A business plan is a written roadmap that outlines what a business wants to achieve and exactly how it will get there. In the Junior Cycle exam, you must be ready to explain why entrepreneurs write plans, outline their key sections, and calculate start-up finance requirements.
Why Prepare a Business Plan?
A business plan turns an idea into an organised enterprise. Whether you run a student mini-company or a local bakery, writing a plan forces you to think through every detail before spending money.
Businesses prepare plans for three main reasons:
- To secure funding by showing a bank manager or a Local Enterprise Office (LEO) that the idea is viable before they approve a loan or a grant.
- To spot problems and competitor risks early before wasting money.
- To set clear targets and track progress over time.
| Stakeholder | What they check in the plan |
|---|---|
| Bank manager | Cash flow forecasts showing the firm can repay loans with interest on time |
| LEO adviser | Evidence of market demand and potential to create local employment |
Core Sections of a Simple Plan
A complete plan brings together the marketing, operational, and financial details of an enterprise into one clear document.
Every simple plan contains six key areas:
- Business details: the enterprise name, address, legal structure, and key owners.
- Product or service: what is sold, how it works, and its unique selling point (USP).
- Market research: desk and field research findings that prove customer demand.
- Marketing mix (4Ps): chosen strategies for Product, Price, Place, and Promotion.
- Production plan: suppliers, equipment, premises, and quality control steps.
- Financial plan: start-up costs, sources of finance, and a monthly cash flow forecast.
Testing the Idea with SWOT
Before launching, entrepreneurs evaluate their idea using a SWOT analysis to confirm it is viable.
Internal Factors
These exist within the enterprise itself and can be controlled directly by the owner:
- Strengths: positive internal features, such as skilled staff, strong recipes, or an innovative USP.
- Weaknesses: internal gaps, such as lack of sales experience or low starting cash.
External Factors
These happen outside the business in the wider market and cannot be controlled directly:
- Opportunities: positive market trends, such as growing online sales or a new local festival.
- Threats: external risks, such as rising supplier prices or a new rival opening nearby.
Financial Planning and Funding
The finance section proves that the venture can pay its bills as they fall due and stay solvent.
A plan separates spending into two categories:
- Capital expenditure: spending on long-term assets lasting over a year, such as ovens, vans, or machinery.
- Current expenditure: regular day-to-day running costs, such as wages, electricity, and raw materials.
The matching principle must be followed when choosing finance. Long-term assets require medium-term or long-term sources such as term loans, leasing, or owner equity. Using a short-term bank overdraft to buy permanent machinery creates severe cash shortages.
Key terms
- Business plan
- A written document setting out the goals of a business and how it plans to achieve them.
- Viable
- The ability of a business idea to survive, cover its costs, and make a profit.
- SWOT analysis
- A planning tool used to examine internal Strengths and Weaknesses, as well as external Opportunities and Threats.
- Unique selling point (USP)
- The distinctive feature that makes a product or service stand out from its competitors.
- Cash flow forecast
- A financial projection estimating future cash receipts and cash payments over a specific period.
- Capital expenditure
- Spending on fixed assets that provide a benefit for more than one year, such as vehicles or equipment.
- Current expenditure
- Spending on day-to-day running expenses consumed in the short term, such as wages and utilities.
- Grant
- A sum of money provided by an enterprise agency that does not have to be repaid if agreed conditions are met.
Check yourself
Name three main sections found in a simple business plan.
Any three of: business details, product/service description, market research, marketing mix, production plan, financial plan.
Which two elements of a SWOT analysis focus on internal business factors?
Strengths and Weaknesses.
State one medium-term source of finance suitable for purchasing a delivery van.
A term loan, hire purchase, or leasing.
Why does a bank manager inspect cash flow forecasts before issuing a loan?
To confirm that the business will have sufficient cash each month to repay loan instalments with interest.
A business needs €40,000 to launch. The owner provides €22,000 and secures an €8,000 grant. How much must be borrowed?
€10,000 (€40,000 needed − €30,000 available).