1.6 Business Planning

Question 1

What is the purpose of a business plan?

Answer 1

A business plan states what a business is trying to achieve over the next few years and how it intends to accomplish these aims.

Question 2

What are some problems you may face when doing a business plan?

Answer 2

• Uncertainty.
• Change.
• Lack of experience.

Question 3

What are some main sections of a business plan?

Answer 3

• The firm’s objectives.
• Details of the price it will set and the expected number of sales.
• How much profit it is expected to make.

Question 4

Define total costs.

Answer 4

Fixed costs + variable costs

Question 5

Define fixed costs.

Answer 5

Costs that do not change when a business changes it’s output.

Question 6

Define variable costs.

Answer 6

The costs that vary directly with the business’ level of output.