3.1.6

Question 1

what is a business plan?

Answer 1

a document setting out what a business does and what it hopes to achieve in the future

Question 2

what may a business plan be created to do?

Answer 2

-help set up a business successfully
-predict possible problems
-raise finance
-set objectives
-co-ordinate actions, how objectives will be achieved

Question 3

when does uncertainty occur?

Answer 3

where there is a lack of information about the situation, this means the outcome or consequences are very difficult to predict

Question 4

lack of experience

Answer 4

might not have the necessary skills to plan effectively

Question 5

change

Answer 5

regular updates are required

Question 6

reducing the risks of business planning?

Answer 6

-research the market thoroughly
-talk to experts and consultants
-plan for a variety of possible outcomes
-regularly review and update the plan so it remains relevant, and any problems are spotted quickly

Question 7

what are the main sections of a business plan?

Answer 7

-background information on the founders and investors and their previous experience
-analysis of the market
-target marketed
-firms objectives
-details of price it will set and expected sales
-how the business will compete with competitors
-analysis of the financial position of the business

Question 8

fixed costs

Answer 8

costs that do not change with output

Question 9

variable costs

Answer 9

costs that vary directly with output

Question 10

revenue

Answer 10

the income earned by a business over a period of time, it depends on the number of items sold and their selling price

Question 11

profit

Answer 11

the surplus left from revenue after paying all the costs