1.45 Business Plans

A business plan is a document which the entrepreneur uses to set out how they will turn their idea into a successful business. It might be needed by lenders such as banks so that they can be more confident that they will get their money back plus interest.

A plan also helps the business owner think carefully about what they are doing.

A typical plan will include information on the following:

  • the actual business idea
  • aims and objectives
  • who the target market is
  • forecasted revenue
  • cash flow forecast
  • sources of finance
  • location decisions
  • marketing mix decisions

Business plans help the entrepreneur succeed in a number of ways:

  1. they give the business focus
  2. they give the business a sense of direction
  3. they help the business identify problems early on e.g. cashflow
  4. they help the business identify the resources it needs

A typical exam question on this might be:

“Explain one reason why an entrepreneur might produce a business plan” (3 marks)

Try answering this (remember to use linked connectives) and then check your answer against the mark scheme by clicking here.

 

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