns to retain donors.
e. Financing keeps you moving forward
Achieving one funding goal doesn't mean you're done; you can sit back and relax. The number of people who support you is constantly increasing, and the things you can do to support your goals are increasing. This means that a constant flow of funds is always needed. This constant need to do more, support more, and achieve more helps to motivate and drive the team, excite the team, and make a passionate change.
Q12) What are the types of fund raising? 5
A12) Following are the types of fund raising:
1) Capital campaign:
These are limited campaigns that are limited by the time of a particular project. These are time-specific and require good preparation and clever execution. That's why many nonprofits do this.
2) Corporate support:
As the name implies, this is a charitable donation from a company to an organization. The organization involves NGOs and other nonprofits. Nonprofits approach businesses and explain their mission. Few companies contribute to their goals from either the set budget or its foundation. Few companies may be interested in sponsoring an NGO's capital campaign. That's because it increases the reach of the brand. This is called because branding.
3) Online fundraising:
This method is one of the easiest ways to raise money for a cause. Being online, you can reach a larger audience that may be physically impossible. Most nonprofits in India do not harness the power of online financing. There are funding platforms like Milaap that use crowd funding to raise money for projects.
4) Income:
Income is the amount of money you earn from producing goods and services offered by nonprofits. For example, NGOs may make and sell handmade products and accessories such as handbags. If you have purchased any of these handmade accessories, this usually requires a marketing plan. Accessories purchased under the Being Human brand contribute to the Being Human Foundation, and the "Being human" brand is a perfect example.
5) Grant:
A grant is the amount of cash given to an organization or individual for the exact purpose. Individuals who choose a grant should keep track of all the data they may need in the future. There are also certain government grants.
6) Membership campaign:
This is one of the effective ways to get people together to learn more about your organization and the work you are doing. Bringing in members increases the chances of raising more money for the campaign, as most members turn into donors in a short period of time.
7) Special event:
Raising funds to support a cause from a special event proves to be the most efficient way, as it not only raises funds, but also raises awareness of your brand and the importance of the cause. Many artists, such as Justin Bieber and Coldplay etc, support a small number of charities and hold charitable concerts to donate a percentage of their proceeds for charitable purposes.
There are many other ways to invest money in a project. Crowd funding is one such method. People often confuse crowd funding with financing. That's why we need to see this, which distinguishes between crowd funding and funding.
Q13) What is fund raising? Explain its sources. 5
A13) Fundraising is generally defined (via Business Dictionary) as the process of soliciting financial support and is an essential way for most nonprofits to bring in revenue for their organization’s mission. Fundraising is about so much more than just asking for money. It also consists of ways for charitable organizations to build relationships, bring in foundation support, and attract new donors.
There are many important steps in the fundraising process, from finding prospects to donor retention. Non profit Quarterly’s fundraising development expert Simone Joyaux has written an extensive column, Unraveling Development, that gives non profit workers an in depth look into fundraising tactics and strategies for nonprofits.
Companies are always looking for a source of funding to grow their business. Financing, also known as financing, refers to the act of providing resources to fund a program, project, or need. Financing can be initiated for short-term or long-term purposes. The various sources of funding are:
a) Retained earnings
b) Debt capital
c) Net worth
- Retained earnings
Companies aim to maximize profits at a price higher than the cost of manufacturing a product by selling or servicing the product. This is the most primitive source of funding for any company.
After making a profit, the company decides what to do with the capital it earns and how to allocate it efficiently. Retained earnings can be distributed to shareholders as dividends, or the company can reduce the number of issued shares by launching a share repurchase campaign.
Alternatively, the company can invest the money in a new project. For example, you can build a new factory or partner with another company to set up a joint venture.
b. Debt capital
Companies personally obtain debt loans through bank loans. They can also raise new money by issuing debt to the public.
In debt financing, the issuer (borrower) issues debt securities such as corporate bonds and promissory notes. Debt issues also include corporate bonds, leasing and mortgages.
The company that initiates debt issuance is a borrower to exchange cash and securities needed to carry out a particular activity. The company then repays the debt (principal and interest) according to the specified debt repayment schedule and the underlying contract of the debt securities issued.
The disadvantage of borrowing money through debt is that the borrower has to pay interest as well as repay the principal on time. Otherwise, the borrower may default or go bankrupt.
c. Net worth
A company can raise funds from the public in exchange for the company's proportional ownership in the form of shares issued to shareholders who become shareholders after purchasing the shares.
Alternatively, private equity financing can be an option if the entity or individual is within a network of companies or directors ready to invest in the project, or where funding is needed.
Compared to debt-capital financing, equity financing does not require you to pay interest to the borrower.
However, one of the disadvantages of equity capital funding is the long-term sharing of profits among all shareholders. More importantly, shareholders dilute the company's ownership control as long as the company sells more shares.
Other sources of funding
Sources of funding include private equity, venture capital, donations, grants, and subsidies that do not directly require a return on investment (ROI), with the exception of private equity and venture capital. They are also called "crowd funding" or "soft funding".
Crowd funding is the process of raising funds to carry out a particular project or to raise a small amount of money from a large number of individuals to start a venture. The crowd funding process is usually done online.
Q14) What is the purpose of raising fund? 5
A14) Financing is essential to the survival and success of nonprofits and charities. In fact, funding campaigns are often the main focus of these organizations, as without working capital, they cannot provide the services they need to reach their key goals. Before the advent of digital marketing, financing was primarily focused on getting as many donations as possible, but outreach in today's competitive environment is another equally important goal. You need to focus on.
