Business Planning (2.1.4)

Question 1

What are the 8 components of a business plan?

Answer 1

-Executive Summary
-Aims +Objectives
-Market Research
-Marketing Mix
-Operational Plan
-Methods of Finance
-Sales Forecast/ Cash Flow Forecast
-Conclusion

Question 2

What are the two main goals of Business Plans?

Answer 2

• To Minimize Risk
  -To Obtain Finance

Question 3

What is the Cash Flow?

Answer 3

Movement of money in and out of a company. Cash received signifies inflows, and cash spent is outflows. The cash flow statement is a financial statement that reports a company’s sources and use of cash over time.

Question 4

What is a Cash Flow Forecast?

Answer 4

Cash flow forecasting is the act of predicting what cash inflows and outflows will be at particular points in the future. A cash flow forecast is a financial document that estimates the movement of money in and out of a business over a period of time, usually 12 months. . The forecast shows the future cash balances of a business and helps managers to plan for cash needs and obligations.

Question 5

How are cash flow forecasts useful in a business?

Answer 5

1. Financial Planning: It enables businesses to plan for their financial future, set goals, and allocate resources effectively.
2. Improved Decision-Making: Cash flow forecasts help in making informed decisions about investments, expenses, and debt management.
3. Risk Management: Forecasting allows businesses to identify and mitigate potential cash shortages or surpluses, reducing financial risk.

Question 6

What will predicting cash flow depend on? (5 factors)

Answer 6

-Experience of the forecaster
-Volume of past data available
-Consumer trend fluctuations
-Seasonality
-External Influences

Question 7

How do you work out Net Cash Flow?

Answer 7

Cash Inflows-Cash Outflows

Question 8

How do you work out Closing Balance?

Answer 8

Net Cash Flow + Opening Balance