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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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BBC Bitesize lessons: Everything you need to know

The BBC has this week launched its online and TV-based teaching service under the BBC Bitesize brand.

The content available may prove useful for teachers to complement existing lesson plans or study areas, or as guides for parents to engage children in learning on topics covering all areas of the curriculum. 

The below provides a guide to the service and what is involved.

BBC Bitesize: When is it on?

The BBC Bitesize Daily lessons will run on the BBC Red Button TV service from 9am to 11am every weekday and then be available to watch on-demand via BBC iPlayer .

The Bitesize website also contains further content and activity suggestions to build on what is covered in each lesson.

Good morning! #BBCBitesizeDaily continues today and every weekday at 9.00am on Red Button and on @BBCiPlayer ? Enjoy the show ? https://t.co/zZOO8liYWB Then head to the Daily Lessons for all ages ? https://t.co/eemHEmxpM2 #HomeSchooling #HomeSchoolingUK pic.twitter.com/OELo5pHo9q - BBC Bitesize (@bbcbitesize) April 21, 2020

How long are the lessons?

Each lesson is 20 minutes long, so there will be six lessons per day.

What content is covered?

The content covers core subjects of maths, science and English but also gives due prominence to other key curriculum areas such as history, geography, music and art.

Lessons are divided into learning groups, as in schools, across ages 5 to 15, covering Year 1 (P2 in Scotland) to Year 11 (S4). Each section has a dedicated webpage that outlines the content that is coming up in the week ahead. For example, in week one: 

• Year 1 lessons include Using Descriptive Words, How to be a Good Friend and Representing Numbers Within 50.
• Year 7 lessons list include Weather and Climate, Writing a Short Speech, and How to Write Algebraic Notation
• Year 10 lessons include learning about Weimar Germany, chemical bonding and analysing language.

Lessons will change each week, and what is coming up for the week can be seen each Monday.

The BBC has also produced additional content for Scotland, Northern Ireland and Wales, including content for Welsh speakers.

How was the content put together?

More than 200 teachers have been involved in helping to plan and deliver the lessons based on the teaching curricula used to deliver core subjects.

A BBC spokesperson said: “Teachers are at the core of every aspect of Bitesize Daily. They are what is powering the initiative and have been with us from day one.

“Every aspect of our curriculum online and on broadcast is planned by a teacher, every book we select is okayed by a teacher, every online guide we produce is written or reviewed by a teacher, and every script is checked by teachers to ensure it is curriculum-relevant and couched in a way that kids will understand.”

Who is delivering the lessons?

Lessons are hosted by established TV presenters, but the BBC has also called on its long list of contacts to get input from a wide array of people willing to act as “teachers” for a mix of content. These include:

• Professor Brian Cox covering topics including the solar system, force and gravity.
• Manchester City striker Sergio Aguero teaching Spanish.
• Former MP Ed Balls, who will deliver a key stage 3 maths class.
• EastEnders actor Danny Dyer, who will discuss Henry VIII for key stage 1 pupils.
• Sir David Attenborough, who will engage pupils in lessons about oceans, mapping the world and why animals look the way they do.
• And Jodie Whittaker - aka Dr Who - who will also be hosting a lesson, on an as-yet-unspecified topic.

However, teachers who have done the bulk of the work in terms of putting the content together will also play a key role, with 50 teachers likely to take part in the weeks ahead in the studio to discuss core learning topics with the presenters, pupils and parents. 

There is also a plan for 90 “Teacher Talks” that will begin from Monday 27 April. These will be short clips explaining key concepts to learn for each of the age groups, from adverbs to algebra. 

There are plans for some teacher-led Instagram Live sessions for older learners, providing learning tips, Q&As and a classroom-style experience.

How long will it run for?

The BBC says it has content to run for 14 weeks, effectively covering the rest of the school year until the summer.  

Is everything on screen?

No, the BBC is also launching two podcasts that will be updated every day. These are aimed at parents of primary and secondary pupils.

Each episode will last around 10 minutes long and will be a guide to help families find content on the BBC that supports their children’s education and wellbeing.

The podcasts - BBC Bitesize Primary Planner and BBC Bitesize Secondary Planner - will be available on the BBC Sounds app and through other major streaming platforms.

Is there anything else teachers should be aware of?

Yes. BBC Four is hosting numerous shows linked to GCSE and A-level curricula.

For example, for students studying science there are programmes entitled  Pain, Pus and Poison:   Chemistry: A Volatile History;   Blood & Guts: A History Of Surgery; and Shock and Awe: The Story of Electricity.

Historical shows include Mary Beard’s Meet The Romans , Michael Wood’s Story Of England , Andrew Marr’s History Of Modern Brita in, and Tunes For Tyrants .

Furthermore, the channel will also show screen adaptations of dramas on the current exam syllabus including King Lear , starring Anthony Hopkins and Emma Thompson;  Tess of the d’Urbervilles, starring Gemma Arterton;  Great Expectations starring Gillian Anderson and Ray Winstone; and JB Priestley’s An Inspector Calls .

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