Learning objective
Explain why businesses create plans, including setting up a new business, raising finance, setting objectives and organising business functions.
Read the explanation, check the common trap, then practise with flashcards and questions.
At a glance
0
Flashcards
0
Questions
Topic
Business planning
Subtopic
Purpose and sections of business planning
Study support
Understand this objective
Quick explanation
Explain why businesses create plans, including setting up a new business, raising finance, setting objectives and organising business functions
- This point belongs to Business planning, especially Purpose and sections of business planning.
- You need to be able to explain why businesses create plans, including setting up a new business, raising finance, setting objectives and organising business functions.
- The key ideas to know are objectives, finance, and functions.
- Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.
Key concepts
Why it matters
This objective helps connect Purpose and sections of business planning to exam-style questions, flashcards, and revision notes for Business planning.
Quick student answer
Explain how a business plan helps a new business secure finance.
Direct answer
A business plan demonstrates to lenders or investors that the entrepreneur has researched the market, identified a viable product or service, projected realistic financials, and has a clear strategy for growth. By presenting this evidence, the plan reduces perceived risk and increases the likelihood of obtaining funding.
How it works
The answer shows that a business plan provides evidence of market opportunity, financial viability and strategic direction, all of which are key criteria for lenders and investors.
Key terms
- Objectives: Specific, measurable goals that a business aims to achieve within a set timeframe.
Common trap
Assuming a business plan guarantees success: A business plan is a tool that outlines strategy and risks; success depends on execution, market conditions and ongoing management.
Related questions
Try this as a practice card
Question 1 of 1
Choose an answer, get feedback, then move sideways through the set.
Flashcard prompts
Flip through the key recall cards
Flashcard 1 of 2
Practise next
Revision tools
Choose how to practise
Flashcards0 linked cards
Practice Questions0 linked questions
Revision notestopic notes
Open the full topic revision notes when you are ready to review this objective in context.
Open revision notesRelated learning objectives
- Identify the main sections of a business plan.
Purpose and sections of business planning
- Analyse the benefits and drawbacks of business planning.
Purpose and sections of business planning
- Distinguish variable costs, fixed costs and total costs.
Basic financial terms
- Explain revenue, costs, profit and loss in a business planning context.
Basic financial terms