Business Plans Flashcards

All 8 cards in this deck

What is a business plan?

A document setting out the business idea and how it will be run, including aims, target market, finances, location and marketing mix.

Name four things a business plan identifies.

Any four of: the business idea; aims and objectives; target market (market research); forecast revenue, cost and profit; cash-flow forecast; sources of finance; location; marketing mix.

Which financial forecasts are included in a business plan?

Forecast revenue, cost and profit, and a cash-flow forecast.

How does including a cash-flow forecast in a business plan help minimise risk?

It identifies potential cash problems in advance, so the business can plan for them.

How does a business plan help a business obtain finance?

A bank can review the figures and judge whether the business will be able to repay a loan.

Give one benefit to an entrepreneur of producing a business plan, other than obtaining finance.

Any one of: it allows them to think through each step before starting; it provides information for external parties such as suppliers (e.g. to get trade credit).

True or false? A business plan guarantees that a start-up will succeed.

False. It reduces risk by making the entrepreneur plan ahead, but it is only a forecast and may be wrong.

True or false? A business plan is only useful for people outside the business, such as banks.

False. It is also used internally to set aims and objectives and to plan each step of the business.