Chapter 1- enterprise and business planning

• To gain a profit
• To turn a hobby or a pastime into a business- satisfying job that can bring you income whilst doing something you love
• To use redundancy money- may not have any opportunities of a job eslewhere
• To be their own boss- they want control of their own lives.

Need

A need is something that people recquire to survive. For example, food, warmth, shelter and clothing. We could also include education, healthcare and security

Want

What we desire, what we want to have that can increase our quality of life. For example nicer clothes, new phone, new TV

An entrepreneur is someone who starts and runs a business. They could make a product, sell that product, or provide a service. They could employ people and try to make a profit.

They can create wealth for a country and so governments place great value on them. They bring new ideas to the market and drive the developemt of new technologies.

• Being a risk taker- they risk capital and their own time to try to create profits.
• Taking the initiative and being productive- they do not panic and allow events to overwhelm them - proactive and able to change as needed
• Being an effective organiser- may need to undertake a wide range of activities; from hiring labour and buying inputs such as raw materials to producing the finished product for sale
• Having creativity and being innovative
• Being hard working
• Being determined and having perserverance- new businesses have low success rates so must be willing to keep trying if initial ideas fail

Potential business opportunities occur when a market need exists. Preferably one that hasnt been targetted yet, or targetted effectively. A starting point might be to find out what is missing in the local area.

A business could service another business, which could be attractive if cutting their costs or increasing their sales. They could supply financial services or office supplies, for example.

Identifying a business opportunity can occur through word of mouth. People could complain of the lack of a product or disatisfaction of the quality of a product.

Many new businesses are based on accessing customers through new market places. Moving into the internet market place will cut costs of a shop, for example.

A business could be founded on the idea of how innovative methods could help meet a need. For example, a website or an app that could make something more efficient.

Another opportunity could come from an entirely new product or servive, produced by the entrepreneur.

• A business plan makes clear the objectives of the business and how business intends to achieve these objectives.
• A business plan is often likened to amap.
• There are objectives set in finance, sales, marketing and production.
• They are used for future guidance and can be refered back to.
• Businesses are more likley to survive if they produce one

• First state clearly and describe the business idea.
• The overview of the business will briefly describe the business opportunity that is to be exploited
• should summarise the strategies that will be employed and how finance will be obtained
• it is very important in setting out the overall aims and objectives of the business
• there is no set pattern for a business plan but there are key elements that need to be included
• the plan needs to be flexible and able to adapt to a changing market

• Should be based on both primary and secondary research
• the market research carried out needs to establish if possible the size of the market, the needs of the customers and the level of competition.
• once market findings have been examined then the marketing plan can be prepared
• if market research has identified weaknesses with the initial idea, this may be the time to adapt the product to more closely meet the needs of the customer or clearly differentiate it from the competition

The operations plan

• this will include details of where the business will be located, production methods and any equipment needed
• in addition any information on the costs of production and where the business will buy supplies may also be included

Human resources plan

• the number of employees and the skills, experience and qualifications they require will be outlines
• any management team will also be identified

A variety of forecasting will be necessary:

• a sales forecast indicating potential revenue
• a cash flow forecast for the first 12 months
• a profit anf loss and balance forecast for the end of the first year
• a break even analysis

in addition, information should be provided onw here the finance for starting and running the business will come from. This will indicate the availability start-up capital as well as any potential borrowing

Benefits

• The business plan will present the business owners with a clear set of instructions on how to run the business
• a comprehensive plan will allow business owners to check progress against objectives, monitor cash flow and take action when objectives are not being achieved.
• business owners can clearly see when things are going wrong
• needed for potential investors or when seeking finance from banks. without a plan it is highly unlikely that capital could be attracted

Drawbacks

• Market research costs time and money, resources may be better spent elsewhere in the business.
• the figures are guess and therefore will be inaccurate and therefore the experience of the business manager could influence the success of the plan
• unachievable objectives can give entrepreneurs false hope, leading to failed investments and a reduced morale.