1.4 Making the business effective

Question 1

What is the purpose of a business plan?

Answer 1

• Convince a bank to loan business money
• forecast financial projections
• identify needs of customers
• formulate market research into important information e.g about competitors
• provide information e.g about competitors
• provide owner with a ‘plan of action’ that minimises risk

Question 2

What does a business plan include?

Answer 2

• cash-flow forecast
• business objectives
• plan for scenarios - reduce risk

Question 3

Why is the business idea important in a business plan?

Answer 3

• stakeholders can understand owners intentions

Question 4

Why are aims and objectives important to a business plan?

Answer 4

• Should be SMART Specific, measurable, achievable, realistic and time-bound so business can measure success against them

Question 5

Why is market research important to a business plan?

Answer 5

• identifies target market as well as market conditions and other competitors