How does planning reduce risk for a new business?

A plan forces the owner to research the market and forecast costs and sales. Problems can then be spotted and solved before money is lost.

What is a business plan?

A business plan is a document that sets out what a business aims to do and how it will do it.

Name four sections usually found in a business plan.

A business plan usually includes the business idea, market research, a marketing plan and financial forecasts.

How does a business plan help an owner identify the market?

A business plan sets out the target market and the competition, based on market research. The owner then knows who the customers are and what they want.

Why does a bank usually ask to see a business plan before lending?

A business plan shows the bank how the loan will be used and how it will be repaid. The bank can judge the risk of lending from the forecasts.

OCR GCSE Business J204

Business Activity

Topic overview Enterprise and entrepreneurship Business planning and the business plan Sole traders, partnerships and limited companies Business aims and objectives Internal and external stakeholders Organic and external growth How business functions depend on each other

Marketing

Topic overview The purpose of marketing Primary and secondary market research Market segmentation Product design and the product life cycle Pricing methods Point of sale promotion and advertising Place and the marketing mix

People

Topic overview The role of human resources Organisational structures and ways of working Communication in business Recruitment and selection Employee motivation and retention Training and staff development Employment law

Operations

Topic overview Production processes Quality of goods and services The sales process and customer service Consumer law Business location Procurement and choosing suppliers Logistics and supply chains

Finance

Topic overview The role of the finance function Sources of finance Revenue, costs, profit and loss Break-even Cash, liquidity and profit Cash flow forecasts

Influences on Business

Topic overview Ethical and environmental considerations The economic climate Globalisation and multinational companies International branding and competition

Business Activity

Business planning and the business plan

3 things to know
Component 01

Overview

Why businesses plan, what a business plan contains, how it identifies the market, resources and finance, why banks and investors ask for one, and its limitations.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

How does a business plan help a business reach its objectives, and what finance does it set out?

Evaluation

Why is a business plan useful to a new café, and what are its limitations?

Key term

Why do businesses plan their activity?

Questions from this subtopic

Each one with the model answer underneath.

1
Why do businesses plan their activity?
Model answer
A plan makes an owner think ahead about costs, customers and competitors before committing money. Careful planning reduces risk and makes success more likely.
2
How does planning reduce risk for a new business?
Model answer
A plan forces the owner to research the market and forecast costs and sales. Problems can then be spotted and solved before money is lost.
3
What is a business plan?
Model answer
A business plan is a document that sets out what a business aims to do and how it will do it.
4
Name four sections usually found in a business plan.
Model answer
A business plan usually includes the business idea, market research, a marketing plan and financial forecasts.
5
How does a business plan help an owner identify the market?
Model answer
A business plan sets out the target market and the competition, based on market research. The owner then knows who the customers are and what they want.
6
Why does a bank usually ask to see a business plan before lending?
Model answer
A business plan shows the bank how the loan will be used and how it will be repaid. The bank can judge the risk of lending from the forecasts.

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Business Activity

Marketing

People

Operations

Cram a whole paper in one sitting

Sort every topic into what you know and what you do not, then drill only the weak ones.

Customers may receive quality.

poorerbetterhigher

Blank Blitz makes facts automatic

Rapid timed gap-fills on the terms and numbers you need to recall without thinking.

AOwners may gain from higher profit.

BEmployees may lose jobs or face lower pay.

CCustomers may receive poorer quality.

Build It gets the exam shape right

Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Aim means a broad long-term goal of a business.

TrueFalse

Test It catches misconceptions

Spot the fault in a statement. The traps are the mistakes students actually make.

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