business plans

Question 1

why do business plan

Answer 1

• To survive / avoid business failure
• To develop business ideas
• To reduce or avoid risk
to achieve the objectives of the business

Question 2

sources of business ideas

Answer 2

• Problem solving
• Innovation (creating and selling new inventions)
• Accidental discovery
• Ideas from employees, inventors or entrepreneurs

Question 3

why do business fail

Answer 3

Poor business plan
• Poor financial control (e.g. cash flow forecast, break-even calculations)
• Lack of knowledge of the market and competition
• Lack of a clear USP (unique selling point
• Concentration risk (e.g. relying on one major customer)

Question 4

contents of a business plan

Answer 4

1. Identification of goods or services provided and the USP of the business
2. How the good or service will be protected (e.g. patent or copyright)
3. Objectives of the business (e.g. survival or targets for revenue/profit/growth)
4. Market research results, including competitor analysis
5. Resources requirements of the business (number of employees and their required skills, premises/location, machinery! equipment furniture, stock and how much they will cost)
6. Financial requirements (how much is needed to finance the business, cash flow forecast and sources of finance)

Question 5

savings source meaning long/short term

Answer 5

Money from the owner(s) of the business
permanent/long term

Question 6

share issue

Answer 6

Money received from the shareholders, who are the owners of a limited company
long term

Question 7

venture capital

Answer 7

Loans and/or shares for small & medium sized firms who are considered too risky by banks.
long term

Question 8

crowd funding

Answer 8

Inviting a large number of investors to each provide a relatively small loan or amount of share capital
long term

Question 9

Ban loan

Answer 9

A fixed amount that must be repaid, plus interest, over a stated amount of time in equal monthly instalments.
long term

Question 10

mortgage

Answer 10

A bank loan that is used to buy property and is secured on that property.
long term