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Business Planning - Introduction

Last updated 22 Mar 2021

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The business plan sets out how the owners/managers of a business intend to realise its objectives. Without such a plan a business is likely to drift.

The business plan serves several purposes:it

(1) enables management to think through the business in a logical and structured way and to set out the stages in the achievement of the business objectives.

(2) enables management to plot progress against the plan (through the management accounts)

(3) ensures that both the resources needed to carry out the strategy and the time when they are required are identified.

(4) is a means for making all employees aware of the business's direction (assuming the key features of the business plan are communicated to employees)

(5) is an important document for for discussion with prospective investors and lenders of finance (e.g. banks and venture capitalists).

(6) links into the detailed, short-term, one-year budget.

The Link Between the Business Plan and the Budget

A budget can be defined as "a financial or quantitative statement", prepared for a specific accounting period (typically a year), containing the plans and policies to be pursued during that period.

The main purposes of a budget are:

(1) to monitor business unit and managerial performance (the latter possibly linking into bonus arrangements)

(2 )to forecast the out-turn of the period's trading (through the use of flexed budgets and based on variance analyses)

(3 )to assist with cost control.

Generally, a functional budget is prepared for each functional area within a business (e.g. call-centre, marketing, production, research and development, finance and administration). In addition, it is also normal to produce a "capital budget" detailing the capital investment required for the period, a "cash flow budget", a "stock budget" and a "master budget", which includes the budgeted profit and loss account and balance sheet.

Preparing a Business Plan

A business plan has to be particular to the organisation in question, its situation and time. However, a business plan is not just a document, to be produced and filed. Business planning is a continuous process. The business plan has to be a living document, constantly in use to monitor, control and guide the progress of a business. That means it should be under regular review and will need to be amended in line with changing circumstances.

Before preparing the plan management should: - review previous business plans (if any) and their outcome. This review will help highlight which areas of the business have proved difficult to forecast historically. For example, are sales difficult to estimate? If so why? - be very clear as to their objectives - a business plan must have a purpose - set out the key business assumptions on which their plans will be based (e.g. inflation, exchange rates, market growth, competitive pressures, etc.) - take a critical look at their business. The classical way is by means of the strengths-weaknesses-opportunities-threats (SWOT) analysis, which identifies the business's situation from four key angles. The strategies adopted by a business will be largely based on the outcome of this analysis.

Preparing the Budget

A typical business plan looks up to three years forward and it is normal for the first year of the plan to be set out in considerable detail. This one-year plan, or budget, will be prepared in such a way that progress can be regularly monitored (usually monthly) by checking the variance between the actual performance and the budget, which will be phased to take account of seasonal variations.

The budget will show financial figures (cash, profit/loss working capital, etc) and also non-financial items such as personnel numbers, output, order book, etc. Budgets can be produced for units, departments and products as well as for the total organisation. Budgets for the forthcoming period are usually produced before the end of the current period. While it is not usual for budgets to be changed during the period to which they relate (apart from the most extraordinary circumstances) it is common practice for revised forecasts to be produced during the year as circumstances change.

A further refinement is to flex the budgets, i.e. to show performance at different levels of business. This makes comparisons with actual outcomes more meaningful in cases where activity levels differ from those included in the budget.

What Providers of Finance Want from a Business Plan

Almost invariably bank managers and other providers of finance will want to see a business plan before agreeing to provide finance. Not to have a business plan will be regarded as a bad sign. They will be looking not only at the plan, but at the persons behind it. They will want details of the owner/managers of the business, their background and experience, other activities, etc. They will be looking for management commitment, with enthusiasm tempered by realism. The plan must be thought through and not be a skimpy piece of work. A few figures on a spreadsheet are not enough.

The plan must be used to run the business and there must be a means for checking progress against the plan. An information system must be in place to provide regular details of progress against plan. Bank managers are particularly wary of businesses that are slow in producing internal performance figures. Lenders will want to guard against risk. In particular they will be looking for two assurances:

(1) that the business has the means of making regular payment of interest on the amount loaned, and

(2) that if everything goes wrong the bank can still get its money back (i.e. by having a debenture over the business's assets). Forward-looking financial statements, particularly the cash flow forecast, are therefore of critical importance. The bank wants openness and no surprises. If something is going wrong it does not want this covered up, it wants to be informed - quickly.

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GCSE Business

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3.1.6 Business planning

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GCSE Business Studies - What is a Business Plan?

A quick powerpoint explaining what a business plan is, how it is used, and why it is important to a business.

• Created by: Rhys B-M
• Created on: 05-12-11 13:13
• Business Studies

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KS1 / KS2 Geography: Rivers

BBC Teach > Primary Resources > Geography KS1 / Geography KS2 > A collection of topics

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Video transcript video transcript.

Rivers are home to a whole host of different types of animal and plant life.

But where do rivers come from?

RIO – Up there?

Many rivers start high up in hills or mountains.

This is where its ‘source’ is found.

AVA – So what are we looking for anyway?

