Business Planning - L1 Flashcards
This competency is about the principles and tools of business planning.
Business Planning - Extract from Candidate Guide - Aug 2018 (updated Feb 2022)
What is a business plan?
A business plan is a document provided to lenders/investors which sets out the reasoning and evidence to obtain funding.
The plan will highlight the reasons for the set up of the business as well as provide an outline of the goals and objectives along with how and why these are achievable.
The plan will assess the benefits and value of the business idea for investors/lenders.
The plan will cover: the main idea, objectives, sales reports, financial forecasts, any potential issues, goals and dates to achieve said goals.
What headings would you find within a business plan ?
- Executive summary
- Company description
- Market analysis
- Competition analysis
- Description of organisation structure
- Breakdown of services offered
- Marketing plan strategy
- Funding requests
- Financial records.
How would you prepare a long term strategy?
- Create a description of the strategy
- Identify the key stakeholders and their needs
- SWOT analysis – Strengths, Weaknesses, Opportunities and Threats
- PEST analysis – Political, Economical, Social and Technological Factors
- SMART goals – Specific, Measurable, Attainable, Realistic and Time
- Prepare a marketing strategy – identify audience, market research, promotions etc.
- Organise resources – funding, staff etc
- Review performance indicators – areas of development, improvement and growth
- Monitor and review the progress on a regular basis.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients key performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is the SMART criteria you mention?
SMART goals are Specific, Measurable, Attainable, Relevant and Time specific
What is Porters 5 forces?
A tool to analyse the attractiveness and profitability of a business. The forces include:
1) Competitive Rivalry (amount of competition)
2) Supplier power (how easy it is for supply cost to increase)
3) Buyer power (how easy it is for buyers to drive your prices down)
4) Threat Substitution (likelihood of customers finding a different way of doing what you do)
5) Threat of new entry (the ability for others to enter the market)
How does a feasibility study differ to a business plan?
A feasibility study will carried out before starting a business to determine the viability of it.
A business plan will then detail how it operates and done on the basis that the feasibility study was positive.
What is the difference between a Sole Trader, Partnership, Limited, and a LLP?
Sole Trader A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses (unlimited liability).
Partnership A business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business.
Limited In a limited company, the shareholders’ liability is limited to the capital they originally invested. If such company becomes insolvent, the shareholders personal assets remain protected. Shares in a private limited company are not offered to the general public (distinguishing it from a public limited company - plc.)
Limited Liability Partnership (LLP)A limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence.
How would you assess a contractors financial accounts?
Request a copy of the contractors company accounts for the last 3 years which would include the Profit & Loss Statement, Balance Sheet and Cash Flow Statement. I would then be able to assess:
• If the contractor had been profitable in the last few years.
• Calculate their liquidity ratio by looking at their assets vs their liabilities to see if they would be able to cover losses under a contract and stay solvent.
• I would always caveat any advice given to a client on a contractors financial position and recommend that further advice is sought through financial reports and a qualified accountant.
How could you check a companies financial standings pre tender ?
A credit check, check companies house, news articles and a google search.
What do you look for when analysing consultant fee proposals?
- Total fee and how it was calculated.
- Level of resources; seniority, experience and allocation;
- Fee drawdown;
- Agreement of client Terms and Conditions;
- Agreement of client payment terms / period;
- Agreement of scope of services;
- Exclusions;
- Assumptions e.g. programme.
What would you need to set up as a company ?
- public liability.
- buildings insurance.
- employer liability cover.
- directors and officers cover.
- contents insurance.
- business interruption insurance
- register with companies house
- suitable policies
- register with RICS for regulation
What might be included in a SWOT analysis?
SWOT analysis is analysing Strengths, Weaknesses, Opportunities and Threats. Competitors, prices of services, and consumer trends
How often might you update a business plan?
Business plans should be reviewed and possibly updated at least once a year, especially for younger companies
What are the different types of business plans?
Strategic Business Plan: Focuses on the long-term vision and direction of the organization, including its mission, market analysis, and competitive strategy.
Departmental Business Plan: Aligns specific departments or units with the organization’s overall strategy, detailing goals and actions for shorter time frames.
Operational Business Plan: Addresses day-to-day operations and management, outlining tasks, processes, and resource allocation for achieving operational targets in the short term.
Corporate Business Plan: Provides an overarching roadmap for the entire corporation, encompassing its subsidiaries and divisions, and combines elements of strategic and departmental planning for a multi-year perspective.
Do you know what is included in your employer’s business plan?
- Sustained growth
* Meet market requirements
What are some of your business targets & objectives for the current year?
Specific to own company*
Explain how you manage your own time to ensure you deliver projects in a cost-effective manner.
I set out my in house programmes and align with my diary and shared calendar. I logically assess inspection locations and delegate to individuals who live nearer.
What current challenges is Covid and/or Brexit bringing to Business Planning?
Brexit has caused a shortage of staff and materials. It has changed the prices of material and resources causing prices to increase. This has also caused issues with working from home, companies becoming insolvent and closing down.
What goes in a long term strategy?
A description of the strategy, identification of stakeholders, SWOT/PEST/SMART, potential marketing strategies, resources, KPI’s, regular review.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is your understanding of a succession plan?
The procedures in place to replace senior members of the team/company.
What is a mission statement?
Formal summary of the aims and values of a company
What is a fee forecast?
Allows the future financial position to be assessed and ensures records are maintained for potential fees.
What is a LLP?
A limited liability partnership. This requires 2 or more members. Each member pays tax on their share of profits and is liable for their responsibilities within the partnership.
What is a limited company?
General form of incorporation that limits the liability undertaken by shareholders. The liability of a company’s members is limited to their stake in the company.
What is a sole trader?
A Self employed person running their own business as an individual. There is no separate legal identity to the owner. The sole trader is liable for the business’s debt.
