Business planning

Understand business plans.

Purposes of business planning: to obtain relevant and up-to-date data and information; to know how to deploy resources; to reach appropriate decisions; to inform strategy

Components of a business plan: executive summary, company description, business objectives, products and services, market analysis, strategy and implementation, management and staffing, financial plan and projections

Characteristics of an effective business plan: clear objectives; comprehensive; easily understood; based on reliable and valid analysis; flexibility; timebound; has a focus on resource requirements and availability; encourages holistic organisational acceptance.

Assessment Criteria

• 1.1

  Explain the purpose of a business plan.

• 1.2

  Explain the different components of a business plan.

• 1.3

  Summarise the characteristics of effective business planning.

Understand how businesses use data to help them set and meet business objectives.

Data: qualitative and quantitative - e.g. sales, performance, market, customer, financial, transactions/interactions, risk

Sources: external to organisation – e.g. a list from a list broker, a proprietary database, or open data sources such as that gathered and published by government or local authorities; internal (collected within or by the company) – sales, finance, marketing and HR departments:

Decision-making: strategic, operational, tactical.

Assessment Criteria

• 2.1

  Analyse how businesses identify, manage and combine data from different sources.

• 2.2

  Analyse how businesses use data to support decision-making in relation to setting and meeting business objectives.

Understand business strategies and tactics.

Strategies: e.g. product and service, pricing, marketing, efficiency, financial

Tactics: e.g. marketing - attraction, conversion, retention.

Assessment Criteria

• 3.1

  Explain the purpose of business strategies and tactics and their relationship to business objectives.

• 3.2

  Analyse strategies and tactics used in a specific business.

Understand the role of financial forecasting within business-planning.

Importance of financial forecasting: key management tool that enables business to create a spending plan; to establish budgets; plan for and source investment/give confidence to investors; to inform decision-making, goal and target-setting

Components: projected income statement; cash budget; projected sources and uses of funds statement; projected balance sheet

Methods: qualitative, e.g. market research/consumer survey, opinions of experienced personnel, Delphi technique; quantitative, e.g. proforma financial statements, time series, cause and effect

Areas of financial risk: market, credit, liquidity and operational risks.

Assessment Criteria

• 4.1

  Analyse the importance of financial forecasting to business planning.

• 4.2

  Explain the key components of a financial forecast.

• 4.3

  Explain methods businesses use to estimate future revenue, income and profit.

• 4.4

  Analyse areas of financial risk to a business.