RIO – The source of the river.

ARJUN – Well we can’t see much around here!

RIO – Come on…

There are a few different types of river source. It can be a lake, a bog, rainfall or a spring.

AVA - I think I found it!

A spring is where water is released from under the ground but the same thing happens whatever the source.

Water from the source trickles downhill forming a small stream, which joins another stream to make a bigger stream.

This happens all the way down the hill until you get…

RIO, ARJUN & AVA: A river!

The flow of the water slows as a river twists and bends, meandering its way through the countryside.

But where does it go?

RIO, AVA & ARJUN – The sea?

Yes! Rivers lead to the sea or a lake, and the place where it enters the sea or lake is called the river mouth

Rivers that flow into the sea form an estuary where fresh water from the river mixes with the salty water from the sea.

It’s not just animals that choose to live near rivers. People love to live near rivers too.

RIO – Nice house!

AVA – Yeah, I'd like to live here.

ARJUN – Not me!

AVA – Why not?

ARJUN – Floods!

Yeah, floods can be a problem for people living near rivers.

Building river defences, or diverting the path of the river to a safe area, can help to minimise the risk.

ARJUN – Okay, well maybe it wouldn’t be so bad then.

Video summary

In this short film, we explore the journey of a river from its source to the sea, exploring the key features of each leg of the journey.

It explores the main aspects of each leg of the river journey, introducing pupils to vocabulary to describe the river journey and to the key features of rivers along the way.

Teacher Notes

This short film is a useful tool to show pupils how the river journey changes as it moves from source to mouth.

It can be used to describe what happens at each stage of the river journey and to look in detail at how the river changes over the course of that journey.

Pupils could discuss where they have seen examples of features shown in the film.

They could also discuss why they think the river changes as it moves from source to mouth.

Points for discussion: · What is a river? · What are the key parts of a river? · What is a meander? · How do humans benefit from rivers? · What are the potential negative things about living near a river?*

Suggested activities:

After watching this short film, pupils could develop a report to explore the key features of a river and how it changes from source to mouth.

They could use base maps of the United Kingdom and the world to plot major rivers and investigate how humans have used rivers to their benefit over time.

Teachers could plan fieldwork activities to investigate a local river and how it works. Pupils could collect data and plot their results to show how the river operates, e.g. what the speed and size of the river is, and then deduce how this affects wildlife in the locality.

Pupils could investigate how human activity has damaged rivers over time and also what is being done today to conserve rivers.

Pupils could discuss changes they could make to their lives to help conserve rivers.

Suitable for teaching geography at KS1 and KS2 in England and Wales, Early and 1st and 2nd level in Scotland and Foundation and KS1 in Northern Ireland.

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The United Kingdom. video The United Kingdom

This short film offers primary pupils a journey around the four countries that make up the United Kingdom: their capital cities, and a natural and man-made landmark from each.

The world. video The world

In this short film we travel around the world, learning about the continents and oceans that make up our planet.

The seasons. video The seasons

In this short animated film, we journey through the four seasons found in the United Kingdom: spring, summer, autumn and winter.

Earthquakes. video Earthquakes

A short animation for KS2 pupils on the causes of earthquakes and what can be done to lessen their impact.

The water cycle. video The water cycle

A short animation for KS2 pupils explaining the water cycle.

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Edexcel GCSE Business - Theme 1 - 1.4.4 Business plans

Subject: Business and finance

Age range: 14-16

Resource type: Lesson (complete)

Last updated

29 February 2024

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This lesson introduces learners to the contents and purpose of a business plan, we discuss the sections of a plan, we then go on to look at an infamous example of what it shouldn’t be like in Solomon’s plan presented to Claude Littner in the Apprentice. A 3 mark question with a model answer, a few short tasks before going onto creating a business plan in groups, a template has been provided. Students present back their plans to the class and the class are provided with a sheet to write WWW and EBI with their peers presentations.

A group task where they match parts of the business plan to the different areas of the business plan - answers included.

Colourful, concise and engaging slides!

Tes paid licence How can I reuse this?

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Edexcel GCSE Business - Theme 1 - 1.4 Making the business effective

This 6 lesson bundle covers: 1.4.1 The options for start-up and small businesses - 2 lessons 1.4.2 Business location 1.4.3 The marketing mix - 2 lessons 1.4.4 Business plans Filled with real life examples, case studies, questions and modelled answers to improve exam practice. All you need - open the powerpoint, run through it, and deliver quality lessons whilst saving precious time. Colourful, concise and engaging slides! - all files in zip folder. Thank you

Edexcel GCSE Business - Theme 1 (FULL bundle updated for 2021)

A complete bundle, updated for 2021 with more engaging and colourful slides to cater for remote learning needs. The highest quality, unrivalled lesson experiences from start to finish. This bundle is filled with real life examples, scenarios, individual and group activities, exam style questions with model answers so students can self or peer assess from looking at the board. Engage your learners and improve their exam skills at the same time, rather than just going through theory slide after slide. Thank you

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