1.4.4 Business Plans

Question 1

What’s the purpose of a business plan?

Answer 1

Provides direction
Supports decision making
Helps establish the viability of the business
To arrange a bank loan
To seek investment
To help the business be successful (More than 50% of new businesses fail in first few years)

Question 2

Bankrupt

Answer 2

When an individual is unable to pay their debts, even after all personal assets have been sold for cash.

Question 3

Limited liability

Answer 3

Restricting the losses suffered by owners/shareholders to the sum they invested in the business.

Question 4

Private limited company:

Answer 4

A small family business in which shareholders enjoy limited liability.

Question 5

Sole trader:

Answer 5

A business run by one person; that person has unlimited liability for any business debts.

Question 6

Unlimited liability:

Answer 6

Treating the business and the individual owner as inseparable, therefore making the individual responsible for all the debts of a failed business.

Question 7

Royalties

Answer 7

Percentage of the sales revenue to be paid to the overall franchise owner.

Question 8

Franchising

Answer 8

Paying a franchise owner for the right to use an established business name, branding and business methods.

Question 9

Fixed premises:

Answer 9

Buildings that have to be where they are (for example, the high street); e-commerce buildings can be located anywhere.

Question 10

Entrepreneur

Answer 10

A person who sets up a business and takes on financial risks in the hope of profit.

Question 11

Proximity:

Answer 11

Nearness; whether or not a business wants to be close to a factor such as ‘materials’.

Question 12

Business plan:

Answer 12

A detailed document setting out the marketing and fi nancial thinking behind a proposed new business.

Question 13

Place:

Answer 13

How and where the supplier is going to get the product or service to the consumer; it includes selling products to retailers and getting the products displayed in prominent positions.

Question 14

Price:

Answer 14

Setting the price that retailers must pay, which in turn affects the consumer price.

Question 15

Product:

Answer 15

Targeting customers with a product that has the right blend of functional and aesthetic benefi ts without being too expensive to produce.

Question 16

Promotion:

Answer 16

Within the 4Ps promotion means all the methods that a business uses to persuade customers to buy, for example branding, packaging, advertising to boost the long-term image of the product and short-term offers.