Business Planning Flashcards
(41 cards)
What is a business plan?
A business plan is a written document defining a business future objectives and strategy ie what it wants to achieve and how it intends to achieve it.
Why have a business plan?
Raise funding or finance
To set business objectives / priorities
To create a business direction
Set staff targets
Budgeting or managing financial resources
Responding to change
What are the elements of a Business Plan?
Executive summary
Mission statement
Vision statement
Goals and objectives
Financial forecasts
Competition analysis
KPIs
What are some types of business analysis?
KPI’s, e.g. target revenue/actual revenue, target new clients/ actual new clients, target new starters/ actual new starters.
SWOT analysis; Strengths, Opportunities, Weaknesses, Threats
PESTLE analysis; Political, Economic, Social, Technological, legislative/legal, environmental
What are some types of business plan?
- Strategic
- Departmental business plan
- Operational (work planning and delivery)
- Corporate
- growth plans
What is a strategic business plan?
A strategic plan is a strategy that’s devised to achieve overall goals set by a business e.g. financial growth, survival. Informs and motivates. Can stimulate change management. Assists business benchmarking and performance monitoring.
Devises goals by looking at resources available, market restrictions and stakeholder demands;
What is a departmental business plan?
Planning document focused on a specific department done by:
Review of period metrics
Do the metrics meet the goals?
Do the goals require adjusting?
What is needed to meet these goals?
Individual staff metrics
What is an operational business plan?
Operational (work planning and delivery)
This has a lot in common with ISO 9001 - quality/business management system. Two stages/types:
-Work planning
-Delivery
Work planning:
-Requirement for professional service to be delivered
-What is the criteria for the service delivery (legislation, guidelines etc)
-What resources are available?
-What is the process (how is delivered)
-Acceptance criteria (what does the client expect)
-Documentation (What is required to produce the service)
Work delivery:
-What communication should be made with customers/the client
-Determine customer requirements
-What is the process for dealing with changes to requirements?
-Review the requirements to deliver work
What are the types of business ownership?
- Sole Proprietorship
- Partnership
- Limited liability partnership (LLP)
- Private limited company (LTD)
- Public limited company (PLC)
- Not for profit organisations
- Cooperatives
What is a sole proprietorship company?
Sole Proprietorship (SP) - A sole proprietorship is a business owned by only one person. Most common and it is easy to set-up and is the least costly among all forms of ownership. The owner is effectively the company of legal purposes, so they are personally liable for all company liabilities. This can be risky as the owner may have to sue personal assets (eg house) to pay business debts. The sole trader does not have to register with Companies House, but they do have to inform HMRC as they will retain the business’ profits after income tax is paid through self assessment.
What is a partnership?
A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits and risk of the business among themselves. Each is personally liable for business losses, and if one partner can’t pay then the other(s) will be liable for their share. Therefore potentially risky.
What is limited liability partnership?
A limited liability partnership is a partnership in which some or all partners have limited liabilities. The business is effectively ‘ring fenced’ from each partner’s personal assets and finances. Less risky. An LLP must be registered with Companies House and HMRC, and there is a similar level of administration and reporting to a limited company. Partners remain assessed for Income Tax through self assessment rather than the business paying corporation tax.
What is a limited company?
A limited company separates the business from the owners - an incorporated business entity. Ownership is divided in shares. Limited liability to owners (provides shareholders personal assets with protection from liabilities incurred by the business).
Shares cannot be sold to the public (owners decide). This provides protection from loss of ownership and control. They can be expensive to set up (legal and administrative costs). Must be registered at Companies House, with a SIC code identifying the company’s specific business. Directors have a number of reporting and management responsibilities including record keeping, filing accounts and paying corporation tax.
What is Public Limited Company (PLC)?
A company which has shares that can be purchased by the public and which has allotted share capital with a nominal value of at least £50,000. Similarly to limited company, it is an incorporated business, meaning exists legally as separate entity from its owners. Also has limited liability.
Managed by a board of directors and owned by shareholders. PLCs have additional reporting requirements and responsibilities to be accountable to their shareholders. Commonly known as a corporation.
What are some positives and negatives of a PLC?
+capital can be easily generated through trading of shares
+owners have limited liability
+public listing makes it easier to attract investors
-anyone can be a shareholder
-board of directors required
-exposed to public scrutiny and regulation
-risk of takeover if someone buys majority of the shares available
What is a cooperative?
Business, or other organisation that is owned and run jointly by its members, who share the profits or benefits. Owners are consumers of its services.
Operated to provide benefits to those people such as economic , social, cultural goals. They are democratic and internally funded.
What is stock?
A security that represents part ownership, or equity, in a corporation. Each share of stock is a proportional stake in the corporation’s assets and profits. Common stock shares enable voting rights and possible returns through price appreciation and dividends.
What is a debtor?
A person or entity who owes money to the business (eg owed payment of an invoice by a customer, customer is the debtor).
What is a creditor?
Who the business owes money to (loan from a bank, bank is a creditor).
What is working capital?
The capital of a business which is used in its day-to-day trading operations. Ability to pay liabilities with current assets.
Calculated as the current assets minus - current liabilities.
What is liquidity?
Measure of how quick a business can convert assets into cash, thus being able to meet short term financial obligations. Lacking liquidity can be a problem when payments are due. Holding too much in liquid sources will limit capital growth.
What are liabilities?
Liabilities - an outstanding expense that a companies owes e.g. wages and loans.
What information does an RICS regulated firm need to provide the RICS annually?
Annual return
Type of business
Staffing
Nature of clients
Training provisions
Complaints handling
PII
Client money
How do you register to become an RICS regulated firm?
A form is available on the RICS website. Several preconditions must be met;
- Your firm must offer professional services in surveying disciplines
- At least 25% of principals must be charted with the RICS
- Agree to comply with RICS Rules of Conduct for Firms
