Business Planning Flashcards
(39 cards)
Essential elements of a business plan
Guidance and direction, setting goals and objectives to maximise growth and profitability.
Business Structures – Sole Trader
Individual.
Don’t publish accounts.
No accounts admin cost.
Liabilities NOT limited
Partnership
As sole trader but require Partnership agreement. Business owned by multiple parties.
Limited Company
Separate from personal assets.
Tax advantages.
Register company & publish accounts.
LLP
Like a partnership but as a Limited company.
i.e. split responsibility (Limited company based on shares; control is defined by roles)
Ratio Analysis
Business performance metrics
Profitability
Returns after costs
Liquidity
assets to cash speed
Current Asset ratio
£150k (asset)/£100k (liability) =1.5
below=risky
above=stable
Acid Test
Assets-stock/liabilities (stock slow to cash) 1-1.2
Gearing Ratio
Equity / Debt
Working Capital
Current assets – current liabilities
e.g. £200k-£150k= £50k
Stock
Product held within the company
e.g. Fuel for a petrol station.
Debtors (asset)
Party who owes a company money without immediate payment (sale of goods and services)
e.g. Arcadis £100k agree to provide their service over the next year
Creditors (liability)
Goods/service without immediate payment (future payment required)
Accounting techniques Cash
Transactions are recorded at receipt of funds
Accrual
Transactions recorded at the point of sale.
e.g. Lender agrees to pay Arcadis fees of £100k which become due over next year but £100k is recorded today.
Forecasting techniques
Use of current and historic costs to predict future costs
e.g. £1m sales over 1 year cost £800k (20% profit)
Planning to meet corporate objectives
e.g. Corporate; Maintain 10% market share = £10m sales = Service excellence (repeat business) Service efficiency (maintain capacity), Increased sales
Legislation in Business
EU Working time (40hrs PW).
Companies Act 2006 – Makes clear company obligations e.g. must keep accurate records.
Bribery Act 2010 - Liability for corruption; Bribing, being bribed, failure to prevent bribery (10 year prison, unlimited fine, director disqualification)
Data Protection Act 2016 - Give control to individuals over their personal data
Money Laundering 2017 – Prevent exchange of money obtained from criminal activity. Identify customers, keep records, report suspicious behaviour
Short Term Strategy
1- year improvements
e.g. productivity (technology/systems), upskill (courses)
Medium Strategy
Regular training/new starter induction, technology servicing contracts
Long Strategy
Capital expenditure
e.g. relocate offices, marketing (new website)
5-year plan
market analysis, staff, acquisition, clients, goals, resource
