Business planning (OCR GCSE Business): Revision Notes
📚 Revision Notes
1.2 Business planning
Business plan – Outlines a company's goals and how they are going to achieve them.
Why is it important to have a business plan?
- More likely to get investors
- Reduces the risk of failure as decisions are based on research e.g. choosing the right prices
- Helps to identify which resources you may need e.g. how much staff, machinery etc
A business plan may include…
| Aims and objectives | · What you plan to achieve (e.g. how much revenue & profit). · SMART objectives (e.g. to make £100 revenue by the end of the month |
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| Marketing plan | · Who your target audience is likely to be · The 4Ps – which products you will sell, what prices you will set, what advertising & special offers you'll do, and where you'll sell. |
| Production plan | · How many employees you'll need. · How much you'll pay the employees. · Any training needed. |
| Human resources plan | · How you will make the product (or which supplier you will buy from). · How you will ensure quality is high. |
| Finance plan | · How you will raise the finance needed to set up the business (sources of finance). · Calculate the break-even point (number of products you need to sell to cover your costs). · Create a cash-flow forecast; estimating likely income and expenditure for the first year. |
A good business plan will cover these objectives…
| Identify the market For example, the gender, age and income of your target customers | Identifying the resources What equipment, workers or machinery you may need to operate the business | Identify the finance needed This is the finance you will need to start up or grow the business. Consider how this will be achieved e.g. by selling shares or getting a loan or overdraft | Achieve the business' aims and objectives For example making sales, a profit or achieving social objectives such as helping others. |
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Benefits and drawbacks
- Helps business to understand their finances, e.g., create a cash flow forecast
- Increase chances of getting external finance
- Time-consuming to create, wasting time could mean business misses out on opportunities or loses gap in the market
- If entrepreneur does not have experience making a plan, danger they may over-predict revenues or under-predict costs