Business Planning

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 3 main reasons for a business plan?

Answer 2

1) Raise finance.

2) Set business objectives.

3) Organise the business.

Question 3

How does a business plan help to raise finance?

Answer 3

Any person or organisation that is considering investing funds into a business will want to view its business will want to view its business plan. This help the potential investor make a judgment on the likelihood of the business being able to repay the investment in the future.

Question 4

How does business plan help a business to set objectives?

Answer 4

1) An important part of preparing a business plan is to set objectives for the business.

2) Helps entrepreneurs and managers to manage effectively.

3)

Question 5

How does a business plan organise the business?

Answer 5

Business plans helps entrepreneur to think through how the different functions of a new business might be organised.

Question 6

What are the advantages of a business plan?

Answer 6

1) It offer opportunities for planners to thin analytically about their business using data that has been gathered for this purpose.

2) It can help to persuade stakeholders (such as potential investors) that the business has been thought through and should succeed.

3) It includes targets by which the business’s progress can be monitored. This helps managers make good-quality decisions at the right times.

Question 7

What are the disadvantages of having a business plan?

Answer 7

1) Business plans involve a lot of uncertainty and do not remove the risk of starting or expanding a business.

2) Some people who prepare business plans may be inexperienced or may not have the breadth of knowledge that entrepreneurs and managers need. This may lead to inaccurate planning.

3) A business environment may change rapidly, meaning a new or updated plan may be required. New products, competitors or sudden changes in consumers’ incomes can all have significant changes.

Question 8

What does a business plan usually include?

Answer 8

1) Details about the entrepreneur or manager.

2) Type of business and its activity.

3) Target market.

4) Resources required.

5) Staff required for the business.

6) Financial forecasts.

Question 9

What financial terms are included in a business plan?

Answer 9

1) Revenue.

2) Fixed costs and variable costs.

3) Total cost.

4) Loss.