Business Planning Flashcards
Essential elements of a business plan
Guidance and direction, setting goals and objectives to maximise growth and profitability.
Business Structures – Sole Trader
Individual.
Don’t publish accounts.
No accounts admin cost.
Liabilities NOT limited
Partnership
As sole trader but require Partnership agreement. Business owned by multiple parties.
Limited Company
Separate from personal assets.
Tax advantages.
Register company & publish accounts.
LLP
Like a partnership but as a Limited company.
i.e. split responsibility (Limited company based on shares; control is defined by roles)
Ratio Analysis
Business performance metrics
Profitability
Returns after costs
Liquidity
assets to cash speed
Current Asset ratio
£150k (asset)/£100k (liability) =1.5
below=risky
above=stable
Acid Test
Assets-stock/liabilities (stock slow to cash) 1-1.2
Gearing Ratio
Equity / Debt
Working Capital
Current assets – current liabilities
e.g. £200k-£150k= £50k
Stock
Product held within the company
e.g. Fuel for a petrol station.
Debtors (asset)
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
Creditors (liability)
Goods/service without immediate payment (future payment required)
Accounting techniques Cash
Transactions are recorded at receipt of funds
Accrual
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.
Forecasting techniques
Use of current and historic costs to predict future costs
e.g. £1m sales over 1 year cost £800k (20% profit)
Planning to meet corporate objectives
e.g. Corporate; Maintain 10% market share = £10m sales = Service excellence (repeat business) Service efficiency (maintain capacity), Increased sales
Legislation in Business
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
Short Term Strategy
1- year improvements
e.g. productivity (technology/systems), upskill (courses)
Medium Strategy
Regular training/new starter induction, technology servicing contracts
Long Strategy
Capital expenditure
e.g. relocate offices, marketing (new website)
5-year plan
market analysis, staff, acquisition, clients, goals, resource
Market Analysis
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
Client analysis
Size,
Type e.g. owner occupier or developer (sale or rental),
procurement e.g. D&B, MC, Traditional
Short Term Goal
Win on a bid for a new job,
grow the team,
enter a new sector Long Term Goals
Grow profit by 50%
Staffing Level
Identify essential requirements to generate revenue (new & existing business), holidays/absence/seasonal business trends
Acquisition
e.g. Arcadis purchase IBI group.
Increase geographical region.
Future growth potential
Resources
Recruit (sales, operational, admin (what level),
Training (increase existing capability),
Finance (organic or raise funding),
Technology (systemisation, resourcing, added value (BIM))
SWOT
Strength (experience/expertise),
Weakness (over leveraged),
Opportunity (growing market),
Threat (changing business e.g. Corona).
SMART
Specific, Measurable, Achievable, Realistic, Time
PESTLE (why know this)
Political,
Economic,
Social,
Technology,
Legal,
Environmental
HR
recruitment,
staff performance (utilisation, client feedback),
labour law (working hours),
staff benefits (bonus, buy back a/l)
Data management
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.
Administration
Keeps trading.
Assets protected.
“Rescue” function.
Restructure to pay debtors
Insolvency
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.
H&S in Business
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.
Equality in Business
Minimum wage (£9.50ph 23+ 2022).
Race Relations Act.
Sex Discrimination Act.
Disability Act.
Equal Pay Act.
