A level Business Revision - Business Plans
Summary
TLDRThis video discusses the importance of business planning for entrepreneurs. It covers key sections of a business plan, including business concept, objectives, financial details, market analysis, and resource requirements. The video highlights the benefits of planning, such as identifying potential issues and securing investment, but also acknowledges the limitations like opportunity cost and the challenge of forecasting for inexperienced entrepreneurs.
Takeaways
- 📝 A business plan is a document created at the start of a new business venture outlining the business idea and strategy.
- 🎯 It includes objectives for the first 12-36 months, such as survival, market share, growth, and profit levels.
- 💼 The financial section details the funding needed and potential sources of finance for the business.
- 📈 Market analysis and competitor breakdown are common, highlighting the business's competitive landscape.
- 📊 Forecasting is crucial, including profit, costs, and cash flow predictions for the initial months of operation.
- 🛠️ The plan also covers required resources, whether they will be owned, leased, or rented.
- 🤔 Business plans help entrepreneurs think through their business idea and anticipate potential challenges.
- 💡 They serve as a strategic tool to preemptively address issues that may arise in the business operation.
- 💸 A well-crafted business plan is essential for securing investment and loans, as it provides a clear framework for use of funds.
- ⏱️ There's an opportunity cost to business planning as it can delay the start of the business and earning revenue.
- 🌐 Business plans may be limited by the unpredictability of external factors such as economic changes and competitor responses.
- 📉 Inexperienced entrepreneurs may struggle to make accurate forecasts, which can reduce the plan's usefulness.
Q & A
What is the primary purpose of a business plan?
-A business plan is a document created by entrepreneurs at the beginning of a new business venture. It outlines the business idea, objectives, financial requirements, market analysis, forecasts, and resources needed to start and run the business.
What does the business concept section typically include?
-The business concept section provides an overview of the new venture, including what it will sell, what it will offer, and who it will target. It essentially serves as an elevator pitch for the business idea.
Why are objectives important in a business plan?
-Objectives in a business plan are important as they set out the goals for the first 12-24 months, or potentially 36 months, of the organization. They may relate to survival, market share, growth, or profit levels.
What financial details might be included in a business plan?
-Financial details in a business plan might include the funds needed to start the business, where this finance can be obtained from, and a cash flow forecast that outlines the business's liquidity during its initial months.
Why is market analysis a common section in a business plan?
-Market analysis is included to understand the markets the business will compete in, which may include a breakdown of different market segments served by the business.
What is the significance of the forecasting section in a business plan?
-The forecasting section is crucial as it includes predictions about the business's profits, costs, and cash flow, which are essential for planning and securing investment or loans.
Why are resources important in a business plan?
-The resources section outlines all the physical, human, and financial resources required for the business, and whether they will be secured permanently or leased or rented.
How does a business plan help entrepreneurs?
-A business plan helps entrepreneurs by forcing them to think carefully about their business idea, prioritize tasks, and consider potential difficulties and strategies to overcome them.
What are the benefits of a business plan when seeking investment or loans?
-A business plan is crucial for securing investment or loans as it provides a clear framework of how funds will be used, how they will be paid back, and why they are needed.
What are the limitations of business planning?
-Limitations include the opportunity cost of time spent planning versus earning, the uncertainty of forecasting external events, and the lack of experience entrepreneurs might have in accurately predicting market share, sales, costs, and breakeven levels.
Why might first-time entrepreneurs bypass the business planning process?
-First-time entrepreneurs might bypass the business planning process to quickly start earning revenue, as they may have left a job to pursue the business venture and want to minimize the delay in starting their business.
Outlines
📈 Introduction to Business Planning
This paragraph introduces the concept of business planning and its significance for entrepreneurs. It discusses the business plan as a foundational document that outlines the business idea, objectives, financial requirements, market analysis, and resource allocation. The paragraph emphasizes the importance of a business plan in helping entrepreneurs to think strategically about their business venture, anticipate potential challenges, and plan for them. It also highlights the role of business plans in securing investment and loans by providing a clear framework of how funds will be used and repaid.
