Chapter 5 - Business planning Flashcards
What is the main difference between an aim and an objective?
time
Aim
an overall goal that an enterprise wants to achieve.
Objective
a specific target that an enterprise wants to reach so it can achieve its aims
Which is long-term and which is short-term between an aim and an objective?
aim is long-term and objective is short-term
What characteristics should an objective have?
SMART
specific
measurable
achievable
realistic
time-based
Name 5 objectives an enterprise may have
- survival
- maximising profit
- satisfying profit
- growth
- sales growth
- sales revenue
- cash flow
- provide a good service
- environmental
- ethical
- social
- not-for-profit
- legal compliance
Survival (objective)
try to keep the enterprise running
Maximising profit (objective)
try to make as much profit as possible
Satisfying profit (objective)
try to make enough profit to keep the owners comfortable
Growth (objective)
try to increase its size including market share
Sales growth (objective)
try to make as many sales as possible
Sales revenue (objective)
try to make as much revenue as possible
Cash flow (objective)
try to ensure they have enough cash to pay its day-to-day costs
Provide a good service (objective)
try to provide a positive experience to its customers
Environmental (objective)
try to protect the environment
Ethical (objective)
try to treat all its stakeholders fairly
Social (objective)
try to meet the needs of less fortunate members of society
Not-for-profit (objective)
try to use any extra revenue to help it achieve its purpose or mission
Legal compliance (objective)
meet all laws and regulations to avoid legal action or damage to reputation
What are some different planing tools an enterprise can use?
- action plans
- business plans
- marketing plans
- plans for negotiations and meetings
Action plan
a list of tasks that need to be completed in order for a set goal to be achieved
Purpose and importance of action plans
- better understand what needs to be done so the right things are done at the right times
- carefully identify the key stages of a project to avoid mistakes that might waste time and effort
- identify potential obstacles and issues and think of how to avoid them
- keep track of responsibilities
- acting as a checklist to monitor progress and so that any problems and delays are spotted quickly
Define prepare
present information in a suitable format
What is the general format of an action plan?
take picture at home from textbook
Stages in constructing an action plan
- set the goal you want to achieve
- identify key actions - what do you need to do to achieve the goal?
- break actions into small, simple activities
- put activities into a logical order
- decide how much time will be spent on and who will do each activity
- monitor - how will you check is a stage is completed
- start implementation
- review and update plan as you carry out each activity
- achieve goal
Define monitor
to check or review the progress of something over a period of time
Why is monitoring important for an enterprise?
- check progress of project
- identify actions to be taken
- allow for alternative steps if necessary
- know stages are completed in the right order and on time
What 5 methods can be used for monitoring?
- checklists
- data
- surveys and interviews to costumers
- testing to check if equipment or products work
- reporting
What should you keep in mind when choosing a monitoring method?
- What is its purpose - what do you need to check?
- Is it simple to use?
- Does it provide the information you require?
Define business plan
a formal document that gives the aims of the enterprise and outlines ways those aims will be achieved
Purpose and importance of a business plan
- acts as a focus
- provides information about market, competitors, and the potential demand
- identifies costs and financial needs
- provides evidence to show an idea is possible
- makes entrepreneur think ahead
- used to produce targets
- helps with organisation
What are the contents of a business plan? What do they mean?
- preliminary information (details about the business)
- marketing (size of market, competition, pricing, etc.)
- operation (how the enterprise will work, e. g. production details, resources)
- human resources (number of employees, who will have each role)
- financial (targets, budgets, cash flow forecast, etc.)
Comparing actual numbers against those identified in marketing plans and budgets is an important way to check progress. What should an enterprise consider depending on the objectives set?
- financial data
- operations data (total level of output)
- marketing data (feedback from customers)
- human resource data (number of employees, attendance, hours worked)
Why should a business plan be updated?
to monitor progress
