1.6 - Business Planning Flashcards
1
Q
What is a business plan?
A
A document setting out what a business does and what it hopes to acheive in the future
2
Q
What is revenue?
A
The income that a firm receives from selling goods or services, this can alos be sometime called ‘turnover’. It is measured by the number of units sold multiplied by the price.
3
Q
What are fixed costs?
A
Are the costs that do not change when a business changes it’s level of output.
4
Q
What are varable costs?
A
Costs that change with a business’ level of output.
5
Q
What is the purpose of business planning?
A
- Allows entrepenurs to think ahead of what they want their business to be
- If presented to investors, they know where the business is going and how their money will be spent
- Set objectives, can help with motivation of where the business is going and end goals
6
Q
What are some of the problems of business planning?
A
- Uncertainty, it is difficult to look ahead and see what is going to happen in a market or estimate sales figures to any degree of accuracy, economic changes are also difficult to predict
- Lack of experience, starting entrepreneurs may not know how the business sphere works
- Change, the environment is constantly changing, with new laws and competitors to take into account, and so a business must change also
7
Q
How to reduce the risk of business planning?
A
- Market research
- Talk to experts and consultants
- Plan for a variety of possible outcomes
- Regularly review and update the business plan to maintain relevancy
8
Q
What are the main sections of a business plan?
A
- Background info on founders, investors, and previous experience
- Analysis of the market and the firm’s expected position within it. Analysis of target market
- Firm Objectives
- Details of set prices and expected sales
- Explanation of how the business will compete against rivals - and how it will be competitive, what makes it better than competition
- Analysis of financial position of business, forecasts of profits and cash flow
