What Is an Investment Company Business Plan?

First of all, what is an investment company? By definition, this type of company refers to a corporation or trust that invests the pooled capital of investors in financial assets or securities. The most common way to invest in financial securities would be via a closed-end fund or an open-end fund. In an investment company, the money pooled is invested, and the investors split any profits and losses experienced by the firm based on each investor’s stake in the company. Investment businesses are private and public companies that manage, sell, and advertise money to the general public. An investment company’s core activity is to store and manage securities for investment reasons, but they also offer a range of funds and investment services, such as portfolio management and recordkeeping.

An investment company business plan is a business document that explains in detail how the company understands its objectives and plans to achieve them. This sort of documentation generally lays out a detailed marketing, financial, and operational strategy for the investment company. Furthermore, these plans may provide insight into how viable a company is and what it takes to expand and thrive, as well as assist in setting actions to ensure an investment company’s excellence. This type of document may be quite valuable for investment companies that are just starting out in life, but it is generally a good idea for any company, regardless of size, to have one.

What’s In an Investment Company Business Plan?

Here are the most essential components that make up an investment company business plan; these elements may also be present in the most general and basic form of a company business plan.

Executive Summary. The executive summary is usually the first key component that the reader sees when he/she looks at an investment company business plan. This component provides an outline of the investment company business plan as a whole and emphasizes the topics covered in this type of document. The goal statement of the investment company, as well as the investment services the company wants to offer or presently offers, should be included in the executive summary. The statement should be brief and professional but can be lengthier depending on how intricate the investment business is, but it is usually no more than one page. It’s worth noting that, despite being the first component the reader sees, this is frequently written last.Company/Business Description. After the executive summary would be the business description. This section gives a detailed overview of the investment company, including its objectives, services, and intended client base. This section of the business plan also includes information about the sector that the firm will service (in this example, the investment industry), as well as any industry trends and main rivals. This section of the business plan may also include information that distinguishes the investment company from the competition that exists in the sector.Analysis and Strategies. This component usually comes after the company/business description. The objective of this section of an investment company business plan is to investigate and determine the company’s major target audience, as well as where to discover them. Conducting a market study requires the investment company to become acquainted with all elements of the market in order to identify the target market and position the firm to attract the most investors. Factors such as how rival investment companies are promoting themselves and the special features that the investing service has that the competitors don’t have should all be addressed when developing a market strategy.Marketing Plan. This section of the investment company business plan should include how the company intends to advertise its investment services. This part should include information such as expected marketing and promotion methods, price or investment plans for the firm’s services, investor-attraction techniques, why the target audience should choose your company over the competitors, the investment firm’s unique marketing concept, and last, how the investment company will get its services in front of the target market.Competitive Analysis. After the marketing plan section of the investment company business plan is the competitive analysis part. This key component should contain a comprehensive competitive analysis that clearly defines a comparison of the investment company to its rivals. Additionally, the shortcomings and strengths of rivals, as well as how the organization expects to compare to them, should also be discussed. This area of the investment company business plan should also mention any competitive advantages the company has and how the company differentiates itself from those advantages. This section should also include what distinguishes the firm from others in the industry, as well as any possible challenges the company may encounter while entering the market, if relevant.Management. The next key component of this business plan after the competitive analysis would be a description of the investment company’s management and organization. This section of the investment company business plan should include the management and organization approach of the investment company. This section will describe the business’s leaders, as well as their credentials and duties. Human resource requirements and the legal framework of the investment company might also be included in this portion of the business plan.Risk AssessmentsHaving this key component in the investment company business plan is a big plus. The risks associated with establishing the service should be analyzed in this portion of the business plan, and a plan should be prepared to meet each one. During the development stage, the risks will generally revolve around the service’s development, how it will be promoted, staff needs, and any potential financial issues. Some of the key concerns about the venture and those of investors will be alleviated by recognizing and resolving each of the perceived hazards during the development stage.Overhead Expenses. Another key component that can be a big bonus to this document would be the overhead expenses section. The expenditures related to the operation of the investment firm can be developed in this area of the business plan. These are commonly known as overhead expenditures. All non-labor expenditures necessary to run the company are referred to as overhead expenses. Fixed expenses (those that must be paid at the same rate regardless of the volume of business) are separated from variable or semivariable expenses (those which change according to the amount of business). Travel, professional services, promotion, and other overhead expenditures are all part of running an investing firm.Operational Plan. The next key component of this type of business plan would be the operational plan. The operation of the investment company should be described in this section of the investment company business plan. Include information on how and where the investment firm will work, how many employees it will have, and any other essential data about the organization’s activities while writing this part.Income Statement. This section of the investment company’s business plan is generally just a short and uncomplicated report on the cash-generating potential of the proposed investment company. It’s basically a scorecard for the company’s financial performance that shows when money comes in and when it goes out. By deducting the cost of services and costs from revenue to arrive at a net result, which is either a profit or a loss, the income statement shows how much the firm makes or loses over the year.Auxiliary Information. This is the last key component of an investment company’s business plan. This section of the investment company business plan provides any additional information to support the business plan’s contents. This part can also include exhibits and appendices to support the feasibility of the business plan and provide investors with a clear knowledge of the research that supports it. This part may also include the management’s credentials, the company’s stakeholders, the permissions required to operate the investment firm, essential legal documents, and so on.

