A business plan turns an idea into something a bank, an investor, or the owner themselves can actually test — built on the basic financial terms every plan depends on: revenue, costs, profit and loss.
A business plan is a written document setting out what a business intends to do and how it intends to do it. AQA won't ask you to write one — but you do need to understand why businesses bother creating them in the first place.
Forces a new owner to think through every part of the business — what it will sell, to whom, and how — before committing time and money.
Banks and investors almost always want to see a business plan before lending money or buying shares, since it shows the idea has been properly thought through.
Turns a vague ambition into specific, written targets that progress can later be measured against (see 3.1.3).
Details how operations, human resources, marketing and finance will each be organised and coordinated from day one.
While the exact layout varies, most business plans follow a similar running order — each section building on the one before it.
What the business will actually sell, and the gap in the market it aims to fill.
What the business wants to achieve, short and long term (see 3.1.3).
Evidence about customers, competitors and the size of the target market.
How the business will price, promote and distribute what it sells.
How the product or service will actually be produced or delivered, day to day.
Expected revenue, costs, profit and cash flow, plus how much finance is needed and from where.
A business plan is useful, but it isn't a guarantee — AQA expects you to be able to argue both sides.
Every financial forecast in a business plan rests on a small set of core terms — get these solid and the calculations that follow are mostly just arithmetic.
The total income a business receives from selling its goods or services, before any costs are taken away.
Costs that stay the same regardless of how much a business produces or sells — eg rent, insurance, salaried staff. These have to be paid even if nothing is sold at all.
Costs that change directly with the level of output — eg raw materials, packaging. Sell nothing, and variable costs fall to zero; sell more, and they rise in line with production.
Every cost the business faces at a given level of output, combining what doesn't change with what does.
If revenue is higher than total costs, the business makes a profit. If total costs are higher than revenue, it makes a loss.
Enter figures for a business and see how profit or loss is calculated. Try changing the quantity sold to see how it affects the result.
Drag each cost into the correct category for a small furniture-making business.
State two sections that might be found in a business plan.
Structure guide: two correctly named sections — 1 mark each, no explanation required.
State and explain two reasons why Priti has prepared a business plan for Anders Joinery.
Structure guide: state a reason grounded in Priti's situation (1 mark), explain it (1 mark) — repeated twice over.
Calculate the profit or loss Anders Joinery would make in its first month, based on the figures in the case study. Show your working.
Structure guide: total revenue (£400 × 30 = £12,000) − total costs (fixed £2,000 + variable £150 × 30 = £4,500, giving £6,500) = £5,500 profit. Marks are typically awarded for correct workings even if the final figure is wrong.
Analyse why the bank might be more willing to lend Priti £10,000 because she has prepared a detailed business plan.
Structure guide: a single developed line of reasoning grounded in the case study (eg: the plan's financial forecasts show Anders Joinery expects a £5,500 profit in its first month → this gives the bank evidence Priti can realistically repay the loan → reducing the bank's perceived risk → making it more likely to approve the £10,000 she needs).
Recommend whether Priti should rely fully on her business plan's financial forecasts when deciding how much stock and material to order for her first three months of trading. Justify your answer.
Structure guide: a "recommend" question needs a justified judgement — weigh the benefit of having clear forecasts to plan against against the risk that a brand-new business's sales figures (like the 30 tables assumed here) may prove inaccurate, before reaching a clear final recommendation.