Increase brand awareness
With intensifying competition and diminished attention, it is no longer enough for nonprofits and charities to simply solicit donations from people. Charities need to market themselves in the same way as standard companies trying to reach their target audience. In short, financing should focus on building the "brand" of the organization. This includes the organization's mission, culture, and quality that makes it unique. Valuable content on your website, such as social media campaigns, articles, videos, and even live stream sessions, can increase viewer engagement through likes, tweets, and comments on social media platforms. Through these methods, charities build awareness that future donors can be transformed into real donors.
Give incentives to expired donors
Fundraising campaigns should also focus on converting donors who have made a single contribution to becoming regular donors. A common axiom in business is that maximizing existing customers is much easier and much cheaper than acquiring new ones. Charities have "donors" rather than "customers," but the axioms still apply because the ultimate goal is the same. In other words, persuade people to give money to the company. Charities can launch a donor campaign by identifying the number of donors who have made a donation only once. Next, you need to establish the goal of converting a certain percentage of those donors to regular donors. Next, the organization needs to target these donors with content such as personalized emails, newsletters, and special event notifications to remind donors why they need to reconnect to the organization.
Raise funds for operating costs
Nonprofits must meet operating costs to continue their business. These costs include rent, utilities, liability insurance, salaries, purchases of office equipment and furniture, launching campaigns for upcoming charitable events, and community engagement programs. Without funding from fundraising, charities would not be able to cover these operating costs or function as intended. However, one risk is that the tax exemption status of an organization can be compromised if too much funding is allocated to staff salaries.
Fund the fund
Financing also helps nonprofits set up funds. A fund is a restricted fund that allows an organization to use only interest accrued from the fund. That is, the organization cannot use the original fund for the fund and can grow the original fund over a period of time. The advantage of donations is that they provide charitable organizations with financial security and help them survive the annual recession and less than expected donations.
Q15) What are the methods of raising fund? 8
A15) Financing is the key to the success of nonprofits. While there are many ways to raise money to support philanthropy, there is also a lot of competition for donations. Choosing the right method and strategy is the key to effectively raising funds.
- Grant writing
Grants are the primary source of funding for nonprofits. Grant securing involves identifying opportunities through the Foundation and other organizations and making and submitting effective grant proposals. There are many types of grants, including programs for local nonprofits, arts, education initiatives, environmental protection, and more. Check out examples of successful grant proposals to help you get started.
b. Product sales
Many organizations require fundraising for product sales to raise funds. This method identifies products that can be profitably sold and donates the proceeds to your organization. Selected items are sold by members, volunteers, or the organization itself. Ideas include food products such as baked goods and donuts, coupon books, stadium seats, holiday decorations such as Christmas tree decorations and garlands, apparel, and many other options available through funding companies.
c. Corporate partnership
Establishing corporate partnerships can be a major source of funding for nonprofits. With so many organizations emphasizing social responsibility, companies are prepared to sponsor or undertake an organization's programs and events, especially if the Group's efforts are in line with the company's mission and values. You may notice. Corporate partnerships often include arranging matching gifts, where the company matches dollars donated by employees with equivalent donations. Companies affiliated with nonprofits may also lend employees and executives to nonprofits to raise funds and act as volunteers.
d. Special event
Special events can be a major source of funding for nonprofits. The event itself can bring money and attract the attention of individuals, many of whom donate additional money or volunteer time and talent to the organization. There are various types of special events such as gala, cooking contests, sporting events and charity auctions. There are many ideas for raising funds for special events. It's important to choose an event that follows best practices for attracting attendees and marketing charity events.
e. Website / app donation page
All nonprofits should have a donation page on their website and mobile app to provide an easy way for anyone who wants to donate to donate online. When people visit your website or app, they may be interested in your organization and the causes it supports. Each page has a "click-to-donate" link that gives you direct access to pages where people can contribute, making it easy for website visitors to get involved when they're thinking about their organization. Of course, websites and apps should also contain information about your organization's services and mission, and how to volunteer.
f. Direct solicitation
Sometimes the best way to raise money is to ask for a donation. As with telephone solicitations, door-to-door financing can be effective in some situations. Face-to-face visits are also beneficial, especially for individuals who can make significant contributions. We also encourage you to collect contact information from donors, volunteers, and special event attendees so that you can follow up on email marketing requests for donation or fundraising letters.
g. Crowd funding
If you're looking for a quick way to raise money, we recommend using a crowd funding platform. This option allows you to call for donations that can quickly and easily attract donors who may be able to create gifts of any size. This option may be a virus and requires immediate attention, such as raising funds for a particular project or bringing donations to help people affected by a sudden tragedy or unexpected repair. Can be used to quickly fund needs that do not. A facility where an organization provides services to the community. There are many crowd funding platforms and text-to-donation services.
h. Capital campaign
If you're trying to raise money to fund a large project that needs to be raised outside your normal operating budget, such as building a new building or buying land, a capital campaign is perfect. This type of fundraising usually begins by looking for the main gifts from the largest and most loyal individual and corporate supporters, but also includes efforts to collect small amounts from other donors. Capital campaign letters and brick fundraiser are often used to request donations. Some nonprofits rely on consulting firms that specialize in capital campaigns.