Steps in Creating an Investment Company Business Plan

Here are the steps that should be followed in order to make an effective investment company business plan:

1. Describe the Investment Company

The first important step to be followed when writing the business plan is to describe what your investment company is all about. In this step, emphasize the company description, such as the registered name of the investment company, the address in which the company operates, the business structure of the investment company (whether it is a partnership, corporation, or a sole proprietorship), as well as what type of investment company it is (whether it is a closed-end fund, an open-end fund, or a mutual investment trust). Additionally, covering the company history is also a must in this step.

2. State the Goals of the Investment Company

After providing a clear description of what the investment company is all about, it’s time to state the goals of the company in this step. By definition, this section of the business plan should outline what the investment company aims to achieve in the short term and in the long term. In this step, you may also determine the company’s major target audience, as well as where to discover them by performing a market study. As stated earlier, doing so requires the investment company to become acquainted with all elements of the market in order to identify the target market and position the firm to attract the most investors.

3. Detail the Services and Write the Marketing Plan

Once the goals of the investment company have been stated in the previous step, it’s time to detail what services the investment company will be providing to its target market. When describing the services, an explanation of how the service is going to work, the pricing plan for the service, the target or typical customers to be served by the company, and any other sales or marketing strategies should be included. After doing so, a marketing plan should also be included which will detail how the investment company is going to advertise the investment services to the intended customers.

4. Conduct a Competitive Analysis

After providing the details on what services the company is going to offer as well as writing the appropriate marketing plan, it’s time to proceed to this step, which is to conduct a competitive analysis. Of course, the investment company should look for ways to stand out from the competition, which is why this step is to be performed when creating the business plan. When performing this step, define a comparison of the investment company to its rivals. Additionally, the shortcomings and strengths of rivals, as well as how the organization expects to compare to them, should be discussed in this step. This area of the investment company business plan should also mention any competitive advantages the company has and how the company differentiates itself from those.

5. Create Appendices

After writing down what is essentially the most important of the important parts of the investment company business plan in the previous three steps, proceed to this step. List any supporting information or supplementary resources that cannot be included elsewhere in the business plan in the appendix section, such as resumes of the management and other essential staff, licenses, equipment leases, permits needed to operate the investment business company, any other types of supporting legal documentation, receipts, bank statements, and so on. If the appendix is lengthy, including a table of contents at the start of this section might be a good idea.

6. Create the Summary

After providing the auxiliary information in the appendix section of the business plan, it’s time to proceed to the last step, which is to write the executive summary of the document. Even though this is the last step of creating the document, it should be noted that the summary is located at the beginning. In writing the executive summary section of the investment company business plan, include a brief detail about the services that the company offers and a summary of how the company intends to financially grow in the future.


What is an unit investment trust?

A unit investment trust is defined as an investment company that offers a predetermined portfolio of equities and bonds to investors as redeemable units for a certain length of time. It is intended to produce capital growth as well as dividend income. They’re comparable to both open-ended and closed-end mutual funds in that they’re all pooled investments in which a group of participants pools their money to be managed by a portfolio manager.

What is a mutual fund?

A mutual fund is a collection of money from several individuals that are invested widely in a variety of firms. There are two types of mutual funds, namely the actively managed and the passively managed mutual fund. An actively managed mutual fund has a fund manager who selects securities to invest in on behalf of investors. An index fund, often known as a passively managed mutual fund, is a form of mutual fund that merely monitors a major stock market index.

What is the purpose of a business plan?

The main goal of a business plan (in this case, an investment company business plan) is to lay out the company’s future plans. Goals or milestones should be included in these plans, as well as precise actions outlining how the organization will achieve each one. The process of developing a roadmap to the company’s objectives will aid in identifying the company’s business focus and pursuing growth.

Starting any form of company, let alone one that specializes in investing tradeable assets, can prove to be a big hassle at times. Having an effectively written business plan for this type of company will give an opportunity for the owner to have some of his/her worries alleviated so that he/she can focus on what’s to come for the investment company. In this article, there are sample templates that are available which can aid you in creating this document.