Business Planning - Internal Factors, Locations & Finance

Internal Factors Affecting Business Planning

  • Resource Needs: Natural, Labour, and Capital.

Natural Resources

  • Items from the natural environment (land, water, raw materials).
  • Businesses should:
    • Use resources wisely.
    • Minimize negative environmental impact.
    • Consider sustainability and accessibility.

Labour Resources

  • People providing skills and knowledge.
  • Businesses should:
    • Treat workers with respect.
    • Address worker happiness and training.
    • Fulfill legal responsibilities.

Capital Resources

  • Tools and machinery to produce goods/services.
  • Businesses should:
    • Plan for repair and maintenance.
    • Ensure skilled workers operate machinery.

Business Locations

Factors to Consider

  • Location links customers, suppliers, and competition.
  • Critical initial decision; difficult to change.

Factors Affecting Location Choice

  • Visibility.
  • Cost.
  • Proximity to customers/suppliers/competitors.
  • Complementary businesses: Businesses selling different products to the same consumer.

Sources of Business Finance

Equity Finance (Not Debt)

  • Self Funding: Personal savings.
  • Family/Friends: Informal loans.
  • Private Investors/Business Angels: Funds for equity.
  • Venture Capitalists: Large investments in startups.
  • Stock Market (IPO): Public offering of shares.
  • Crowdfunding: Online funding platform.
  • Bootstrapping: Financing operations without loans or investors.
    • Keeping overheads low, operating from a garage or spare room
    • Taking on multiple roles (multiskilling)
    • Leasing equipment
    • Bartering goods and services with other goods and services

Debt Finance (External)

  • Financial Institutions: Banks, credit unions offering loans.
  • Retailers: Finance for goods purchases.
  • Suppliers: Trade credit for delayed payment.