2.1.4 Business Planning

Question 1

What is business planning

Answer 1

The process of looking ahead to an event and organising it

Question 2

What is a business plan

Answer 2

A document that sets out the business idea and shows how the firm will be financed and marketed

Question 3

What is the purpose of a business plan

Answer 3

Encourages the entrepreneur to:
1. Think ahead about what is needed or be done to make the idea a success
2. Consider the finance needed to run the business
3. Consider how the firm will compete against other firms

Question 4

What is the content of a business plan

Answer 4

1. Nature of the business
2. People running the business
3. Market research
4. Finance
5. Aims and objectives
6. Target market
7. Competition
8. Strategy
9. Location
10. Sales forecasting

Question 5

What are the sources of information and guidance for a business plan

Answer 5

1. Market research
2. Government agencies
3. Banks
4. Accountants
5. YouTube

Question 6

What are the advantages of business plans

Answer 6

It forces the entrepreneur to think about every aspect of a start up, increasing the chance of success.
A good business plan can get investors to compete, offering better terms for obtaining capital
It can identify a lack of skills in certain areas

Question 7

What are the disadvantages of a business plan

Answer 7

Plans do not guarantee success and poor sales can come as a shock
A rigid plan can make running the company too difficult
Focussing too much on the plan can mean that customers are ignored
Predicting the future is difficult and projections are often wrong