1.6: Business Planning

Question 1

What is a Business Plan?

Answer 1

Document setting out what business does and what it hopes to achieve in the future

Question 2

When does a business product or update a Business Plan?

Answer 2

Usually produced when business is starting or expanding.

Question 3

What is the purpose of a Business Plan?

Answer 3

Raise Finance - helps investor make decision

Set business objectives - that will show if a business will be successful and help entrepreneurs make decisions

Organise the business - think about the different functions required, the resources required etc

Question 4

What are advantages and disadvantages of business planning?

Answer 4

Advantages - planner think analytically about business using data, help persuade stakeholders ‘ investors that will succeed, includes targets to monitor if successful

Disadvantages- uncertainty and assumption might not be correct, planner may be inexperienced and not have right knowledge. Business environment can change quickly (new product, economics, competition) can have an effect on the plan

Question 5

What are the main sections of a Business Plan?

Answer 5

Details of entrepreneur or manager

Type of business and activity

Target market

Resources required

Staff required

Financial forecasts

Question 6

What are the financial terms in a Business Plan?

Answer 6

Revenue

Costs

Profit and Loss

Question 7

What is Revenue?

Answer 7

Income a business receives from selling its goods and services

Question 8

What are the type of costs?

Answer 8

Fixed costs - do not change when business increases output of product e.g. rent for factory

Variable costs - vary directly with a businesses level of output e.g. raw materials, labour costs

Totals costs - Fixed plus Variable costs