💼 Benefits and Limitations of Business Planning
This paragraph delves into the benefits of business planning, such as aiding in the strategic thinking process for new entrepreneurs, helping to identify potential issues before they arise, and serving as a crucial document for securing funding from investors or financial institutions. However, it also points out the limitations, including the opportunity cost of time spent planning versus earning revenue, the difficulty for first-time entrepreneurs to accurately forecast future events, and the inherent uncertainty in predicting external environmental changes. The paragraph acknowledges that while business plans are valuable, they can also be hindered by inexperience and the dynamic nature of business environments.
🎓 Conclusion and Encouragement for Students
The final paragraph serves as a conclusion to the video script, reminding viewers of the importance of business planning and encouraging students to continue their studies. It suggests that the video's content is intended to aid in their revision and learning, wishing them luck and encouraging them to keep up their efforts.
Mindmap
Keywords
💡Business Plan
💡Elevator Pitch
💡Objectives
💡Finance
💡Market Analysis
💡Forecasting
💡Resources
💡Investment
💡Lenders
💡Opportunity Cost
💡Uncertainty
Highlights
A business plan is a document created at the start of a new business venture.
It provides an overview of the business idea and what the business will offer.
Objectives for the first 12-36 months are typically outlined in a business plan.
Financial details, including funding needs, are a key part of the business plan.
Market competition and competitor analysis may be included.
Forecasts for profit, costs, and cash flow are crucial elements of a business plan.
Resources required for the business are detailed, including physical and human resources.
Business plans help entrepreneurs think through stages of starting a business.
They can identify potential problems and strategies to overcome them.
Business plans are essential for securing investment and borrowing.
Investors and lenders want to see a clear plan for how funds will be used and repaid.
There is an opportunity cost to spending time on business planning rather than earning revenue.
Business plans may be hindered by the inability to foresee external events.
Uncertainty and changing external environments can limit the value of business plans.
Lack of experience can make it difficult for first-time entrepreneurs to accurately forecast.
Despite limitations, business plans force entrepreneurs to consider their business concept carefully.
Transcripts
[Music]
helloyou it's taking them is time again
this is the channel dedicated to a level
business students and their revision and
this video is going to examine the
rather jaunty topic of business planning
so a business plan is essentially a
document to the entrepreneurs create or
draw up at the onset of a new business
adventure now if we start by having a
look at some of the key sections of a
business plan sections that might
typically be prepared by entrepreneurs
as they're planning out a new business
venture the first of those is an outline
or an overview of their business idea or
concept instructing what this new
business venture is going to sell what
this new business venture is going to
offer who this new business venture is
going to try and target so the concept
really provides an overview sometimes
known as an elevator pitch of what is
going to be involved in this new
organization next in a business plan is
common to find some objectives that have
been set for the first 1224 potentially
36 months of the organization those
could be objectives to do with survival
or achieving a certain market share
achieving a certain amount of growth or
a certain profit level but then we might
also see in a business plan some more
detailed evidence of the finances that
will be associated with this new
business venture and in particular what
finance might be needed in order to fund
this new business and where this finance
might be obtained from we might also see
a section in a business plan over
viewing the markets that the business
will be competing in might be common to
see some competitor analysis as part of
this may be a breakdown of different
market segments that are served by this
market will then see a forecasting
section which is one of the most crucial
elements of a business plan now this
might have forecasts in to do with the
profit
it's that the business might have to
achieve all the costs that the business
might be looking to spend might also
include what's known as a cash flow
forecast which will plot out the
liquidity of the business for its first
formative months another section is very
common to see in a business plan is a
breakdown of all of the resources that
are going to be required for this
business and whether those resources are
going to be secured permanently or
whether they're going to be leased or
rented for the organization and they'll
go through all of the physical resources
or the human resources all of the
financial resources that are going to be
essential in getting this business off
the ground now business plans aren't
generally perceived as being essential
when you are starting a new organization
and there's some very distinct benefits
to crafting a business plan before you
start your organization the first of
those is it helps the owner of this new
business particularly if there are
first-time entrepreneur to plot out
exactly what their business idea is to
think very carefully about the stages
they're going to have to work through in
order to successfully start this new
venture together to really consider
exactly what tasks will be the priority
in order to establish this new
organization so one of the main benefits
of business plans is that it serves as
