business plans

• what is a business plan

  ‘A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts.’

  • It is a document that states what the owners want to do and how they intend to do it.
  • It will include financial details and forecasts 
  • It is often used as a tool for raising finance
• what are the main components of a business plan

  • The executive summary - a synopsis of the entire plan looking at the most important points
  • The business and products or services
  • The market e.g. size, share, competitors
  • The marketing strategy
  • The skills of the entrepreneur and other key employees
  • Operations
  • Financial forecasts ->
• what are the components of a business plan ?

  • The executive summary - a synopsis of the entire plan looking at the most important points
  • The business and products or services
  • The market e.g. size, share, competitors
  • The marketing strategy
  • The skills of the entrepreneur and other key employees
  • Operations
  • Financial forecasts
• what financial accounts are included?

  • Projected Break Even
  • Projected Cash flow forecast
  • Projected Profit & Loss
  • Projected Balance Sheet
• benefits of a business plan ?

  • Helps the entrepreneur to focus on their mission and to clarify their objectives
  •  which to measure progress and performance
  • Encourages a logical approach to setting up a business
  • Outlines everything that needs to be done
  • Essential to raising finance from external investors
  • Helps assess the feasibility of a business idea
• drawbacks of a business plan ?

  • Is based on forecasts and estimates and is therefore likely to be inaccurate, often entrepreneurs are overly optimistic
  • Takes time to carry out research and write the plan
  • Can cost money to produce e.g. carry out research
  • The entrepreneur may lack expertise
• What does Jemma advise young entrepreneurs to set up?

  A good business plan
• Why is a good business plan important for new businesses?

  It helps survive difficulties in a competitive market
• How does a good business plan affect a new business's chance of survival?

  It increases the chance of survival
• What focus does a good business plan provide?

  Focus on important business issues
• How does a business plan help in convincing lenders?

  It shows the business is creditworthy
• What are bank managers likely to do if a business plan is unclear?

  They are unlikely to give a loan
• How can new enterprises use their business plan after starting?

  To monitor progress and highlight problems
• What can be controlled through the use of a business plan?

  Problems that arise in the business
•  

  Explain the reasons why a business plan is vital to the success of a venture. [6]


  • A statement outlining how a business will achieve its objectives, providing a clear idea of its operation and direction its marketing strategy, essential information such as the of the potential market, the strength of the competition, etc.
  • Assists in convincing banks and lending institutions of its ability to repay loans.
  • Specifies the personnel/skills required to run the business effectively.
  • Includes any other items in a business plan that may be considered vital to its success.
• why may a business plan not be crucial

  • Business plans can be poorly written. Some expertise and research is needed to ensure this is not misleading and that all aspects are covered well
  •  Sometimes figures can be too optimistic ,cost could be underestimated and sales overestimated
  •  For small business a business plan may not be needed like a sole trader or where minimal finance is needed to set up
  •  A downturn in economic activity or demand could render the plan meaningless
  •  Costs of research in time and money – resources may be better spent elsewhere in the business
• what is the marketing plan element of a business plan

  Important part of any business plan , based on both field and desk research. Market research carried out needs to establish if possible the size of the market, the needs of the customers and the level of competition. market research findings have been examined then the marketing plan can be prepared.
• What is the operations part of a business plan ?

  Include details of where the business will be located, production methods and any equipment needed. Plus, information on on the costs of production on and where the business will buy supplies may be included.
• What is the Human resources part of a business plan ?

  The number of employees and the skills, experience and qualifications they require will be outlined. Any management team will also be identified.
• What is the financial part of a business plan ?


  A variety of forecastng will be necessary:

  • a sales forecast indicating potential revenues;
  • a cash flow forecast for the first 12 months;
  • a profit and loss and balance forecast for the end of

  the first year;

  • a break even analysis.

  In addition, information on where the finance for starting and running the business will come from. indicating the available start-up capital as well as any

  potential borrowing.