A business plan is a plan of what the business is and what type of business it is. It is an overview of the business, accessing possible risks and opportunities.
Business planning is important because its the whole business, it determines whether it is successful or not, it helps organise the business. It also lets the bank to decide whether to invest or lend money to this business idea.
Keys aspects in a business plan:
- Background information of the desired business.
- business objectives.
- information about the business
- how the business will compete
- financial information
- an analysis of the market
- business idea (product idea/service)
- how will they promote/market their business.
Here is a quick video clip on the importance of business planning:
Public and Private sectors contains two different types of organisations.
The Public sector is owned by the government.
The Private sector is owned by an individual.
When a public sector company moves into the Private sector it is called 'Privatisation'
Examples of Public and Private sector companies:
- NHS (Public)
- London Transport (Public)
- Schools (Public)
- BBC (Public)
- Bank of England (Pubic)
- Metropolitian Police (Public)
- Private Schools (Private)
- HSBC (Private)
- Natwest (Private)
- McDonald's (Private)
- Holly House (Private)
- London Attractions (Private)
- Heathrow Airport (Private)
Stakeholder-are individuals and organisations that are interested in the success/failure of a business. They will be affected by and can affect the activities of a business.
Internal Stakeholders-are people within the business. eg. Employees
External Stakeholders-are people outside the business. eg. Government
Some examples of stakeholders:
- Government (external)
- Customers (external)
- Suppliers (external)
- Competition (external)
- Shareholders (external)
- Local community (external)
- Banks (external)
- Pressure groups (external)
- Employees (internal)
- Business owner (internal)
Start-Up costs are the things you are going to need to get the business giong i.e. furniture, IT, stock / materials etc. These are mainly one off payments that do not come again.
Running Costs are the day to day costs of running the business usually calculated in terms of monthly or annual costs. These costs will be for things like power, staffing, materials etc.
Fixed and Variable Costs
Fixed costs are ones that do not vary with sales. For example, one of the fixed costs of a high street shop is the rent paid for the property. The rent is still the same whether the shop sells one item or hundreds.
Variable costs are ones that vary with sales. For example, imagine that a shop buys in books for an average price of £5 each. It then sells the books for a higher price. For the shops the variable cost is £5 per unit.
Heres a quick video clip on Fixed and Variable costs:
Sales of product
x 100
Total Market Sales
Example:
12'500
x 100 = 5.3%
234'000
5.3%=Market Share.
The company with the most Market Share is called the Market Leader.
Market Research is the process of gathering, analysing and presenting data relevant to marketing. It is important to a business when starting up because it tells them what type of product or service they should make. Market Research is measured by the volume of sales, (number of items sold) or the value of sales.
Primary Research- primary research is also known as "Field" research. The data is new and has not been collected before. It can be done by someone in the business or pay another business to carry it out for them. Advantages of Field research is that you research what you want, it is also new. Disadvantages of Field research is that it is very time consuming, and it costs a great deal of money.
Secondary Research- Secondary research is also known as "Desk" research. The data is collected from sources such as the internet. The data has been gathered before. Advantages of Desk research is that you don't have to find it yourself because it has already been collected. Disadvantages of Desk research is that it can be outdated and it is not always relevant to what your looking for, also it has to many sources and they could be incorrect.
Reasons for business failure:
- Lack of money
- Debt (owing money) ->Unlimited liability
- No profit
- Weak idea
- Gap already filled in the market
- Competition
- Market has changed
- Underestimated the difficulty
- Recession
- Product does not sell
- Lack of public awareness (Advertising)
- Product to similar to another product (competitor)
- Location
Heres a small clip:
How to measure the size of a business?
- Number of employees
- Number of stores (outlets)
- Amount of profit made
- How big the stores are
- Number of different products they sell
- Publicity
- Amount of advertising
- Number of shareholders
- Local, national, international (multinational)?
- Turnover
