Topic 1 - Business in the real world (6. business planning)

Question 1

what is a business plan

Answer 1

A business plan is a document created by a business or entrepreneur that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business.

Question 2

what are the sections that should be included into a business plan

Answer 2

the business idea
the business’ aims and objectives
target market
revenue forecast
projected costs and profit
cash flow forecast
sources of finance 
location
marketing mix

Question 3

what is the big advantage of creating a business plan

Answer 3

By completing each section of the business plan, an entrepreneur gains a full understanding of each element of their business. This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not. If there is a chance the business might not succeed, the entrepreneur can amend the business plan in order to minimise this risk.

Question 4

drawbacks to business plans

Answer 4

takes a lot of time and money
make business plans too optimistic and struggle with problems later on
may stick too tightly to the business plan and struggle when something unexpected happens