Business Planning Practice Questions

Which one of the following would normally be included in a business plan?

A Contract of employment

B Cash flow forecast

C Health and safety policy

D Job description

Identify two reasons why the owner of a new business might produce a business plan.

The owner of a business compares the sales figures in her business plan with the sales the business actually achieves.

This is an example of using a business plan to:

A raise finance

B recruit employees

C reduce fixed costs

D track progress

Identify two problems a business might face when producing a business plan.

Which one of the following is a drawback of business planning?

A It co-ordinates the actions of the business

B It helps the business to raise finance

C It is based on predictions that may not be accurate

D It sets targets for employees to achieve

Explain one reason why a business should update its business plan after it has started trading.

State and explain two sections that should be included in a business plan.

Explain one reason why the bank may want to see Priya's business plan before agreeing to lend her the £45 000.

Explain how a business plan could help Priya to manage the change from running the coffee van to running the coffee shop.

You should use information in Item A in your answer.

Analyse two problems Priya may face in producing an effective business plan.

Which one of the following is an example of a fixed cost for a business?

A Packaging for each item sold
B Raw materials
C Rent for premises
D Wages paid for each item produced

Table 1 shows financial information about a small business for one month.

Table 1

Selling price per unit	£14
Variable cost per unit	£6
Fixed costs for the month	£4 400
Units sold in the month	950

Using Table 1, calculate the total revenue for the month.

Show your workings.

Using Table 1, calculate the total costs for the month.

Show your workings.

Which one of the following best describes fixed costs?

A Costs that rise and fall with the number of units produced
B Costs that do not change with output, such as rent and insurance
C The income a business earns from selling its goods
D The money a business has left after all costs have been deducted

Table 1 shows information about a small business that makes garden benches. In June the business made and sold 45 benches.

Table 1

Fixed costs for the month	£1 950
Variable cost for each bench	£62
Selling price for each bench	£130

Using Table 1, calculate the total costs for June.

Show your workings.

Using Table 1 and your answer to part (b), calculate the profit for June.

Show your workings.

Explain one reason why Rosa needs to estimate her monthly costs before starting Hussain Pottery.

Calculate the percentage of the cost of starting Hussain Pottery that Rosa plans to borrow from the bank.

Show your workings.

Analyse two benefits to Rosa of writing a business plan before starting Hussain Pottery.

Rosa is worried that she has underestimated her costs.

Recommend whether Rosa should leave her job to open Hussain Pottery.

Give reasons for your answer.