Business planning

• Business plan


  A document created by a business or entrepreneur that provides details about each element of the business
• Business plan


  • Considers all of the different elements of the business
  • Usually made up of several sections: business idea, aims and objectives, target market, revenue forecast, projected costs and profit, cash flow forecast, sources of finance, location, marketing mix
• By completing each section of the business plan, an entrepreneur gains a full understanding of each element of their business
• This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not
• If there is a chance the business might not succeed

  The entrepreneur can amend the business plan in order to minimise this risk
• A business plan is an essential part of starting any business
• Entrepreneurs create business plans to help them consider all of the elements they are going to need for their new business to be a success
• Business plan


  A document created by a business or entrepreneur that provides details about each element of the business
• Entrepreneur


  A calculated risk-taker who sets up a business in return for financial gain
• Risk


  An estimate of the probability of an unwanted outcome. It depends upon the chance of it happening and the consequences if it did happen
• There is a high risk of business failure within the first year
• Purpose of a business plan

  • Allows an entrepreneur to minimise the level of risk when setting up a business
• Creating a business plan

  1. Consider all of the key elements of a business

  2. Address any issues

  3. Conduct market research around the idea

  4. Gain a better understanding of the market, potential customers and where to locate the business

  5. Create aims and objectives for the business
• Primary and secondary research


  Two types of market research a business might undertake
• Cash flow forecast


  A prediction of the money flowing in and out of a business
• Budget


  A plan for expected income and spending over a specified time period
• Receipts


  The money flowing into a business, otherwise known as inflows
• Finance


  Any form of money used by a business
• Investor


  A person or group that buys part of a business with the aim of making money
• Mortgage


  A special loan taken out by some property buyers, where the more money you borrow, the more you will pay back in interest payments. Also the longer you take to repay your mortgage, the more interest you will pay
• A business plan is essential when a new business is attempting to raise finance from a bank or potential business investors
• Investors want to see a business plan to ensure that they will not lose money
• The primary purpose of an investor is to make more money, so they want to make sure the business has the potential to be a success