Business Planning Flashcards

All 8 cards in this deck

What is a business plan?

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

Give three reasons why a business creates a business plan.

To help set up the business and judge whether the idea will succeed; to raise finance from banks or investors; to set aims and objectives and organise how the functions of the business will work.

Name four sections usually found in a business plan.

The business idea, aims and objectives, the target market, and the marketing mix (product, price, place, promotion).

Give two problems a business might face when producing an effective business plan.

It is time consuming; it is based on predictions/forecasts; market conditions may change; the entrepreneur may lack experience.

True or false? Once a business plan has been written it does not need to be changed.

False. A plan must be reviewed and changed — e.g. if a new competitor enters the market the business must react.

True or false? Having a business plan guarantees the business will succeed.

False. A plan uses forecasts, so sales may be lower than predicted and trends, competition or legislation may change.

What benefit does a business plan give a business once it is already trading?

Actual performance can be compared with the plan's forecasts, so the business can spot problems and take action if targets are missed.

Why is a business plan important to a new business applying to a bank for a loan?

It shows the bank what the money will be used for and gives forecasts as evidence that the business can repay it.