Planning a Business + Business Finance

Question 1

Why do business prepare a business plan?

Answer 1

1. To potentially sell to the global market.
2. A business is more likely to succeed as it will be more efficient with a business plan.

Question 2

What does SMART stand for

Answer 2

Specific
Measurable
Agreed
Realistic
Time-bound

Question 3

What is a cash flow forecast

Answer 3

A cash flow forecast predicts a business receipts and payments over a period of time

Question 4

Why is it important

Answer 4

1. It shows what payments have to be made out of the business and if it will have enough money to cover them.
2. It shows when money is due to be recieved into the business

Question 5

How to deal with a cash flow surplus

Answer 5

1. Pay off borrowings
2. Re-invest the surplus cash into advertising the business

Question 6

How to deal with a cash flow deficit

Answer 6

1. Source cheaper suppliers of raw materials to reduce purchases
2. Increase sales with a sales promotion

Question 7

How to deal with a cash flow deficit

Answer 7

1. Source cheaper suppliers of raw materials to reduce purchases
2. Increase sales with a sales promotion

Question 8

What is an asset

Answer 8

An asset is something of value owned by a business eg Land

Question 9

What is a grant

Answer 9

A grant it a sum of money that is given out by the government or EU to people who want to start a business

Question 10

What is a hire purchase

Answer 10

This allows a business to use an asset, such as equipment or vehicles immediately and pay for it in instalments. The asset is only owned when the last instalment has been payed.

Question 11

What is a sale and leaseback

Answer 11

When a business asset is sold to an investment company and leased back over a period of time. The business is still as to use the asset but no longer owns it.