Pearson-Edexcel-Business-IAS Complete-Revision-Notes Unit-2=Managing-Business Activities =(-Paper-Unit-code= WBS12-)

Business plan → A plan for the development of a business, giving details such as the products to be made, resources needed & forecasts such as costs, revenues & cash flow. → Initially, new businesses will create a plan to follow but changes in external factors will lead to changes in business plans. → Business plan is a written document by the business regarding its operations. II. Relevance of a Business Plan → A business plan is needed to support applications for finance, both at the start- up stage & in the future. Lenders & other investors are not likely to put money into a business unless the owners can provide a clear, concise vision of future progress & profitability. → In particular, investors will want to know how their money is going to be spent & when & how they are going to benefit from their investment. III. Uses of a business plan 1. To show a clear direction for the development of a business. 2. Help show lenders & investors that the owner is cautious, responsible, serious & credible. 3. To flag up potential problems in advance so that investors are aware & solutions can be found. When the business creates a business plan, they can see the potential problem in advance & find solution. e.g., If the business decided to expand in the future, then they will have to increase their production. The problem is the source of finance. As a result, they can think of in advance where they will get the finance.