Business Plan Flashcards
(4 cards)
Business Plan
: A statement that outlines the way in which a business will attempt to achieve its objectives -
giving a clear idea of its operation and direction
Core part of a business plan
The introduction or overview/Executive
Statement
This provides an overview of the business’s
aims, objectives and strategy, and is evidence
that the proposal is viable. It sets out how the
business is going to be run.
* The Marketing Plan
Important part of any business plan based on
both field and desk research. Market research
carried out needs, if possible, to establish the
size of the market, the needs of the customers
and the level of competition. When market
research findings have been examined then the
marketing plan can be prepared.
* The Operations Plan
Include details of where the business will
be located, production methods and any
equipment needed. Plus, information on the
costs of production and where the business will
buy supplies may be included.
* The Human Resources Plan
The number of employees and the skills,
experience and qualifications they require will
be outlined. Any management team will also be
identified.
* The Financial Plan
A variety of forecasting will be necessary:
* a sales forecast indicating potential revenues
* a cash flow forecast for the first 12 months
* a profit and loss and balance forecast for the
end of the first year
* a break-even analysis.
In addition, information on where the finance
for starting and running the business will come
from, indicating the available start-up capital as
well as any potential borrowing.
Benefits of a business plan
Sets out their objectives and strategy - plan of how business will develop over a period of time that
outlines the way in which they will attempt to achieve their business objectives.
Outlines its marketing strategy – researches vital information such as the size of the potential market,
the strength of the competition, etc.
Clear idea of direction and operation – strategic planning/setting objectives.
Helps to convince banks and lending institutions of its ability to pay back loans – cash flow forecast.
Without one, obtaining finance, e.g. from banks, is less likely.
Highlights strengths and identifies possible problems that can then be dealt with in advance.
Sets out what personnel/skills will be required to run the business effectively.
Helps them think ideas through – giving a clear idea of direction and operation. May help to identify
difficulties that may occur and allow the business to deal with them before they become a problem.
Useful as a monitoring tool – e.g. compare actual performance with forecasts in the business plan.
Used by a business customer they are supplying.
Drawbacks of business plan
May succeed if the product or service proves so popular that sales are very high and profits are made
consistently.
May succeed without one if the business is small and easily-managed, e.g. window cleaner.
No business can be guaranteed success however good the business plan.
External factors may make the business successful even if business plan not drawn up – economic
upturn, change in the law/government policies.
