Business planning (L1) Flashcards
What is your Employer’s business plan?
My Employer’s business plan for AMP8 is to provide great water for a Stronger, Greener and Healthier North West. Highlights from the plan include:
- Reducing spills by 60%
- Doubling financial support for those who need it, and
- Supporting 30,000 jobs across UU and its supply chain
What is a business plan?
It is where a business outlines future objectives and how it will get there.
What are the elements that may be included in a companies business plan?
- Executive summary
- Business description
- Market analysis
- Operating plan
- Company structure
- Objectives
- Summary of strategy
What is a SWOT analysis?
It is a framework that can help businesses identify Strengths, Weaknesses, Opportunities and Threats as they relate to internal and external factors that affect its performance.
What is Working Capital?
It is the money available for a business to meet short-term obligations and fund its day-to-day operations.
How is Working Capital calculated?
Current Assets - Current Liabilities
What is a Debtor?
A company or individual that owes the business money.
What is a Creditor?
A business or individual that has lent money to another business or individual.
Why is maintaining good payment practices important?
Being aware of when sums are due is essential for business planning to maintain good relationships with Creditors.
Likewise, understanding the amount owed by Debtors and recognising red flags that they are not able to pay can help avoid cash-flow issues.
What is liquidity?
Liquidity refers to the ease in which assets can be converted into cash quickly.
What is the problem with a business lacking liquidity?
If a business is lacking liquidity it may struggle to meet its short-term obligations like payroll which could lead to bankruptcy.
What is the problem with a business being too liquid?
Holding too much money in liquid sources such as cash can limit a business’s capital growth.
What is the most liquid asset?
Cash
What are examples of illiquid assets?
Property, fine art and collectibles
What makes an asset illiquid?
If it takes time and effort and costs to convert the asset into cash
What are the main structures/ types of business in the UK?
There are 4:
- Sole Trader
- Partnership
- Limited Liability Partnership (LLP)
- Limited Company
What is a Sole Trader?
It is a business structure where one individual runs and manages the whole business and gets to keep all the profits as income but is liable for filling out a Self Assessment Tax Return and also for the businesses debts.
It is the simplest and easiest form of business to set up and is often used by people who provide specialist services such as plumbers and consultants.
What is a Partnership?
It is a business structure that involves two or more individuals who agree to share the profits or losses of the business.
Each partner is personally responsible for the losses and debts as well as negligence or misconduct of other partners
What is an LLP (Limited Liability Partnership)?
It is a similar to a Partnership except that LLPs are incorporated and therefore are registered with Companies House.
Member’s liability for the business’s debts is limited to the amount they invest in the business.
What is a Limited Company?
It is a business structure that is owned by shareholders and run by Directors. It is a separate entity from the Directors and can be limited by shares or guarantee.
Any profits are kept in the company after it pays Corporate Tax, after which profits be distributed to shareholders in the form of dividends.
What is the business type of your Employer?
A Public Limited Company (PLC)
What is a Public Limited Company (PLC)?
It is similar to a Private Limited Company except that the company is listed on the stock market and therefore needs to be more open and public about its details compared to a private limited company.
What does it mean if a company is incorporated?
It means the business will exist as a separate legal entity which keeps member’s personal finances separate from the businesses so personal liability for company debts is limited.
What types of legislation do businesses need to adhere to?
- Employment such as Equality Act 2010
- Health and Safety (at Work Act 1974)
- Data legislation such as the Data Protection Act 2018
- Consumer legislation
- Environmental legislation
- Competition legislation
What is a short-term strategy?
This is operational planning. Short-term objectives may be time-critical, e.g. for new legislation. It will consider things like cash flow and profit margins and roll-out costs
What is a long-term strategy?
This is strategic planning. A long-term plan to achieve a specified mission e.g. a change in culture for competitive advantage.
What key headings would you expect to see addressed in a business plan?
- Executive summary
- Business description
- Market analysis
- Operating plan
- Company structure
- Objectives
- Summary of strategy
What period of time would a business plan cover? (short-term or long-term business plan)
- My Employer’s business plan covers a period of 5 years to coincide with the Regulators Asset Management Plan (AMP) cycle
- This would be considered a long-term business plan
- Whereas a short-term business plan will cover a period between 1 and 2 years.
Who contributes to a business plan?
- Owners or CEOs
- Management Teams
- Financial Analysts
- Marketing Specialists
- Operational Staff
- Advisors/ Consultants
- Customers
- Regulators (water has a Draft Determination and Final Determination)
What is a SWOT analysis and what is it used for?
It is a framework that can help businesses identify Strengths, Weaknesses, Opportunities and Threats as they relate to internal and external factors that affect its performance.
What have you learnt through reading your own company’s business plan?
My Employer’s business plan for AMP8 is to provide great water for a Stronger, Greener and Healthier North West. Highlights from the plan include:
- Reducing spills by 60%
- Doubling financial support for those who need it, and
- Supporting 30,000 jobs across UU and its supply chain
