Business planning study guide

A written document that outlines a business’s objectives, strategies, market analysis, operational structure, and financial projections.

A brief paragraph that summarises the business idea, objectives, key financial highlights and the main points of the plan.

A written document that outlines a business’s objectives, strategies, market analysis, operational structure, and financial projections.

A cost that changes directly with the level of output. For example, raw materials or hourly wages that increase as more units are produced.

Total income from sales before any costs are deducted.

Exam practice

• Which of the following is NOT a primary reason businesses create a business plan?
• Explain how a business plan helps a new business secure finance.
• Which of the following lists the main sections that should be included in a business plan?
• List the four main sections of a business plan and briefly describe the purpose of each section.
• Which of the following is a potential drawback of a detailed business plan for a new online service?
• Evaluate the impact of a detailed business plan on securing investment for a small online service business.
• A small manufacturer produces 100 units of a product. The variable cost per unit is £5 and the fixed cost for the month is £200. What is the total cost for producing the 100 units?
• A retailer has fixed costs of £1,200 per month and variable costs of £3 per item sold. If they sell 400 items in a month, calculate the total cost for that month.
• A small online retailer sells 200 units at £15 each. Variable cost per unit is £5 and fixed costs are £1,000. Which figure is the profit?
• A small manufacturer has revenue of £50,000, fixed costs of £12,000 and variable costs of £25,000. Calculate the profit or loss.