BUSINESS PLANS

What is a business plan?

A formal written document that outlines a business’s objectives, strategies, market, and financial forecasts.

What is the main purpose of a business plan?

To plan the future of a business and assess whether the idea is viable.

Why do entrepreneurs write business plans?

To reduce risk, set clear objectives, and attract finance.

Why do banks and investors require business plans?

To assess risk, profitability, and the likelihood of repayment or return.

How does a business plan help decision-making?

It provides structured analysis of costs, revenue, and strategy.

What is included in an executive summary?

A brief overview of the business idea, aims, and key financial information.

Why is the executive summary important?

It is often the first section read and determines whether investors read further.

What is included in the business description?

The business idea, objectives, legal structure, and ownership.

What is market analysis?

Research into customers, competitors, and market size.

Why is market analysis important?

It shows demand exists and that the business understands its market.

What is included in the marketing plan?

Target market, pricing, promotion, and distribution methods.

What is included in the operations plan?

Production methods, location, equipment, and suppliers.

What is included in the human resources plan?

Staffing needs, roles, skills, and wage costs.

What is included in the financial plan?

Start-up costs, cash flow forecast, profit forecast, and break-even analysis.

Why are financial forecasts important?

They show whether the business is financially viable.

What is a cash flow forecast?

A prediction of cash inflows and outflows over time.

What is a break-even analysis?

A calculation showing when total revenue equals total costs.

Why is a business plan important for start-ups?

It reduces uncertainty and increases chances of survival.

How does a business plan help secure finance?

It reassures lenders and investors about risk and potential returns.

How does a business plan help manage risk?

It identifies potential problems and allows contingency planning.

Why might a business plan be less important for small businesses?

Informal planning may be sufficient for simple or low-risk ventures.

What are the limitations of business plans?

They can be time-consuming, costly, and based on inaccurate forecasts.

Why can financial forecasts be unreliable?

They rely on assumptions and estimates about future performance.

Why should business plans be flexible?

Market conditions and customer demand can change.

Overall evaluation of a business plan’s importance?

Very important for external finance and strategic planning, but should not replace adaptability.

What are primary sources of information?

First-hand data collected by the entrepreneur.

Give examples of primary research.

• Surveys - Questionnaires - Interviews - Focus groups

What are secondary sources of information?

Data collected by others.

Give examples of secondary research.

• Market reports - Government statistics - Trade journals

How can the government support entrepreneurs?

Advice, grants, training, and funding schemes.

Name UK government support organisations for entrepreneurs.

GOV.UK, local councils, growth hubs.

How can banks help entrepreneurs?

Loans, financial advice, and start-up accounts.

How can accountants support entrepreneurs?

Financial planning, budgeting, and tax advice.

How can business mentors help entrepreneurs?

By sharing experience, guidance, and advice.

How can the internet support entrepreneurs?

Market research, competitor analysis, and guidance websites.

Why might investors trust a business with a detailed business plan more?

It shows preparation, understanding of risks, and financial control.

Why might entrepreneurs rely too heavily on a business plan?

Overconfidence in forecasts may reduce responsiveness to change.

Why is external guidance particularly useful for new entrepreneurs?

They often lack experience and business knowledge.