1.4.4a Contents of a business plan Quiz: Pearson Edexcel Business, Unit 4

The 20 questions

1. Which of these is a typical part of a business plan?

   • A forecast of revenue, costs and profit for the next few years
   • Copies of the owner's personal bank statements for the past decade
   • A list of the owner's personal debts and credit card balances
   • A detailed history of the owner's previous jobs and salaries

2. What does a business plan usually include about the target market?

   • Details of the chief executive's pension arrangements
   • A full transcript of the competitors' private board meetings
   • A list of the owner's personal hobbies and social commitments
   • The results of market research identifying who the customers are

3. Which of these is a purpose of a cash-flow forecast within a business plan?

   • To show when cash will come into and go out of the business over time
   • To set the business's long-term aims and objectives for the next decade
   • To describe the business's location in terms of local planning law
   • To identify the owners' personal wealth and property holdings

4. A business plan sets out the business idea, aims and objectives. Which of these is an aim?

   • To move the owner's family home to another county within two years
   • To buy a new delivery van next Tuesday for the sales team
   • To become the market leader in its region within five years
   • To hire a specific named employee as operations manager

5. Which of these should a business plan identify in relation to finance?

   • The name of every person who has ever bought a product from the business before
   • The owner's personal views on the national football league results for the season
   • The sources of finance the business will use, such as loans or share capital
   • The forecast average monthly rainfall for the next three years in the local area

6. Which of these is included in a business plan's section on location?

   • A list of the owner's previous jobs and salary history
   • Why the chosen site suits the business's market, suppliers and costs
   • The average annual temperature of the region over the past decade
   • A description of the owner's personal car and its service history

7. A business plan includes a sales forecast of £120,000 and costs of £90,000. What is the forecast profit?

   • £210,000
   • £120,000
   • £30,000
   • £90,000

8. Which of these is a benefit of writing a business plan before starting up?

   • It forces the owner to think through risks and set out how the business will work
   • It means the owner does not need to pay any tax on future profits made by the business
   • It guarantees that the business will never make a loss in its first year of trading
   • It removes the need to research competitors or customers at all before launch

9. Which of these should a business plan include in its marketing section?

   • Average household income across the whole country last year
   • A list of all the owner's personal bank account balances
   • The owner's personal opinion of the local council's road repair schedule
   • The planned product, price, promotion and place for the new business

10. Why might a business plan include a cash-flow forecast alongside a profit forecast?

    • Because a business can be profitable on paper yet still run out of cash
    • Because the bank will only read a plan that is printed in two colours
    • Because profit forecasts are illegal unless they are paired with a cash forecast
    • Because cash-flow forecasts replace the need for any sales forecast at all

11. Which of these describes the target market in a business plan?

    • The set of government regulations that apply to the business and its premises
    • The list of shareholders who have agreed to invest in the business at the outset
    • The specific group of customers the business aims to sell its product to
    • The price that the business will pay its suppliers for the raw materials it buys

12. A business plan states its aim is to reach £500,000 in sales within three years. What type of section is this?

    • Business aims and objectives, such as the sales target and the timescale for reaching it
    • Location of the premises and why the site suits the business's customers and its suppliers
    • Cash-flow forecast showing the timing of monthly money in and out over the first two years of trading
    • Sources of finance, including the owner's savings, bank loans and any share capital raised

13. Which of these is most likely to be the first stage of writing a business plan?

    • Calculating the owner's personal tax bill for the year
    • Ordering stock from suppliers in bulk
    • Choosing a logo for the business's merchandise
    • Identifying the business idea and what it will sell

14. A bank asks to see a business plan before lending. What is the main purpose of the plan for the bank?

    • To set the interest rate for every business in the same sector
    • To judge whether the business is viable and able to repay the loan
    • To check the owner's personal spending on products outside the business
    • To decide which competitor the bank should lend money to instead

15. Which of these is a benefit of a business plan that includes a forecast of costs?

    • It guarantees the business will be exempt from paying any business rates at all
    • It means the business's costs can never change in the future, whatever happens
    • It helps the owner judge whether the business can cover its costs at planned sales levels
    • It removes the need for the owner to keep records of costs once the business has started

16. Which of these is a risk a business plan is designed to reduce?

    • The risk of a key supplier changing its payment terms during the first year
    • The risk of paying staff a slightly higher wage than competitors for the same role
    • The risk of the owner needing to move to a larger home within the first year
    • The risk of starting with insufficient cash or demand for the product

17. Which of these best describes the owner's aims in a business plan?

    • The number of hours the owner plans to work personally each week in the business
    • The rules of the local council for planning permission on new commercial buildings
    • What the owner wants the business to achieve, such as profit or market share
    • The owner's personal wishes for the family's long-term retirement plans and savings

18. A business plan identifies the owner's marketing budget for launch. Which element of the marketing mix is this budget most likely to support?

    • Price, because the budget is used to set the price of every product
    • Product, because the budget pays for the owner's personal training
    • Promotion, because launch budgets usually fund advertising and awareness
    • Place, because the budget pays for the business's head office in a new town

19. Which of these is NOT a normal item in a business plan?

    • A detailed list of the owner's personal pension savings and private investments
    • A cash-flow forecast showing the timing of money coming in and going out each month
    • A forecast of revenue, costs and profit for each of the first three years of trading
    • A description of the target market and the market research used to identify its customers

20. Why should a business plan state its assumptions about prices and costs?

    • So that the owner can avoid preparing any forecasts at all
    • So that the bank can set the business's tax rate
    • So that readers can judge how realistic the forecasts are
    • So that suppliers can set the price of goods for the business

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