Unit 1.4 - business planning

Question 1

Explain the difference between business planning and a business plan.

Answer 1

Business planning helps show what skills and capital a business has and to decide how these can be used most effectively whereas a business plan sets out what the business does and what it intends to achieve in the future and how this will be achieved.

Question 2

Identify and explain the uses of a business plan? (4)

Answer 2

Decision making tool - helps the entrepreneur decide whether they should set up the business or not
To gain finance/investment - before providing money they will need to know the financial issues
Future vision - the plans for the future of the business
Management tool - helps give direction showing stakeholders such as employees what they are working towards

Question 3

What are the main sections of a business plan? (5)

Answer 3

Business description - name, type of ownership, type of good or service provided
Marketing - undertaken research, results of research, pricing strategy, promotion, location
Finance - income statement/cash flow forecast
Production/operations - how and where will the goods be produced, the size of the operation, will resources need to be imported
Human resources - how many workers will be needed, are they skilled or unskilled, what will the pay structure be (wages/salary)