an aid to the entrepreneur starting the
organization in helping them to think
about from different kind of
perspectives what they will need to try
and do in order to establish this
business in the process of doing that it
might highlight to the entrepreneurs
difficulties or problems that they might
face in the running of their new
organization that they hadn't previously
considered and by thinking about
problems by identifying difficulties it
allows them to plot strategies to
circumnavigate those difficulties or
solutions to those problems that they
might envisage arising but without the
business planning Pro
yes those problems would have
materialized but may have taken
entrepreneurs by surprise so that they
would have had to react to them rather
than being able to plan how they will
deal with those problems in advance and
of course the classic benefit of the
business planning process is that
business plans aren't generally seen as
a prerequisite when you're seeking
investment from potential shareholders
or partners in your organization or when
you are seeking borrowing from lenders
such as banks and other financial
institutions very few organizations
would be willing to lend another
business money without a clear framework
or a plan of what that money is going to
be used for how it's going to be paid
back and why that finance is needed
similarly with investors very few people
are likely to invest their hard-earned
capital into an organization purely
based on a whim they are likely to want
to see more detailed coverage of what
this business concept is that they're
investing it where this business sees
itself going during the first few years
how this business is going to compete
and sustain itself so in order to secure
borrowing and in order to entice
investment a business plan document can
be a crucial stepping stone in finding
potential investors and lenders for your
organization but there are some
limitations to business planning as well
not at least the opportunity cost that's
involved many first-time entrepreneurs
are very eager to get their new business
venture underway often they have left a
job in order to pursue this business and
they want to try and start earning
revenue as quickly as possible and the
business planning process takes time it
takes research and it might be that they
might have to delay the starting of
their business maybe for a few weeks
from
or detailed business plan maybe even for
a couple of months and there might be an
earning gap for the entrepreneur in that
timeframe so they might decide to bypass
the business planning process and just
run straight into their new business
venture and rather than planning out
their organization they try and run it
ad hoc and make decisions as they go now
it might be that they get away with that
and they experience success regardless
but there is an opportunity cost to
spending time planning rather than
spending time earning we've also got the
idea that business plans and usefulness
might just be hindered by the fact that
entrepreneurs might not be able to
foresee events that might unravel in the
external environment and that
particularly for first-time
entrepreneurs that may not have run
businesses before and may not have had
experience of crafting a business plan
before there is a certain amount of
uncertainty involved in creating a
business plan it's unlikely that
first-time entrepreneurs will accurately
be able to forecast events that might
materialize in the economic environment
for example or that they may not be able
to accurately predict how competitors
might respond to the start of their
business or how changes in technology
might evolve or how changes in society
might take place once their business has
started and this uncertainty this
changing external environment can mean
that the business plan that
entrepreneurs have produced becomes of
limited value once the business is up
and running because they haven't been
able to accurately forecast how the
external environment might change and
evolve once their business starts and so
there's a lack of experience that
entrepreneurs might have in business
planning it's really the final
limitation that we might want to
highlight business plans will include a
wealth of forecasts or predictions
predictions to do with profit
predictions to do with liquidity and
cash flow predictions to do with costs
as well as marketing predictions a
what level of output the business might
need to break-even what level of sales
the business might be able to achieve in
its first year the degree of market
share the business might be able to
establish and for first-time
entrepreneurs that in experience is
going to make it pretty difficult to
accurately predict any of these
forecasts with confidence if you've
never run a business before and you've
never operated in this market before
how are you accurately going to forecast
the market share that you might achieve
how are you going to know exactly how
many units you will be able to sell in
your first year how are you going to be
able to accurately forecast your cost so
that you can accurately calculate your
breakeven level of output and this lack
of experience can limit the usefulness
of business plans making them full of
less accurate data and forecasts that
obviously impinges on how useful they
turn out to be for entrepreneurs but we
shouldn't neglect the fact that business
plans have some pretty tasty benefits
and if nothing else it forces new
entrepreneurs to sit down and carefully
consider what their business concept is
going to be and what tasks they need to
perform in order to deploy their new
business venture hopefully that video
will help you revise that topic as
always we will see you very soon good
luck with your revision and keep on
taking the beers
you
you
you
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