Pearson Edexcel · GCSE · Business
Course version: 1BS0 · Version from Sept 2017
The role and importance of a business plan: ● to identify: the business…
Full specification wording
Business plans: The role and importance of a business plan: ● to identify: the business idea; business aims and objectives; target market (market research); forecast revenue, cost and profit; cash-flow forecast; sources of finance; location; marketing mix.
A business plan is a vital document outlining how an enterprise will operate.
Checked against the Pearson Edexcel 1BS0 specification (opens in a new tab) on .
- Point 1 of 2
- 4 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
A business plan is a vital document outlining how an enterprise will operate. It details the core business idea alongside specific aims and objectives to provide clear direction. Entrepreneurs use market research to identify their target market, ensuring customer demand exists. Financial viability is proven through forecast revenue, cost, and profit, plus a cash-flow forecast to manage liquidity. The plan specifies required sources of finance, such as a bank loan. Operational details like the chosen location and the marketing mix are included to show how the business will reach buyers.
For example: A new café's plan would detail its high-street location, premium pricing, and projected monthly cash inflows to secure funding.
What earns the marks
- A business plan sets out the core business idea and its specific aims and objectives.
- Financial forecasts, including revenue, cost, profit, and cash-flow, are essential components to demonstrate viability.
- The plan outlines the marketing mix and location to show how the product will be sold.
Common mistakes and how to put them right
Confusing a cash-flow forecast with profit forecasting.
Put it right: Cash-flow tracks the timing of money in and out, whereas profit is total revenue minus total costs.
Stating that a business plan guarantees success.
Put it right: A business plan only reduces risk and provides direction, it cannot eliminate the chance of failure.
Forgetting that the marketing mix is part of the plan.
Put it right: Include product, price, place, and promotion as key elements of a comprehensive business plan.
Exam tips
- When asked to evaluate a business plan, consider how inaccurate market research might invalidate the revenue forecasts.
- Link the components together; for example, explain how the chosen location directly impacts the forecast costs.
- Use the specific elements listed in the specification, such as the marketing mix or cash-flow forecast, when providing examples of what a plan contains.
Try the lesson
The start of the Business plans: The role and importance of a business plan: ● to identify: the business idea; business aims and objectives; target market (market research); forecast revenue, cost and profit; cash-flow forecast; sources of finance; location; marketing mix. lesson, made from checked teaching notes for this specification point.
Have a go first
An entrepreneur is writing a business plan for a new mobile catering service. Which of the following details must be identified in this document to outline the expected financial performance?
Listen
A business plan is a vital document outlining how an enterprise will operate. It details the core business idea alongside specific aims and objectives to provide clear direction. Entrepreneurs use market research to identify their target market, ensuring customer demand exists. Financial viability is proven through forecast revenue, cost, and profit, plus a cash-flow forecast to manage liquidity. The plan specifies required sources of finance, such as a bank loan. Operational details like the chosen location and the marketing mix are included to show how the business will reach buyers. For example, a new café's plan would detail its high-street location, premium pricing, and projected monthly cash inflows to secure funding. A strong answer earns marks for these points. A business plan sets out the core business idea and its specific aims and objectives. Financial forecasts, including revenue, cost, profit, and cash-flow, are essential components to demonstrate viability. The plan outlines the marketing mix and location to show how the product will be sold. A common slip: Confusing a cash-flow forecast with profit forecasting. Instead, cash-flow tracks the timing of money in and out, whereas profit is total revenue minus total costs. Exam tip: When asked to evaluate a business plan, consider how inaccurate market research might invalidate the revenue forecasts.
See it
Key words
Say what each word means before you turn the card.
Business plan
Try answering aloud or in your head before turning the card.
Market research
Try answering aloud or in your head before turning the card.
Cash-flow forecast
Try answering aloud or in your head before turning the card.
Marketing mix
Try answering aloud or in your head before turning the card.
See every definition
- Business plan
- A vital document outlining how an enterprise will operate, setting out the core business idea and its specific aims and objectives.
- Market research
- Used to identify the target market, ensuring customer demand exists.
- Cash-flow forecast
- Tracks the timing of money in and out to manage liquidity.
- Marketing mix
- Included to show how the business will reach buyers.
Label the diagram
Some boxes have lost their names. Pick the right name for each number.
1Box 1
2Box 2
3Box 3
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