Business Planning

• What is a business plan?

  A business plan is a document created by a business or entrepreneur that provides details about each element of the business.
• Why is creating a business plan important for an entrepreneur?


  Creating a business plan means an entrepreneur considers all of the different elements of their business.
• What are the main sections typically included in a business plan?

  • Business idea
  • Aims and objectives (using SMART principles)
  • Target market (determined through market research)
  • Revenue forecast
  • Projected costs and profit
  • Cash flow forecast
  • Sources of finance (long-term and short-term)
  • Location
  • Marketing mix (the four Ps: product, price, place, promotion)
• What does the business idea section of a business plan describe?

  The business idea section describes what product or service the business will provide.
• What are the SMART principles used for in a business plan?

  SMART principles are used to define the business' aims and objectives.
• How is the target market determined in a business plan?

  The target market is determined through market research.
• What does the revenue forecast section of a business plan include?

  The revenue forecast includes projected costs and profit.
• What is included in the cash flow forecast of a business plan?

  The cash flow forecast includes sources of finance, both long-term and short-term.
• What does the location section of a business plan specify?

  The location section specifies where the business will be located.
• What is the marketing mix in a business plan?

  • The marketing mix consists of the four Ps:
  • Product
  • Price
  • Place
  • Promotion
• How does completing each section of the business plan benefit an entrepreneur?

  It gives the entrepreneur a full understanding of each element of their business.
• What can an entrepreneur do if there is a chance the business might not succeed?

  The entrepreneur can amend the business plan in order to minimize this risk.
• What is the purpose of a business plan for an entrepreneur?

  To minimise the level of risk when setting up a business
• Why is it important for an entrepreneur to minimise risk when starting a business?

  Because there is a high risk of business failure within the first year
• What is the risk of business failure within the first year?

  High
• What must an entrepreneur consider when creating a business plan?

  All of the key elements of a business and address any issues.
• Why is market research important for an entrepreneur?

  It helps them gain a better understanding of the market, potential customers, and business location.
• What are the two types of market research a business might undertake?

  Primary and secondary research.
• What is a cash flow forecast?

  A prediction of the money a business might have coming in or going out over a period of time.
• How can a cash flow forecast help an entrepreneur?

  It allows them to see if there are times of the year when they may lose money and make necessary changes.
• What can an entrepreneur adjust based on the information from a cash flow forecast?

  Their budget and payments or increase receipts.
• Why is a business plan essential when raising finance?

  It provides evidence to banks or investors of why the entrepreneur believes the business will succeed.
• What does a bank do when an entrepreneur applies for a loan or mortgage?

  The bank reviews the business plan to decide if it believes the business will be a success.
• What might happen if a bank thinks a business is too risky?

  It may decide not to let the business borrow money.
• What do investors want to see in a business plan?


  They want to ensure that they will not lose money.
• What is the primary purpose of an investor?

  To make more money and ensure the business has the potential to be a success.