3. business planning - the business planning process

Question 1

what is the business planning process

Answer 1

1. Planning is the preparation of a predetermined course of action for a business.
2. It refers to the process of setting objectives and deciding on the methods to achieve them.
3. The business plan needs to analyse the whole business by examining all parts of the operation.
4. As a result, each part of the business can function effectively and achieve its goals.

Question 2

what is a business plan

Answer 2

1. It is a written statement of the business’s goals and the steps to be taken to achieve them.
2. It is a summary and an evaluation of a business idea in written form.
3. Each plan will be unique, containing information and strategies that apply to one particular business.

• A business plan for a transnational corporation will be detailed and comprehensive. It will add up to hundreds of pages, having taken much time, effort and money to prepare.
• A business plan for a SME may be only 10–15 pages in length, word processed at home .

Question 3

common elements of a business plan

Answer 3

Executive summary
Goals
strategies
Business description and outlook
Management and ownership
Operational plans
Marketing plans
Financial plans
Human resource plans

Question 4

what is Executive summary

Answer 4

a brief overview of the plan

Question 5

what are goals

Answer 5

What the business hopes to achieve

Question 6

what are statergies

Answer 6

An overview as to how the business will attempt to achieve the goals

Question 7

what is a Business description and outlook

Answer 7

An overview of the industry, in which the business will operate, including a situational (SWOT) analysis

Question 8

what is Management and ownership

Answer 8

The type and nature of organisational structure

Question 9

what are Operational plans

Answer 9

Details the production process and the people required now and in the future

Question 10

what are Marketing plans

Answer 10

The product, price, promotion and distribution details

Question 11

what are Financial plans

Answer 11

A description on the business’s financial needs and methods for evaluating its performance

Question 12

what are Human resource plans

Answer 12

Details of both the present and future staff requirements

Question 13

benefits of developing a business plan

Answer 13

1) Helps test the viability of the business
2) Assists the business to be proactive rather than reactive
3) Assists in maintaining the business operation, especially focusing attention on the goals and objectives
4) Indicates the owner’s ability and level of commitment
5) Forces the small business owner to justify their plans and actions
6) Identifies the business’s strengths and weaknesses

Question 14

what is SWOT

Answer 14

SWOT is the process of analysing a business’s strength, weaknesses, opportunities, and threats

Question 15

What are ‘strengths’

Answer 15

*refers to the internal aspects of the business.
*Are identified to analyse the advantages associated with the business’s current position.
*Enquires into what the business does well and what advantages it has over its competitors.
*E.g. well-trained staff or good customer knowledge.

Question 16

what are weaknesses

Answer 16

*refers to the internal aspects of a business.
*Are identified to analyse the limitations and disadvantages associated with your current position.
*Enquires into what the business is not good at, the limitations that a business has, and the advantages that competitors have.
*E.g. limited access to technology

Question 17

what are opportunities

Answer 17

*refers to external opportunities that may affect the business.
*Opportunities are identified to analyse potential future actions and their associated benefits.
*refer to future plans, rather than to where the business is currently.
E.g. new Govt legislation

Question 18

what are threats

Answer 18

*refers to external factors that may pose a threat to the business in the future.
*Identifies future risks.
*e.g. new competitors who copy your ideas.

Question 19

what is a vision statement

Answer 19

1. A vision statement broadly states what the business aspires to become in the future.
2. The main purpose of the vision statement is to guide and direct the business owners, managers and employees.
3. It creates the culture within the business and acts as a benchmark against which to measure all the business’s decisions and operations.
4. A vision statement is a long-term, idealistic state of the FUTURE that doesn’t exist yet.
5. A company’s mission statement is how the company chooses to pursue its vision. It is more specific and relates directly to the company’s products and services.

Question 20

vision statement example

Answer 20

*IKEAs vision: “To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”

*Cokes mission statement: “to craft the brands and choice of drinks that people love, to refresh them in body & spirit.”