Planning, Revenues + Costs

• What is the purpose of a business plan?

  Helps in decision-making and securing finance
• Why is a business plan important for banks?

  It persuades them to grant loans
• What are the reasons for drawing up a business plan?

  • Needed by banks for lending money
  • Shows how the business will be run
  • Demonstrates research and planning
  • Identifies opportunities and problems
• What does the aims of a business or mission statement provide?

  Direction and motivation for workers
• What is the purpose of a cash flow forecast?

  To show if the business can pay back loans
• What does the owner's CV in a business plan identify?

  Skills and experience to run the business
• Why is the type of ownership important in a business plan?

  To assess liability and advantages/disadvantages
• What does the marketing section of a business plan outline?

  Marketing mix and customer attraction strategies
• What factors are assessed in the location/premises section?

  Suitability in relation to main factors
• What financial information is included in a business plan?

  Cash flow, balance sheet, and profit/loss account
• What is turnover in a business context?

  Value of sales or income from goods/services
• How is turnover calculated?

  $\text{Selling Price} \times \text{Quantity Sold}$
• What are the ways to improve turnover?

  • Increase price for more revenue per item
  • Reduce price to create demand
  • Increase promotion to attract more customers
• What are fixed costs?

  Costs that remain constant regardless of production
• Give examples of fixed costs.

  Rent, equipment lease, business rates
• What are variable costs?

  Costs that change with production levels
• Give examples of variable costs.

  Raw materials, electricity, and gas
• What are total costs?

  Full amount spent on producing goods
• How are total costs calculated?

  $\text{Fixed Costs} +$$\text{Variable Costs}$
• What is profit in a business context?

  Difference between total revenue and total costs
• How is profit calculated?

  $\text{Total Revenue} - \text{Total Costs}$
• What are the key components of business planning, revenues, and costs?

  • Business plan: decision-making and finance
  • Turnover: sales value and calculation
  • Fixed costs: constant expenses
  • Variable costs: changing expenses
  • Total costs: sum of fixed and variable costs
  • Profit: revenue minus costs