2C : business plans

Question 1

what is a business plan ?

Answer 1

how a business is going achieve its aims and objectives

Question 2

why do businesses use a business plan ?

Answer 2

• forces entrepreneur to look at every key aspect of the business
• banks will not usually lend to a new business without a business plan
• helps entrepreneurs to see the strengths , weaknesses opportunities and threats to the business

Question 3

why are business plans important ?

Answer 3

business : reduces risk to investors and pay lower interest rates which keeps costs down to a minimum while keeping ownership and control of business

• business : allows owners to check progress of the company

Question 4

what are the advantages of a business plan ?

Answer 4

• before a bank will lend money to a business it will want to know if it will get money back .A business plan will :
• fleshes out business idea so bank can see weather it is likely to work financially
• show the owners clearly when things are going to run the business
• shows bank when it can expect to be repaid

Question 5

what are the disadvantages of a business plan ?

Answer 5

• market research costs can be expensive
• objective of business may be unrealistic
• new businesses could find it difficult to predict accurately how much income they can expect

Question 6

what are some sources of information and guidance

Answer 6

entrepreneurs wishing to set up in business can turn to the following :

• business Wales
• small business advisors :provide help writing business plan
• bank managers : specialist advice regarding business plans

Question 7

what are the best business plans ?

Answer 7

they are flexible : the cashflow forecast and profit projections can be easily altered to inform the stakeholders

Question 8

what are the contents of a business plan ?

Answer 8

• statement of aims and objectives
• market research
• size, growth and segmentation
• marketing plan/strategy
• products
• pricing strategy
• operational plan
• method of production
• finance
• potential profit & loss account
• human resources plan
• the types of skill the staff will need
• the amount of staff needed
• executive plan
• key objective of business
• financial information e.g. revenue an profit over the next five years