Business Planning

Question 1

Essential elements of a business plan

Answer 1

Guidance and direction, setting goals and objectives to maximise growth and profitability.

Question 2

Business Structures – Sole Trader

Answer 2

Individual.
Don’t publish accounts.
No accounts admin cost.
Liabilities NOT limited

Question 3

Partnership

Answer 3

As sole trader but require Partnership agreement. Business owned by multiple parties.

Question 4

Limited Company

Answer 4

Separate from personal assets.
Tax advantages.
Register company & publish accounts.

Question 5

LLP

Answer 5

Like a partnership but as a Limited company.
i.e. split responsibility (Limited company based on shares; control is defined by roles)

Question 6

Ratio Analysis

Answer 6

Business performance metrics

Question 7

Profitability

Answer 7

Returns after costs

Question 8

Liquidity

Answer 8

assets to cash speed

Question 9

Current Asset ratio

Answer 9

£150k (asset)/£100k (liability) =1.5
below=risky
above=stable

Question 10

Acid Test

Answer 10

Assets-stock/liabilities (stock slow to cash) 1-1.2

Question 11

Gearing Ratio

Answer 11

Equity / Debt

Question 12

Working Capital

Answer 12

Current assets – current liabilities
e.g. £200k-£150k= £50k

Question 13

Stock

Answer 13

Product held within the company
e.g. Fuel for a petrol station.

Question 14

Debtors (asset)

Answer 14

Party who owes a company money without immediate payment (sale of goods and services)
e.g. Arcadis £100k agree to provide their service over the next year

Question 15

Creditors (liability)

Answer 15

Goods/service without immediate payment (future payment required)

Question 16

Accounting techniques Cash

Answer 16

Transactions are recorded at receipt of funds

Question 17

Accrual

Answer 17

Transactions recorded at the point of sale.
e.g. Lender agrees to pay Arcadis fees of £100k which become due over next year but £100k is recorded today.

Question 18

Forecasting techniques

Answer 18

Use of current and historic costs to predict future costs
e.g. £1m sales over 1 year cost £800k (20% profit)

Question 19

Planning to meet corporate objectives

Answer 19

e.g. Corporate; Maintain 10% market share = £10m sales = Service excellence (repeat business) Service efficiency (maintain capacity), Increased sales

Question 20

Legislation in Business

Answer 20

EU Working time (40hrs PW).
Companies Act 2006 – Makes clear company obligations e.g. must keep accurate records.
Bribery Act 2010 - Liability for corruption; Bribing, being bribed, failure to prevent bribery (10 year prison, unlimited fine, director disqualification)
Data Protection Act 2016 - Give control to individuals over their personal data
Money Laundering 2017 – Prevent exchange of money obtained from criminal activity. Identify customers, keep records, report suspicious behaviour

Question 21

Short Term Strategy

Answer 21

1- year improvements
e.g. productivity (technology/systems), upskill (courses)

Question 22

Medium Strategy

Answer 22

Regular training/new starter induction, technology servicing contracts

Question 23

Long Strategy

Answer 23

Capital expenditure
e.g. relocate offices, marketing (new website)

Question 24

5-year plan

Answer 24

market analysis, staff, acquisition, clients, goals, resource

Question 25

Market Analysis

Answer 25

Growth Trends e.g. Distribution sector
Opportunity – larger market
Threats – simple build = high competition
Clients
Competition – significant due to high growth and ease of build

Question 26

Client analysis

Answer 26

Size,
Type e.g. owner occupier or developer (sale or rental),
procurement e.g. D&B, MC, Traditional

Question 27

Short Term Goal

Answer 27

Win on a bid for a new job,
grow the team,
enter a new sector Long Term Goals
Grow profit by 50%

Question 28

Staffing Level

Answer 28

Identify essential requirements to generate revenue (new & existing business), holidays/absence/seasonal business trends

Question 29

Acquisition

Answer 29

e.g. Arcadis purchase IBI group.
Increase geographical region.
Future growth potential

Question 30

Resources

Answer 30

Recruit (sales, operational, admin (what level),
Training (increase existing capability),
Finance (organic or raise funding),
Technology (systemisation, resourcing, added value (BIM))

Question 31

SWOT

Answer 31

Strength (experience/expertise),
Weakness (over leveraged),
Opportunity (growing market),
Threat (changing business e.g. Corona).

Question 32

SMART

Answer 32

Specific, Measurable, Achievable, Realistic, Time

Question 33

PESTLE (why know this)

Answer 33

Political,
Economic,
Social,
Technology,
Legal,
Environmental

Question 34

HR

Answer 34

recruitment,
staff performance (utilisation, client feedback),
labour law (working hours),
staff benefits (bonus, buy back a/l)

Question 35

Data management

Answer 35

Improve transparency and security of data held about individuals.
Companies must have and demonstrate complaint policies.
Option to delete data.
Obligation to state data breaches within 72 hours.
Data should extent to that only of what is required in detail and time.

Question 36

Administration

Answer 36

Keeps trading.
Assets protected.
“Rescue” function.
Restructure to pay debtors

Question 37

Insolvency

Answer 37

Insolvency is where a company is unable to pay its debts (unable to manage cash flow) and the company is put under the management of Licensed Insolvency Practitioners.

Question 38

H&S in Business

Answer 38

H&S at Work Act (1974);
Welfare of employees and customers.
Protect from hazards.
Control of Substances Hazardous to Health.
Display H&S poster.
Carry out risk assessment of premises.

Question 39

Equality in Business

Answer 39

Minimum wage (£9.50ph 23+ 2022).
Race Relations Act.
Sex Discrimination Act.
Disability Act.
Equal Pay Act.