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:
- they give the business focus
- they give the business a sense of direction
- they help the business identify problems early on e.g. cashflow
- 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.