Small Busines Planning - Chp 3 Flashcards
Planning
The process of formulating objectives and determining how to achieve them.
What are the benefits of developing a business plan?
- helps tests the viability of the business
- assist the business to be proactive rather than reactive
- assist in maintaining the business operations
- indicates the owners ability and level of commitment
- forces the small business owner to justify their plans and actions
- identifies the businesses strengths and weaknesses
What are the element of a business plan?
An executive summary, an operations plan, a resources plan, a financial plan, and a marketing plan.
An Executive summary
A document describing the business and its objectives.
An operations plan
Outlining how the business will be set up and the human and physical resources needed.
A financial plan
Details how the business will be financed and the projected revenue, Expenses and profit.
A marketing plan
Outlines the key information from the industry the business will be entering and how it fits in, and the marketing strategies of the business.
Resource
An person or product that will help in the production of a good or a service.
Human resources
The employees who provide their time energy, skills and effort towards the business activities
Physical resources
Refer to the equipment such as computers, machinery, office equipment and stock that are needed to run the business.
Asset
Any item of value owned by the business
What is a business plan
A written statement of the business’ goals and objectives and the steps to be taken to achieve them.
Why is a business plan essential?
It is set up to act as guide or map on which the business can plot out its journeys to success. It also links the business owners ideas and the actual operations to achieve such ideas.
Human resource planning
Should include detail on the present and future staff requirements
Present staff requirements
- the number of people needed to operate the business
- the staffing objectives
- the methods the business will use to recruit extra staff
- a form on the organisational chart
- the specific duties to be preformed
- the administrative records to be kept to manage the employees
Future staff requirements
- holiday periods
- at peak production times
- the introduction of new technologies
Physical resource planning
Should include detail on the types of assets required for the business and the associated costs of each asset
What does a well researched plan help with?
It helps improve the chances of accessing adequate finance, by providing a finance plan that describes the effectiveness and value of the business
Effectiveness
Viability
Value
Profitability
Viability
Capable of working successfully
What are the 2 curtail questions in relation to financial plan
- How much money will I need to commence operation?
2. Where will I get the money?
Establishment costs
Include those expenses involved in setting up the business, must be paid in order to commence business.
Examples of establishment costs
Legal fee, furniture, computer hardware and software, vehicles, fixtures and fittings, phone and electricity connection, stock and advance rent.
Operating costs
Include those expenses involved in the ordinary day to day running of the business, must be paid in order for the business to continue to trade.
Examples of operating costs
Wages, advertising, insurance, interest in loans, telephone and electricity costs, stationary, rent, accountants fees, vehicle running costs.m
What are the two main sources businesses can obtain finance?
From either internal or external sources
Internal funds
Owners personal funds
External funds
Debt and Grants
What are the two types of debt
Short term and long term