business plan & sales forecasts

Question 1

what is a sales forecast?

Answer 1

a prediction/ estimation of a businesses future sales

Question 2

what is a business plan?

Answer 2

a document that illustrates the thought process of the start up business or the future planning of an established business

Question 3

what is in a business plan?

Answer 3

• executive summary
• the product/ service
• the market
• marketing plan
• operational plan
• financial plan
• conclusion

Question 4

LOA- benefit of business plans

Answer 4

• business plan involves carrying out market research
• such as questionnaires
• which is based on a large sample size
• improves the validity of the results
• develop reliable sales predictions
• create a cash flow forecast
• convince the bank that they can make loan repayments

Question 5

LOA- drawback of business plans

Answer 5

• a business plan can quickly become out of date
• for example there may be an unexpected change in social trends ( adapt to extract)
• causing unexpected change in demand
• making the market research in the plan invalid
• resulting in an unreliable sales forecast
• inaccurate cash flow forecast
• therefore any financial predictions will be unreliable making the loan or investment application unreliable

Question 6

what are the factors affecting sales forecasting

Answer 6

• consumer trends ( changing trends)
• actions of competitors ( lowering their prices)
• economic variables ( incomes, unemployment) PESTLE

Question 7

LOA- benefit of sales forecasting

Answer 7

• accurate forecast will appropriately predict sales volume
• this will ensure the business can order the correct amount of stock
• this will reduce waste and avoid over ordering
• reduced waste will decrease outflows
• this will improve net cash flow
• ensuring the business can pay suppliers OR invest in research and development ( choose relevant one)
• explain impact

Question 8

LOA- drawback of sales forecasting

Answer 8

• accurately compiling a sales forecast requires significant investment into market research
• to accurately quantify demand for products
• to ensure data is valid it must be collected from a large sample
• this may require recruiting specialist researchers to collect and analyse data
• their wages will increase business cash outflows
• placing a strain on cash reserves
• less cash available to pay current liabilities
• may be pressured to sell non current assets