Question 4 15 Marks: 21 Minutes

1. Which of the following is not an explanation for why small businesses tend not to write formal business plans? (1)
   1. a lack of understanding of the process or benefits of business planning
   2. pressure on doing, rather than thinking, or gathering information
   3. no data being available
   4. the belief that strategic planning is for larger organisations
2. A business plan should be used only when setting up a new venture. True/False? (1)

3. Which of the following is not a good reason for writing a business plan? (1)
   1. assessing the feasibility of a business or project
   2. setting objectives and budgets
   3. Though this knowledge is important, writing a business plan involves much more than this
   4. calculating how much money is needed

4. A good business plan will answer 3 straightforward questions. Indicate which of the following is not one of these. (1)
   1. Where have we been?
   2. Where are we now?
   3. Where do we intend going?
   4. How do we get there?
   5. sourcing premises

5. The format of a business plan should be tailored to suit its particular context. True/False? (1)

6. Danny wants to set up his own business as a personal fitness trainer and is hoping for a R1 000,000 loan from the bank. Which 3 of the following pieces of financial information should he include in his business plan?

(3)

a) Results of market research Danny carried out into rising obesity levels in the UK. b) Details of the money available for investment into the business from Danny and two family members.

c) Details of Dannys GCSE and A level qualification

d) Details of Dannys qualifications as a personal trainer

e) Estimates of the business running costs for the first twelve months

f) Forecasted revenue generated from clients in the first twelve months, based on market research carried out by Danny.

7. Fill-in the missing words (5)

A great idea may kickstart a business, but its not enough for success. An entrepreneur will need to ____________ carefully how to put the idea into practice. A business plan is a document setting out details of the business opportunity and how it will be achieved. It provides details about the business owners and their _________________, as well as a description of the goods or services to be produced. It will contain a great deal of financial information including a cash-flow _________________, outlining the money coming in and going out of the business. This should also identify how much __________________ is needed to get the business started. Producing a business plan is vital for raising funds from _____________________or the bank.

Hint: words from finance, forecast, investors, objectives, plan

1. Match each of the definitions on the left to the correct key term on the right (2)

Definitions Key terms

1. The money (capital) that a business needs in order a) Break-even

to carry out its plans. b) Finance

2. A document showing the expected cash inflows c) Cash flow forecast

and outflows in the coming months. d) Business plan