IB Business and Management

1.6 Business Plans

Learning Outcomes

• Analyse the importance of the importance of the information in the business plan to different stakeholders

• Analyse and Interpret Business Plans

What is a Business Plan?

A business plan is:A report showing the plans of the businessThe business plan describes out the market opportunities the business intends to exploit, how it will do so and what resources are required

Video

• Watch the video ‘How to write a business plan’

• What are the main sections in a Business plan?

• Clarify your vision and decide whether or not to go ahead with an idea.

• Determine if your product and/or service has a sufficient market to support it and whether or not it will be profitable.

• Estimate your start-up costs and how much you'll need to invest or finance.

• Convince investors and lenders to fund your business.

A business plan helps you to:

Task – Example Business Plans

• Pick one of the business plans on Haiku

• Answer the questions on the ‘Business Plans Task’

Business Plans and Stakeholders

• How are business plans useful to ‘Internal Stakeholders’

• Which external stakeholders will be interested in a business plan?

• How are business plans useful for ‘External Stakeholders’

Internal Uses of Business Plans

Clarify objectives Provide a sense of direction and purposeForces research to be doneMonitor progress and success Improve motivation and communication Allocate responsibility Can be proactive rather than reactive

Business Plans – Essential For Raising Finance

A business plan is essential to: Persuade people to invest in an enterprise (VC or Angels)Convince creditors about the credit worthiness of the enterpriseObtain a bank loan

To persuade banks and others to lend or invest money it is necessary to:Demonstrate the lender/investor has a good chance of being repaid or getting a good return on their investmentBuild confidence about the firm and owners’ capabilitiesDemonstrate that there is a good market for the product or service

Business Planning cycle

Characteristics of good Busines Plans

Business plans are more effective if… They are carefully researched They contain detailed market analysis They are used as a reference point for decisions Actual performance is compared with objectives and objectives are regularly updated They evolve over time to ensure that growth targets are realistic and challenging