2.4

Question 1

what is a business plan

Answer 1

a look into the future of the business entirely to help layout objectives

Question 2

why do businesses use a business plan

Answer 2

• prevent likelihood of failure
• get loans from banks
• attract investors
• give the owner direction
• set targets and objectives to be followed in the long term and short term

Question 3

what is cash flow forecast

Answer 3

predicts the amount of money that will go into and out of the business

Question 4

define cash inflow

Answer 4

money coming into the business (receipts)

Question 5

define cash outflow

Answer 5

money going out of the business (payments)

Question 6

give examples of cash inflows

Answer 6

• bank loans/grants
• owner capital
• sales
• shareholders

Question 7

give examples of cash inflows

Answer 7

• buying stock
• overheads
• salaries/wages
• advertising & marketing
• loan repayments

Question 8

state factors impacting cash flow

Answer 8

consumer trends
economic variables
competitor actions

Question 9

how can you fix cash flow forecasting issues

Answer 9

short term loan
reduce expenses
delay paying bills

Question 10

what are the limitations of cash flow forecasts

Answer 10

bias - businesses may overinflate figures to attract investors
predictions - can’t take into account external shocks
mistakes - can be complex for an unexperienced entrepreneur to produce
time - the longer the period of time a cashflow is based over the more accurate it becomes