Business Plans (Edexcel GCSE Business)

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Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Using a Business Plan to Obtain Finance

  • A business plan is a document produced by the owner at start-up, which provides forecasts of items such as:

    • The business idea

    • The business aims and objectives

    • The target market

    • The forecast revenues, costs and profits

    • The cash-flow forecast

    • The sources of finance

    • The business location

    • The planned marketing mix

  • The main aim of producing a business plan is to reduce the risk associated with starting a new business and help the owners to raise finance

    • Producing a business plan forces the owner to think about every aspect of the business before they start which should reduce the risk of failure  

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Elements of a business plan

  • Having carried out research to support the plan, the business will be well-informed about the potential problems and chance of success

    • The most appropriate source of finance can be selected, based on this information 

  • A well-written business plan can help a business to obtain finance

    • Lenders (e.g. banks) and other investors will be able to explore the plan and make an informed decision about whether the business is credible and worth the financial risk

    • Investors (e.g. venture capitalists) will use the business plan to explore whether there is an opportunity to increase the value of their investment and make a worthwhile profit

    • The business, having carried out research to support the plan, will be well-informed about the potential problems and chance of success and can select the most appropriate source of finance based on this information

  • A clear action plan provides direction for the business

    • It helps lenders and investors have confidence in the future success of the business 

  • Most high street banks can provide a detailed template for business owners to complete when applying for finance.

Examiner Tip

A business plan cannot guarantee success - though it is very unlikely that investors or financial institutions such as banks would consider risking their money on a business without one!

Managers and business owners should keep the business plans up to date, treating it like a Curriculum Vitae (CV) for the business. It can help focus business activities and identify resources the business needs as well as providing justification to potential investors.

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Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

Jenna Quinn

Author: Jenna Quinn

Expertise: Head of New Subjects

Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.