Business Planning Level 1 Flashcards
Why are businesses analysed?
- analyse the need to set up a new business
- to manage a change in an existing one
- identify areas for growth and investment
Name some business analysis methods?
SWOT
PESTLE
What is a PESTLE Analysis?
- acronym for Political, Economic, Social, Technological, Legal & Environmental
- a way of understanding & reviewing how external forces may impact the business
What is the P in PESTLE for?
Analyses Political forces such as:
- political stability
- corruption
- foreign trade policy
- tax policy
- funding grants
What is the first E in PESTLE for?
Analysis Economic forces such as:
- economic growth
- interest rates
- inflation
- disposable income of consumers
- labour costs
What is the S in PESTLE for?
Analyses Social forces such as:
- population growth
- age distribution
- cultural barriers
- consumers views
- workforce trends
What is the T in PESTLE for?
Analyses Technological forces such as:
- emerging technologies
- maturing technologies
- copyright and patents
- production & distribution
- research & investment
What is the L in PESTLE for?
Analyses Legal forces such as:
- regulation
- employment laws
- consumer protection laws
- tax policies
- anti-trust laws
What is the last E in PESTLE for?
Analyses Environmental forces such as:
- climate
- environmental policies
- availability of inputs
- corporate social responsibility
What is a SWOT analysis?
- a strategic planning method used to evaluate strengths, weaknesses, opportunities & threats involved in a project or business venture
- can be used as a basis for a business strategy
- can help to identify both internal & external factors that affect its performance and to understand current & future potential
What are the various business types or structures?
Business Link identifies 5 types of business structures:
- Sole traders
- Limited companies
- Partnerships
- Limited liability partnerships
- Franchise
What do you know about sole traders?
- very simple way to set up a business
- but you are personally liable for debts
What do you know about limited companies?
- avoids personal liability associated with those who are sole traders
- have to pay corporation tax
What do you know about limited liability partnerships?
- avoids personal liability associated with those who are sole traders
- partners are taxed individually on their share of the profits
What are debtors?
Those who owe money to a business
For example, a customer who owes the payment of an invoice
What are creditors?
Those who the business owes money to
For example, the lender of a loan
What are the typical elements of a business plan?
Executive summary
Marketing strategy
Vision & mission statements
Products & services
Management team & personnel
Financial forecasts
Responsibilities & targets
Training, resource strategy & hierarchy plans
SWOT analysis
Summary
What is a business vision statement?
Vision statements focus on tomorrow & what an organisation wants to ultimately become
What is a business mission statement?
Mission statements focuses on today & what an organisation does to achieve it
What is business forecasting?
- considering what may happen in the future
- often difficult to predict
- up-to-date data will assist in making forecasting as useful as possible
- e.g. using work-in-progress schedules or forecast planned billing for instructions currently working on
What are business goals?
What a business wants to achieve in the short, medium & long-term
What is a SMART goal?
Objectives which are:
- Specific
- Measurable
- Achievable
- Realistic
- Time related
What is an investment?
- At some stage, a business will need investment to grow
- Can be financial in the form of a loan or equity finance from a creditor
- can be in training, service development or resourcing such as hiring more staff or buying better equipment
What is an investment appraisal?
IA is used to assess whether a business or project would be a worthwhile investment in terms of return (both financially and/or added value)
Considerations are typically:
- Rate of return
- Pay back period
- Net present value (NPV)
What are KPIs?
- Key performance indicators
- quantifiable measures of performance over time for a specific objective
- helps businesses to consistently track progress, identify trends and put plans into place where indicators are not met
- ## can also help businesses focus on the right goals
What is liquidity?
- Measures how quickly a business can convert assets into cash, thus able to meet short-term financial obligations
- lacking liquidity can become a problem when payments such as VAT and tax are due
- on the other hand, holding too much money in liquid sources such as cash can limit capital growth
What are financial ratios?
- a relative magnitude of 2 selective numerical values taken from a businesses financial statements
- aim to evaluate overall financial condition of a business
- help understand how efficient a business is and inform planning
- should be included within the financial analysis section of the business plan
What are examples of financial ratios?
working capital, debt & equity, profit margin and current ratio
What is an X-Ray approach?
- means exploring all data about a business
- speaking with relevant personnel and leaving no stone unturned
- helps to ensure business plans are relevant & offer the best chance of success
What is working capital?
- represents funds available for a business to meet its current, short-term obligations
- its calculated by dividing current assets by current liabilities, with the ideal ratio being between 1.5 and 2 - suggesting a business is healthy & can meet its obligations in the short term
What are the issues relating to staff turnover?
- it can be expensive & time consuming to hire staff, having to pay agency fees to help find the right people
- training new people is time consuming & expensive
- turnover can also affect team dynamics, productivity & continuity
What things do you need to consider when setting up a business?
- advise RICS that you are starting a new business & comply with the RICS ROC for member & firms
- create a business plan
- create a H&S policy
- register the business with Companies House & inform HRMC
- set-up company & client bank accounts
- set-up a complaints handling procedure
- get the relevant insurances in place?
When setting up a business, what are the relevant insurance tat need to be in place?
- professional indemnity & run off cover
- directors’ liability
- buildings insurance
- public liability insurance
What is an investment appraisal?
Investment appraisals are used to assess whether a business or project would be a worthwhile investment in terms of return (both financially and / or added value).
What is considered as part of an investment appraisal?
- rate of return
- payback period
- net present value
Give some examples of fee earning staff?
- Quantity Surveyors
- Project Managers
- Architects
Give some examples of non-fee earning staff?
- Administration staff
- IT technicians
What is the purpose of an organisation chart?
- a graphical representation of the roles, responsibilities & relationships between individuals within the organisation
- it can be used to depict the structure of an organisation as a whole or broken down by smaller business units
What are the levels or types of business plans?
- Corporate Level
- Management Level
- Operational Level
What is a corporate level business plan?
For an entire company, is long term & in fairly broad terms
What is a management level business plan?
For an area of an organisation, is in monthly or quarterly periods & quite detailed
What is an operational level business plan?
For individuals in an organisation, is in days or even hours & will be very detailed
What are the main types of organisational or management structure?
- functional
- multi-divisional
- flat
- matrix
What do you know about functional organisational structures?
- the most common structure
- breaks up a company based on specialisation of its workforce
- most small to medium sized businesses implement this structure
What do you know about multi-divisional structures?
- the second most common structure amongst latge companies with many business units
- a company using this structures its leadership team based on the products, projects or subsidiaries they operate
- each business unit operates its own company with its own president
What do you know about flat organisational structures?
- a relatively newer structure
- used among start-up companies
- it flattens the hierarchy & chain of command, giving its employees a lot of autonomy
- companies using this structure have a high speed of implementation
What do you know about matrix organisational structures?
- most confusing & least used stuctures
- matrixes employees across different superiors, divisions or departments
- For example, an employee working for a matrixed company may have duties in 2 departments
