Define business plan .

A business plan is a document that sets out the key aspects of a business and how its owners intend it to develop .

How can a business plan help an owner raise finance ?

Lenders such as banks and other investors can use the plan to make an informed decision about whether the business is credible and worth the financial risk .

How does producing a business plan reduce the risk of starting a business?

It forces the owner to think about every aspect of the business and organise activities before they start , which increases the chance of success.

True or False? A business plan is only useful when a business first starts up.

False. A business plan should be a regularly updated working document . As the business grows, its plans are likely to change as it faces new threats and opportunities .

The _______________ section of a business plan gives a concise overview of the business idea, its target market and financial projections.

The executive summary section of a business plan gives a concise overview of the business idea, its target market and financial projections.

What does the market analysis section of a business plan include?

It includes an analysis of the target market , such as its size and growth potential, the target customers and their needs, and a competitor analysis .

True or False? A business plan is only as good as the research behind it.

True. The usefulness of a plan depends on the quality of the research and the people who produced it. New owners may lack the experience to write an effective plan.

Why does uncertainty limit the usefulness of a business plan?

Uncertainty about the future makes it hard to predict sales, costs and cash flows accurately.

How can a business plan help an owner measure success ?

The owner can compare actual outcomes to the plan and make changes if necessary.

Fixed costs are costs that do not vary with output , so a business must pay them even if it does not make or sell anything.

How are total costs calculated?

Total costs are calculated using this formula: Total costs = Fixed costs + Total variable costs

Revenue is the money earned from the sale of goods and services . Revenue = Selling price × Number of items sold

How is net profit calculated?

Net profit is calculated using this formula: Net profit = Gross profit − Fixed costs

When does a business make a loss ?

A business makes a loss when its costs are greater than its revenue . A negative result from the net profit formula shows a loss.

GCSEBusinessAQAFlashcardsBusiness in the Real WorldBusiness Planning

Business Planning (AQA GCSE Business): Flashcards

Exam code: 8132

1/14

0Still learning

Know0

FrontThe Purpose of Business Planning
Define business plan.

Was this flashcard helpful?

Cards in this collection (14)

Define business plan.
A business plan is a document that sets out the key aspects of a business and how its owners intend it to develop.
How can a business plan help an owner raise finance?
Lenders such as banks and other investors can use the plan to make an informed decision about whether the business is credible and worth the financial risk.
How does producing a business plan reduce the risk of starting a business?
It forces the owner to think about every aspect of the business and organise activities before they start, which increases the chance of success.
True or False?
A business plan is only useful when a business first starts up.
False.
A business plan should be a regularly updated working document. As the business grows, its plans are likely to change as it faces new threats and opportunities.
The _______________ section of a business plan gives a concise overview of the business idea, its target market and financial projections.
The executive summary section of a business plan gives a concise overview of the business idea, its target market and financial projections.
What does the market analysis section of a business plan include?
It includes an analysis of the target market, such as its size and growth potential, the target customers and their needs, and a competitor analysis.
True or False?
A business plan is only as good as the research behind it.
True.
The usefulness of a plan depends on the quality of the research and the people who produced it. New owners may lack the experience to write an effective plan.
Why does uncertainty limit the usefulness of a business plan?
Uncertainty about the future makes it hard to predict sales, costs and cash flows accurately.
How can a business plan help an owner measure success?
The owner can compare actual outcomes to the plan and make changes if necessary.
Define fixed costs.
Fixed costs are costs that do not vary with output, so a business must pay them even if it does not make or sell anything.
How are total costs calculated?
Total costs are calculated using this formula:
Total costs = Fixed costs + Total variable costs
Define revenue.
Revenue is the money earned from the sale of goods and services.
Revenue = Selling price × Number of items sold
How is net profit calculated?
Net profit is calculated using this formula:
Net profit = Gross profit − Fixed costs
When does a business make a loss?
A business makes a loss when its costs are greater than its revenue. A negative result from the net profit formula shows a loss.

Sign up to unlock flashcards

By signing up you agree to our Terms and Privacy Policy

Previous:Business LocationNext:Expanding a Business