Business Planning Flashcards
What are the main types of business plans?
Strategic Business Plan: A long-term plan (typically 3-5 years) outlining an organization’s vision, objectives, and market positioning.
Corporate Business Plan: Covers the overall business strategy, integrating multiple departments and long-term goals.
Departmental Business Plan: Focuses on specific functions (e.g., finance, marketing, operations) within an organization.
Operational Business Plan: A short-term, detailed plan covering day-to-day activities, resource allocation, and performance monitoring.
Why is a business plan important?
A business plan provides direction, financial planning, risk assessment, and a framework for decision-making, helping businesses achieve their goals.
What are the key elements of a business plan?
Executive Summary: Overview of the business and key objectives.
Business Description: Company background, mission, and market positioning.
Market Analysis: Industry trends, competitor analysis, and target customers.
Organisational Structure: Details of key personnel and reporting lines.
Operational Plan: Logistics, resources, and processes.
Financial Plan: Revenue projections, cost estimates, funding, and financial ratios.
Risk Assessment: Identifying potential challenges and mitigation strategies
Why is financial planning important in a business plan
It ensures businesses have a clear financial strategy, manage cash flow efficiently, and can secure investment or funding.
What are the main types of organisational structures?
Hierarchical Structure: A traditional top-down structure with clear reporting lines.
Flat Structure: Fewer management layers, encouraging direct communication and quicker decision-making.
Matrix Structure: Employees report to multiple managers, often used in project-based organisations.
Divisional Structure: Organised by product lines, regions, or markets.
What are the advantages of a flat organisational structure?
Faster decision-making, greater flexibility, and better employee autonomy
What are the key financial ratios used in benchmarking?
Profitability Ratios: Measure financial success (e.g., Net Profit Margin, Return on Investment).
Liquidity Ratios: Assess a company’s ability to meet short-term liabilities (e.g., Current Ratio, Quick Ratio).
Efficiency Ratios: Evaluate operational effectiveness (e.g., Asset Turnover, Stock Turnover).
Gearing Ratios: Measure financial leverage (e.g., Debt-to-Equity Ratio).
What is working capital?
Working capital = Current Assets – Current Liabilities. It represents a company’s short-term financial health and ability to cover day-to-day operations.
What is the difference between stock, debtors, and creditors?
Stock (Inventory): Goods or materials held for sale or production.
Debtors: Customers who owe money to the business (Accounts Receivable).
Creditors: Suppliers or lenders to whom the business owes money (Accounts Payable).
Why is working capital management important?
Efficient working capital ensures a business can meet short-term obligations, manage cash flow, and avoid liquidity issues.
What are common accounting techniques used in financial management?
Accrual Accounting: Records income and expenses when they are incurred, not when cash is received or paid.
Cash Accounting: Records transactions only when cash is received or paid.
Depreciation Methods: Allocating asset costs over time (e.g., Straight-Line Depreciation, Reducing Balance Method).
Variance Analysis: Comparing budgeted vs. actual financial performance
What is the difference between management accounting and financial accounting?
Management Accounting focuses on internal reports to help in decision-making.
Financial Accounting provides external reports (e.g., balance sheets, profit & loss statements) for investors and regulators.
What are common financial forecasting techniques?
Trend Analysis: Using past financial data to predict future performance.
Break-Even Analysis: Determining the point at which total revenue equals total costs.
Scenario Planning: Preparing financial forecasts based on different possible outcomes.
Cash Flow Forecasting: Estimating future cash inflows and outflows to ensure liquidity.
How does forecasting help businesses?
It enables proactive decision-making, risk management, budgeting, and resource allocation.
What are corporate objectives?
Corporate objectives are high-level goals set by a company, such as revenue growth, market expansion, or sustainability targets.
How does a business ensure its strategy aligns with corporate objectives?
Key Performance Indicators (KPIs) to track progress.
Balanced Scorecard Approach (Financial, Customer, Internal Process, Learning & Growth).
Budgeting & Resource Allocation to align financial planning with strategic goals.
Why is strategic planning important?
It ensures that a company is focused, competitive, and financially sustainable in the long term.
