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O LevelBusinessCambridge (CIE)Business StudiesRevision Notes1. Understanding Business Activity1.3 Enterprise & Business GrowthBusiness Plans & Government Support

Business Plans & Government Support (Cambridge (CIE) O Level Business Studies)

Revision Note

Danielle Maguire

Written by: Danielle Maguire

Reviewed by: Steve Vorster

Contents of a Business Plan

  • A business plan is a document produced by the owner at start-up, which provides forecasts of items such as sales, costs and cash flow

The business plan include elements such as financial forecasts, sources of finance, the marketing mix and aims and objectives
The main elements included in a business plan, although some differ slightly depending on the nature of the business

  • 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

Elements of a Business Plan

Element

Explanation

The business idea

  • A clear explanation of the goods or services provided by the business which helps to attract investors

    • This may also include the history of the business idea

Business aims & objectives

  • What the business wants to achieve in the medium and long term

    • These aims may be both financial and non-financial depending on the business

Target market

  • This section explains who the business is aimed at e.g. age, gender, income and will form part of the firms marketing strategy

Forecast revenue

  • This section projects how much income the business plans to make through sales

    • Sales Revenue = Price x Quantity Sold

    • This can help plan for break even levels of output

Forecast costs

  • Firms need to forecast their fixed, variable and total costs in order to manage their spending

    • Some new businesses may have high start up costs, e.g. new stock

Profit forecasts

  • Investors will be interested to see the firms profit forecasts to see whether the business will have the ability to pay back loaned funds e.g. bank

Marketing mix

  • An explanation of the firms marketing strategy for the product/service which will outline how the firm plans to attract customers

    • This includes Product, Place, Price and Promotion

Cash-flow forecast

  • This explains how the firm plans to manage its inflows and outflows of cash on a monthly basis in order to avoid liquidity problems

Sources of finance

  • This section shows the sources of finance used to fund the new business e.g. loans, owners funds or venture capital

Business location

  • The location of the business is proposed, including a map along with an explanation of potential advantages such as transport links or proximity to customers

How Business Plans help Entrepreneurs

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

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

  • A well-written business plan can help a business 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

  • A clear action plan provides direction for the business and 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

Government Support of Business Start-ups

  • Governments often provide support to entrepreneurs

    • This encourages them to set up new businesses or take steps to grow their business

  • Reasons for providing government support include:

    • Increase the country's level of output to achieve economic growth

    • Reduce the level of unemployment as new or growing businesses create jobs

    • Improve choice for consumers by providing competition for existing businesses

  • Encourage entrepreneurs to set up social enterprises which may support disadvantaged groups or improve communities
     

    How Governments Support Business Start-ups

Support

Explanation

Training and support sessions

  • Advice regarding finance, operations and marketing can often be accessed through local authorities

  • Support sessions offered by business mentors allow entrepreneurs to ask specific questions related to their business

Enterprise zones

  • Enterprise zones are geographic areas which provide tax breaks and Government support to help businesses grow

    • Enterprise Zones can provide access to low-cost premises and incentives such as reduced business rates

    • They are often linked with universities that share expertise and facilities, especially in less economically-developed regions

Finance

  • Some governments provide low-interest start-up loans and grants for new or growing businesses that create jobs or invest in training workers

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    Author
    Reviewer
    Danielle Maguire

    Author: Danielle Maguire

    Expertise: Business Content Creator

    Danielle is an experienced Business and Economics teacher who has taught GCSE, A-Level, BTEC and IB for 15 years. Danielle's career has taken her from across various parts of the UK including Liverpool and Yorkshire, along with teaching at a renowned international school in Dubai for 3 years. Danielle loves to engage students with real life examples and creative resources which allow students to put topics in a context they understand.

    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.