2.1.4 planning Flashcards

1
Q

what is a business plan

A

a document containing a business objectives, aims and strategies and how it plans to achieve them

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2
Q

why is a business plan important

A

-reduces risk
-helps to attract investors
-banks are more likely to give out loans to business with business plans
-to identify potential problems early on

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3
Q

what is a cash flow forecast

A

a forecast which shows the inflows and outflows of a business, allowing them to calculate the netflow

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4
Q

what does a cash flow forecast help to do

A

-show if a business has enough money to pay bills
-show how quickly a business is able to raise finance

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5
Q

what is cash inflow

A

money going into a business

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6
Q

what is cash outflow

A

money going out the business

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7
Q

what is net cash flow

A

inflows-outflows

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8
Q

what is the opening balance

A

the total amount of money a business has at the start of the month, it is the same amount as the closing balance of the previous month

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9
Q

what is the closing balance

A

the money a business has at the end of the month, (net cashflow+ opening balance)

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10
Q

what are some limitations of a cash flow forecast

A

-time consuming (needs to be updated regularly)
-biased (business may overestimate the inflows it earns)
-mistakes are easily made

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11
Q

how can a business plan attract investors

A

they will be able to look at the plan and see the business is running smoothly and is likely to grow a lot bigger in the future

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12
Q

how can a business plan help to obtain loans

A

the bank will be able to look at the plan and see they are able to pay it back and trusteable enough to pay it back

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13
Q

what is found within a business plan

A

-business name
-aims and objectives
-4ps of marketing
-what the business is about
-what products it sells

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14
Q

how is a business plan biased

A

the business may overestimate their sales too much

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