Business planning

Question 1

What does a business plan mean?

Answer 1

A business plan is a document setting out what a business does and what it hopes to achieve in the future.
Business planning is the process of producing a plan.

Question 2

Why should a business make a plan?

Answer 2

• help set up a business successfully
• raise finance
• set objectives
• coordinate actions

Question 3

What could be the problems with planning?

Answer 3

-Uncertainty/risk - what do these mean?
-Lack of experience
-Change
Uncertainty occurs when there is a lack of information about a situation. This means the outcome or consequences are difficult to predict.

A risk is the possibility of something going wrong.

Question 4

How can businesses reduce the risk of business plans going wrong?

Answer 4

• Research the market thoroughly
• Talk to experts and consultants (if affordable)
• Plan for a variety of outcomes
• Review and update so any problems are spotted quickly

Question 5

What are the main sections of a business plan?

Answer 5

• Background info on founders and investors and their previous experience
• An analysis of the market and the firm’s expected position within it, as well as target customers
• Firm’s objectives
• Price and expected sales
• An explanation of how the business will compete against its rivals - how it will be competitive and what makes it better than the competition
• An analysis of the financial position of the business, including forecasts of profit and cash flow