Business Planning and the Business Plan
This domain tests the purpose, structure and quality of a business plan. Questions ask you to identify sections, write SMART objectives, assess assumptions, or explain how a plan is used by different audiences.
Core rules and concepts
- A business plan is a written roadmap for a venture; it is also a communication tool for lenders, investors and partners.
- Common sections: executive summary, company description, market analysis, marketing plan, operations plan, management and organisation, financial plan, risk analysis and appendices.
- The executive summary is written last but placed first; it must match the detailed sections.
- Objectives should be SMART: specific, measurable, achievable, relevant and time-bound.
- Financial forecasts must rest on stated assumptions about price, volume, costs and timing.
- A plan is iterative: evidence from feasibility testing should revise it.
Worked example
A solar-panel installation start-up plans to sell 20 installations in year one at N$25,000 each. Reasoning: revenue of N$500,000 is not a plan unless assumptions are shown: installer capacity, lead conversion, panel supply and payment terms. If installation takes five days and two installers are available, 20 installations is feasible in about 100 working days. The plan should then show cash flow, not just profit, because customers may pay after materials are bought.
Traps that cost marks
- Using a generic template with no evidence for the specific venture.
- Presenting unrealistic sales growth without capacity or market support.
- Omitting cash flow and contingency plans.
- Writing an executive summary that contradicts the financial section.