The different parts of a business plan

Christina Maling

Task 1 (AO1)

Preliminary Information

Name: The name of a business is an important factor to consider when creating a new business. The name of the enterprise may give specific details of what the enterprise actually does. When considering a particular name for a business it is a good idea to create a name for the business that actually links to the product/service of the business. For example, it would be inappropriate to call a new chocolate bar ‘Doritos’ as this is a name of a crisp and people would think of crisps rather than chocolate when hearing the name of the new product. Also, the name of a business needs to be catchy and memorable, if this is the case; customers are more likely to remember the business. Also, when considering a name for a new business, the translation of the name needs to be taken into consideration. For example, when translating the name into different languages, it needs to be seen as appropriate in other languages, as something in English may be inappropriate in Chinese for example. Another factor that needs to be taken into consideration is copyright laws. A business needs to make sure that their new name isn’t already an existing businesses name, as the new company could be sued due to copyright laws. Finally, a businesses competition needs to be accounted for. It would be better for a business to have a completely different name to their competition. For example, it wouldn’t be good for two fast food restaurants to have extremely similar names, e.g. ‘McDonald’s’ and ‘McRonald’s’.

Mission Statement: The mission statement is a brief summary that gives the details of the businesses aims, background, purpose and values. It gives people an insight to the aims of the business and allows them to view these aims and to see whether the business achieves these aims in the period of time set to achieve their aims. It also allows outsiders to look at the background of the business, its previous history and how well the business has done in the past. Also, the purpose and values of the business is shown in the mission statement, it allows ...

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Location: A businesses location is very important to the business as it gives detailed information to potential stakeholders, including investors, about where the business is going to be operating from and why that particular location is important to the business. When deciding upon a location for a business they will need to take into consideration its surroundings. For example, if the area the business is located in is rural then they are less likely to sell their products than if the business was located in an urban area. Also, a business needs to work out how much space they will need to run the business; this may affect the location as urban places may have less room than the rural areas.

Physical size of the business: The actual size of the businesses premises is important as it affects the type of location that is needed and the initial investment costs within the business. It is important to take into consideration the physical size of the business; this is because a business doesn’t want to have to pay unnecessary costs which could be due to the size of the business being too large for what they actually need.

Type of business ownership: The type of ownership needs to be included within the business plan and needs to be described thoroughly. This enables the exploration of the elements of risk and liability. It is important to consider the type of business ownership as if the business chooses the wrong type of ownership it could be crucial to the business. There are a number of different types of business, including sole traders, partnerships, public limited companies and private limited companies. A sole trader is someone who owns the business on their own and has the disadvantage of unlimited liability. Partnerships are businesses that 2-20 partners own who control and finance the business, again this type of business ownership has unlimited liability. Public limited companies (plc) are companies owned by shareholders, which may allow shares to be bought by the general public. This type of business ownership has the advantage of limited liability. Private limited companies (ltd) again, are companies owned by shareholders. A limited number of shares are issued, which are often owned by friends and family of the business. Again, this type of business ownership has limited liability. Unlimited liability is a legal obligation on the owners of a particular business to pay all debts the business produces, and in order to pay off all debts, the owners personal belongings can be taken away from them. Limited liability on the other hand is when shareholders are liable for the debts of the business, but only the value of their shareholding can be claimed to repay the debts.

Goals and objectives: The mission statement outlines the long-term purpose of the business and what it aims to achieve. However, the preliminary information should also contain details about the goals that the business wants to achieve over a set period of time and the objectives that support those goals. It is a good idea for a business to carefully construct their goals and objectives, and make sure that they don’t set their goals too high or make their objectives too hard to achieve. All businesses need to set objectives for themselves or for their product/service. Setting objectives focuses the company on specific aims over a set period of time and can help to motivate staff to achieve these aims and objectives. A well known, simple acronym used to help a business set objectives is called SMART objectives:

S – Specific; Objectives should specify what they want to achieve.

M – Measurable; It should be measurable whether the objectives are being met or not.

A – Achievable; The objectives set should be achievable for the business.

R – Realistic; The objectives need to be realistic for the business.

T – Time; The set time that the business wants the objectives to be achieved by.

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