business plans Flashcards
(15 cards)
What is the purpose of a business plan?
To outline a business’s objectives and strategies for achieving them. It acts like a road map, guiding decision-making and helping to monitor progress.
What is included in the executive summary of a business plan?
A brief overview of the business idea, opportunity, strategy, objectives, and how finance will be obtained.
What is the purpose of the marketing plan in a business plan?
To present findings from market research, analyse customer needs and competition, and outline marketing strategies.
What does the operations plan outline?
Details about location, production methods, equipment needed, supply sources, and production costs.
What does the human resources plan include?
The number of employees required, their skills/qualifications, and the structure of the management team.
What forecasts are part of the financial plan?
Sales forecast, cash flow forecast, profit and loss account, balance sheet, and break-even analysis.
What are the main sources of finance in a business plan?
Owner’s capital, bank loans, and other borrowing methods.
Name four sources of guidance for preparing a business plan.
High street banks, accountants, small business advisers, and government agencies like the Prince’s Trust.
Why is a business plan important when seeking finance?
Investors and banks require a business plan to assess risk, viability, and how their funds will be used.
How can a business plan help after trading begins?
It helps monitor performance, compare forecasts with actual results, and adjust strategies if objectives aren’t met.
What is a major limitation of business plans?
They rely heavily on market research and forecasts, which may be inaccurate or based on assumptions.
Why might experienced entrepreneurs not rely heavily on business plans?
They may have enough market knowledge to operate effectively without formal forecasting, though this can limit growth.
Evaluate the statement: A business plan guarantees success.
It doesn’t guarantee success but increases the chances by helping to identify risks and plan strategies. Success also depends on the plan’s accuracy and adaptability.
advantages of business plans
Clarifies Objectives and Strategy
Helps the entrepreneur define the business’s goals and how to achieve them.
Attracts Finance
Banks and investors usually require a detailed business plan before providing funding.
Risk Management
Identifies potential problems early, helping reduce uncertainty and improve decision-making.
Performance Monitoring
Acts as a benchmark to compare actual results with forecasts (e.g. sales, cash flow).
Encourages Research and Planning
Forces entrepreneurs to research their market, competition, and customer needs thoroughly.
Improves Resource Allocation
Helps plan staffing, operations, and finances more efficiently.
Easy visual means / calculation of analysing The Great Escape’s financial position at
different levels of output.
disadvantages of business plans
Time-Consuming and Costly
Market research and financial forecasting can be expensive and delay start-up.
Inaccuracy and Uncertainty
Forecasts (e.g. sales) may be based on guesswork, especially in new markets.
False Confidence
An over-optimistic or poorly researched plan can give a misleading impression of viability.
May Not Predict Change
Business plans might fail to adapt to rapid market changes, making them outdated quickly.
Not Always Needed
Experienced entrepreneurs may succeed based on intuition and experience without formal plans.
