AQA BUSS1 Planning and Financing a Business

Starting a Business - 1.4 Developing business plans

Assessment 1.4 Developing business plans

 The purpose and contents of business plans

 Sources of information and guidance

Love and Beauty

Sisters, Francesca and Isabella had always wanted to open their own beauty salon. Love and Beauty was almost
ready. Primary market research suggested that there was a demand for a high quality, environmentally friendly salon
near the new Media City area in Salford. The BBC, ITV and the University of Salford would all be based at Media City,
whilst Manchester United’s ground, Old Trafford, was just across the river. The sisters were expecting to attract
famous stars from programmes such as Coronation Street to their salon.

Love and Beauty would be targeting media professionals who would be willing to pay high prices for a good quality
service. The pair had spent time and money researching the project and drawing up a business plan. There was an
opportunity cost to this. They had relied on their savings and had to borrow money from family. Francesca had given
up her job as a beauty consultant with a large organisation to concentrate on the new business. It had been difficult,
particularly as they had no experience of business finance. The business plan had taken a long time to produce and
Francesca had to forego earnings that she would have received in her job. Isabella worked in media herself and was
to remain in her highly paid position until the venture was up and running. They had consulted the business manager
of a high street bank and a small business advisor for advice on business planning.

Francesca believed that the business plan was vital in the initial success of the business. She had listed the business
objectives and it had made her focus on any difficulties that might arise. She knew a business plan would be essential
if the business was to obtain the loan of £40 000 required. Isabella’s financial forecasts suggested that the business
would break-even in its first year but by the second year they would be profitable. As a partnership they would have
unlimited liability but completing the financial documents for the business plan gave Isabella the confidence that Love
and Beauty would be successful. She believed that setting up in premises close to the new BBC buildings gave them a
competitive advantage. As the first beauty salon to set up in the area they would be able to establish a customer
base and develop brand loyalty.

Question 1
a. What is meant by the term “business plan”? (2 marks)
b. State two financial documents you might expect to see included in the financial section of a business plan.
(2 marks)
c. In addition to the financial section state two other sections that might be included in a business plan.
(2 marks)
d. Explain two benefits to Love and Beauty of consulting the business manager of a high street bank and a small
business advisor. (6 marks)

Question 2
a. Analyse the difficulties Francesca and Isabella may have faced in preparing their business plan.
(10 marks)
b. To what extent is the business plan the most important factor in gaining a competitive advantage
for Love and Beauty? Justify your view. (15 marks)
Total 37 marks

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