3 - Business Planning Flashcards
This competency is about the principles and tools of business planning.
Business Planning - Extract from Candidate Guide - Aug 2018 (updated Feb 2022)
What is a business plan?
A business plan is a document provided to lenders/investors which sets out the reasoning and evidence to obtain funding.
The plan will highlight the reasons for the set up of the business as well as provide an outline of the goals and objectives along with how and why these are achievable - like a roadmap.
What are the main headings you would see under a business plan?
- Market analysis
- Competition analysis
- Description of organisation structure
- Breakdown of services offered
- Planned timescales and milestones.
- Current financial position
What are the short, medium and long term goals of your company ?
Short term - Continue to provide a high level of service
Medium term - Build relationships with new clients to continue the business, continue new revenue streams
Long term goals - Embrace emerging technologies in the industry and target work areas and new sectors.
How would you prepare a long term strategy?
- Create a description of the strategy
- Identify the key stakeholders and their needs
- SWOT analysis – Strengths, Weaknesses, Opportunities and Threats
- PESTELE analysis – Political, Economical, Social, Technological, Environmental, Legal, Ethical Factors
- SMART goals – Specific, Measurable, Attainable, Realistic and Time
- Prepare a marketing strategy – identify audience, market research, promotions etc.
- Organise resources – funding, staff etc
- Review performance indicators – areas of development, improvement and growth
- Monitor and review the progress on a regular basis.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients key performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is the purpose of a business plan?
A business plan is a document usually provided to lenders and investors. It sets out the reasoning and evidence to obtain funding. The plan should highlight the reasons for set up as well as provide an outline of goals and objectives as well as assess the value of the business idea.
What is Porters 5 forces?
A tool to analyse the attractiveness and profitability of a business. The forces include:
1) Competitive Rivalry (amount of competition)
2) Supplier power (how easy it is for supply cost to increase)
3) Buyer power (how easy it is for buyers to drive your prices down)
4) Threat Substitution (likelihood of customers finding a different way of doing what you do)
5) Threat of new entry (the ability for others to enter the market)
How does a feasibility study differ to a business plan?
A feasibility study will carried out before starting a business to determine the viability of it.
A business plan will then detail how it operates and done on the basis that the feasibility study was positive.
What is the difference between a Sole Trader, Partnership, Limited, and a LLP?
Sole Trader - A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses (unlimited liability).
Traditional Partnership - A business organisation in which two or more individuals manage and operate the business. Both owners are equally liable for the debts from the business
Limited Company - The shareholders’ liability is limited to the capital they originally invested. If such company becomes insolvent, the shareholders personal assets remain protected. Shares in a private limited company are not offered to the general public (distinguishing it from a public limited company - plc.)
Limited Liability Partnership (LLP) - A LLP is a partnership in which one partner is not responsible or liable for another partner’s misconduct or negligence. Essentially self employed - they do not pay corporation tax.
How would you assess a contractors financial accounts?
Request a copy of the contractors company accounts for the last 3 years which would include the Profit & Loss Statement, Balance Sheet and Cash Flow Statement. I would then be able to assess:
• If the contractor had been profitable in the last few years.
• Calculate their liquidity ratio by looking at their assets vs their liabilities to see if they would be able to cover losses under a contract and stay solvent.
• I would always caveat any advice given to a client on a contractors financial position and recommend that further advice is sought through financial reports and a qualified accountant.
How could you check a companies financial standings pre tender ?
A credit check, check companies house, news articles and a google search.
What do you look for when analysing consultant fee proposals?
- Total fee and how it was calculated.
- Level of resources; seniority, experience and allocation;
- Fee drawdown;
- Agreement of client Terms and Conditions;
- Agreement of client payment terms / period;
- Agreement of scope of services;
- Exclusions;
- Assumptions e.g. programme.
What would you need to set up as a company ?
- public liability.
- PI cover
- buildings insurance.
- employer liability cover.
- locum agreement
- register with RICS for regulation
- register with companies house
- contents insurance.
- business interruption insurance
- suitable policies
What might be included in a SWOT analysis?
SWOT analysis is analysing Strengths, Weaknesses, Opportunities and Threats. It may review competitors, gaps in the market, new technologies, assets and liabilities.
How often might you update a business plan?
Business plans should be reviewed and possibly updated at least once a year, especially for younger companies
What are the different types of business plans?
Start up plan – how the business will operate long term
Annual Growth Plan – financial, marketing and operations
Scenario Plan – for companies in rapidly changing industry
Do you know what is included in your employer’s business plan?
2030 Strategy
* Meet quarterly / yearly financial targets
* Team growth and WIP growth
* Work area targets, e.g. offices in city centre
Give me some examples of some new business areas you could considering moving into.
- Moisture mapping
- Drones
- Cladding replacement
- Fire door inspections
Explain how you manage your own time to ensure you deliver projects in a cost-effective manner.
I set out my in house programmes and align with my diary and shared calendar. I logically assess inspection locations and delegate to individuals who live nearer.
What current challenges is Covid and/or Brexit bringing to Business Planning?
Brexit has caused a shortage of staff and materials. It has changed the prices of material and resources causing prices to increase. This has also caused issues with working from home, companies becoming insolvent and closing down.
What goes in a long term strategy?
A description of the strategy, identification of stakeholders, SWOT/PESTELE/SMART, potential marketing strategies, resources, KPI’s, regular review.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is your understanding of a succession plan?
The procedures in place to replace senior members of the team/company.
What is a mission statement?
Formal summary of the aims and values of a company
What is a fee forecast?
Allows the future financial position to be assessed and ensures records are maintained for potential fees.
What is a LLP?
A limited liability partnership. This requires 2 or more members. Each member pays tax on their share of profits and is liable for their responsibilities within the partnership.
What is a limited company?
General form of incorporation that limits the liability undertaken by shareholders. The liability of a company’s members is limited to their stake in the company.
What is a sole trader?
A Self employed person running their own business as an individual. There is no separate legal identity to the owner. The sole trader is liable for the business’s debt.
What is the difference between LLP and Ltd?
Partnership must have a minimum of 2 partners, a Ltd company can be non-profit/charity whereas LLP is always profit making. Ltd pays Corp tax and LLP doesn’t as they are classed as self employed.
What is a SMART Goal ?
To make sure your goals are clear and reachable, each one should be:
- Specific (simple, sensible, significant).
- Measurable (meaningful, motivating).
- Achievable (agreed, attainable).
- Relevant (reasonable, realistic and resourced, results-based).
- Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
What are the different types of business set ups ?
- Sole Trader
- Partnership
- Limited company
- Limited liability company
Where would you find details of a company’s assets?
Business assets are itemised and valued on the balance sheet, which can be found in the company’s annual report.
They are listed at historical cost, rather than market value, and appear on the balance sheet as items of ownership.
What is a business plan ?
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals.
