Business Plans

Question 1

What is a business plan

Answer 1

a written document that describes a business, its objectives, its stratergies, the market it is in and its financial forecasts

Question 2

Purpose of a business plan

Answer 2

• provides a focus on the business idea. Is it a good idea? Why?
• test financial viability of the idea. Will it achieve profitability or run out of cash?
• encourages entrepereur to set appropriate objectives that are in line with the business activities
• identify target market through market research

Question 3

What should be included in a business plan?

Answer 3

• the idea
• objectives and key targets
• finance required
• market overview
• how the business will operate
• marketing
• cash flow forecast
• forecast revenue, costs and profits

Question 4

Advantages of a business plan

Answer 4

• reduces risk
• review the business’s progress
• review the idea (profitable future?)
• secure finance
• market research reduces risk of failure

Question 5

Disadvantages of business plans

Answer 5

• sales may be overestimated, poor quality from lack of research
• need constant updating
• requires time and effort producing and reviewing (expensive too)
• new opportunities can be missed if they’re not in the plan