Like any other business, Non-Banking Financial Companies (NBFC’s) also require to frame a business plan for laying foundation of the company. The business plan gives a source of direction to achieve short- and long-term objectives. NBFC business planning is an enormous concept that comprises of business structure, promoter background, an executive summary, market size, growth aspect, products and services etc.
IMPORTANCE OF DRAFTING AN NBFC BUSINESS PLAN:
Drafting an effective Business Model for NBFC is crucial for the business purpose and serves the following objectives:
- It presents information to stakeholders such as prospective investors, financial institutions, funding institutions for generating loan.
- Motivates the company to achieve its goal.
- Keeps the employees of the organisation updated with plans and objectives, and the roadmap to make these.
- A good business plan would also have a framework to operate during challenging situations.
Because of the above requirements, it is crucial to have a well-drafted NBFC business model.
Documents/Points To Be Covered In NBFC Business Plan
- Thrust of Business;
- Market Segment;
- Projected Balance Sheets, Cash Flow Statement, Asset/Income Pattern Statement for next 3 years.
PROCEDURES OF NBFC BUSINESS PLAN
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Sr. No.
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PARTICULARS
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REMARKS
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1.
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Create a draft of your services
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Make a list of services and products which you will provide. After drafting the plan, you have to analyse your products with its market value.
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Write a detailed description of your NBFC
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After specifying the products and services, start writing a detailed description of your company. It must include the mission, purpose, and vision of your company’s formation. Further, mention the geographical markets in which you have served until now, the current status of your ventures.
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Make an annual expense budget
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Despite operating a Non-Banking Finance Company, you need to set a budget. If you have sufficient capital, then only you can provide financial help to others. Thus, estimate the annual budget required for sufficing the business needs of the customers. Contemplate whether your business idea can achieve the desired outcome and create a cash flow forecast for the same.
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Executive Summary
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It is a significant step in completing a business plan. The executive summary brings together every element of your NBFC. It can either break or make the foundation of your company. Executive summary determines if the customers will take an interest in enrolling your documentation and forming a relationship with your NBFC or not.
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FEATURES OF NBFC BUSINESS PLAN
Well drafted Business Plan helps you to be a successful NBFC. Business Plan acts as a blueprint to be successful NBFC. Following are the advantages of NBFC business Plan:
- Business Strategy: NBFC Business Plan helps you in the understanding the business strategy. It also serve as a resource for measuring the goals of the NBFC Business with the model.
- Potential Sales, growth, profits: Before commissioning product design and implementation, it is important to get a reasonable estimate of the numbers first. As a quantitative reflection of the strategy, a well-prepared business plan will provide insights on the cost structure, sales required to break-even or even post a profit, and what the return on investment will be. The business plan can have significant downstream benefits during the implementation journey, and provide warning signals in case of significant deviation from the initial plan. More importantly, the business plan provides impetus to ancillary initiatives necessary to ensure a successful implementation (e.g., hiring plan, digital budget, marketing spend, branch rationalization).
- Prioritizes Work: The NBFC business plan will assist you in prioritizing work according to the importance. This will help your NBFC to be productive and achieve its targets within the time limit.
- Setting Business- On drafting the NBFC business plan, it will provide a straightforward method of starting the NBFC business. You would not forget essential procedures which need to be followed by your NBFC by having an NBFC business plan. This model will also allow you to secure investment from investors. Apart from this, the business plan also acts as a marketing tool in helping you set up an NBFC business.
- Financial management– Financial institutions such as banks deal with money and deposits daily. Similarly, an NBFC deals with providing loans and advances, acquisition of stock and dealing with the business of chit funds. Therefore financial management is crucial for the business of the NBFC. By using the NBFC business plan, there would not be any difficulties in managing the flow of cash and other receivables in your business.
THE VALIDITY OF AN NBFC BUSINESS MODEL
A well-drafted NBFC business plan would have the above points. However, a business plan is drafted having the current market factors and would be valid for a specified period. A business plan cannot be valid indefinitely. Some factors which affect the business plan are technology changes, digitisation, market forces and changes in the preference of consumers. Therefore, an NBFC business plan drafted must be put to immediate use.
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