Business Plans

Question 1

Business Plan

Answer 1

A report describing the marketing strategy, operational issues and financial implications of a business start-up.

Question 2

Benefits of a business plan

Answer 2

-Sets out their objectives and strategy - plan of how business will develop over a period of time that outlines the way in which they will attempt to achieve their business objectives.
-Outlines its marketing strategy – researches vital information such as the size of the potential market, the strength of the competition, etc.
-Clear idea of direction and operation – strategic planning/setting objectives.
-Helps to convince banks and lending institutions of its ability to pay back loans – cash flow forecast.
-Without one, obtaining finance, e.g. from banks, is less likely.
-Highlights strengths and identifies possible problems that can then be dealt with in advance.
-Sets out what personnel/skills will be required to run the business effectively.
-Helps them think ideas through – giving a clear idea of direction and operation. -May help to identify difficulties that may occur and allow the business to deal with them before they become a problem.
-Useful as a monitoring tool – e.g. compare actual performance with forecasts in the business plan.
-Used by a business customer they are supplying.

Question 3

Drawbacks of a business plan

Answer 3

-May succeed if the product or service proves so popular that sales are very high and profits are made
consistently.
-May succeed without one if the business is small and easily-managed, e.g. window cleaner.
-No business can be guaranteed success however good the business plan.
-External factors may make the business successful even if business plan not drawn up – economic upturn, change in the law/government policies.