Entrepreneurship – Business Plan Fundamentals

Question-and-answer flashcards summarising key concepts, stakeholders, sections, characteristics, format, and guidelines for creating a business plan.

What is a business plan?

A written document (about 25–40 pages) that describes in detail what a business intends to do and how it will do it, serving as the company’s operational and financial blueprint.

Give two other names commonly used for a business plan.

Venture plan and project paper (also accepted: entrepreneur’s plan, working paper, prospectus).

Typically, how long is a formal business plan?

Between 25 and 40 pages.

What key assurance must a business plan give its readers?

That the business can generate revenue and earn a satisfactory profit, making it an attractive investment opportunity.

Name four categories of individuals who need a business plan.

Entrepreneurs, shareholders, bankers/creditors/financial institutions, and investors (others include management/employees, clients/customers, suppliers).

Why do entrepreneurs themselves need a business plan?

To gauge the time, effort, skills, and support required, analyse SWOT, and benchmark success against competitors.

How do shareholders use a business plan?

To understand how the business is conducted, evaluate changes in strategy, and critically review or approve the plan.

What information do bankers or creditors look for in a business plan?

Accurate data on the venture plus key financial points, especially a cash-flow statement, to judge loan viability.

What must a business plan show to potential investors?

Reasons to invest, how capital will be used, and enough detail to give them confidence and peace of mind.

Why is a business plan important for management and employees?

It aligns the team on common goals, clarifies strategies and objectives, and allows forecasting of future changes.

How can a business plan influence clients or customers?

By demonstrating the firm’s capability, product quality, safety, and use of authorised technology, encouraging purchase decisions.

What reassurance do suppliers look for in a business plan?

Proof of the venture’s viability and the company’s ability to pay credit terms, fostering long-term partnerships.

List the five main sections of a business plan.

Business Concept, Administration/Management Plan, Operational/Production Plan, Marketing Plan, and Financial Plan.

What does the Business Concept section focus on?

Industry overview, offered products/services, business structure, objectives, staff roles, and administrative budget.

State two items covered in the Administration/Management Plan.

Organisational chart and manpower planning (other examples: mission & vision, remuneration plan, office equipment list, administrative budget).

What key content appears in the Operational/Production Plan?

Process flow, materials, machinery, manpower, layout, production schedule, operational cost, and budget.

Which section of a business plan estimates market size and market share?

The Marketing Plan.

Name three financial statements included in the Financial Plan.

Income statement, cash-flow statement, and balance sheet (plus financial ratios such as break-even).

Give three characteristics of a good business plan using SMART-like criteria.

Specific/simple, measurable, and attainable/achievable (also realistic/relevant and time-bound).

Why should goals in a business plan be time-bound?

To keep the entrepreneur focused on meeting deadlines instead of getting lost in day-to-day issues.

List the first four items that appear before the Main Body in a standard business plan format.

Cover Letter, Cover Page, Executive Summary, and Table of Contents.

Provide two pieces of information normally found in the Introduction section.

Name of the company and nature of the business (others: industry profile, location, date of commencement, reasons for choosing the venture).

State any three of the six main objectives for preparing a business plan.

To evaluate the venture objectively, to obtain financing, and to provide management guidance (other objectives: convince investors, allocate resources, allow self-assessment).

What basic details are included in the Business/Company Background section?

Company name, address, phone number, form of ownership, and main business activities.

List three factors discussed under Location of the Business.

Proximity to raw materials, availability of manpower, and transportation facilities (other factors: premise price, distance to customers, basic amenities).

What is the purpose of an organisational chart in the Management Plan?

It shows lines of authority and responsibility, clarifying relationships between departments.

Give two elements analysed when identifying a target market.

Geographic and demographic segmentation (also psychographic factors).

What are the 4Ps covered in the marketing strategy subsection?

Product, Price, Place, and Promotion.

Name three pricing strategies mentioned in the notes.

Cost-based pricing, value-based pricing, and competition-based pricing (also pricing based on external factors).

What does a Process Flow Chart illustrate within the Operational Plan?

Key steps in the operational process, including operations, transportation, inspection, delay, and storage.

Which three pro-forma financial statements must be prepared in a Financial Plan?

Cash-flow projection, income statement, and balance sheet.

Give two examples of documents commonly placed in a Business Plan’s appendices.

Certificates and licences/permits (others: resumes, tender offer letters, brochures, advertisements).

State three guidelines for preparing an effective business plan.

Keep it simple, avoid jargon, and be realistic and objective (also be flexible; base info on prior studies; reveal key people; know strengths and weaknesses, competition, and what’s needed to avoid failure).