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Assess the likely value of a business plan to Tended Ltd. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Assess the likely value of a business plan to Tended Ltd.
Worked Solution & Example Answer:Assess the likely value of a business plan to Tended Ltd. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Value of a business plan
Answer
A business plan is essential for Tended Ltd as it details how the business intends to develop over time. It includes crucial elements like forecasts for cash flow and profit, allowing investors to understand the risk associated with their investment.
For a start-up like Tended Ltd, which focuses on wearable technology, the risk can be significantly high due to the competitive market. A well-structured business plan can enhance Tended Ltd’s chances of securing loans, such as the £50,000 loan they obtained from Enterprise Loans. This capital can be crucial for their growth, helping them innovate and expand operations effectively.
Moreover, a business plan encourages entrepreneurs to assess all potential factors that could impact the success or failure of the business. In Tended Ltd’s case, this may include market competition and technological advancements.
However, it is also worth noting that preparing a comprehensive business plan requires time and resources, which may be viewed as an additional cost. Additionally, Leo Scott Smith, being a young entrepreneur, may lack the experience necessary to create an accurate and realistic business plan in such a dynamic field.
Step 2
Possible Counterbalance
Answer
Despite these advantages, there are challenges. The time required to develop a business plan may represent an opportunity cost, particularly if product development is delayed.
Furthermore, Leo Scott Smith's limited experience could translate to oversights in the business plan, especially since Tended Ltd is in a rapidly evolving industry. This could lead to miscalculations regarding market expectations or investment needs.
Step 3
Potential Judgment
Answer
In conclusion, while a business plan may be fundamental in securing investment and outlining the future direction of Tended Ltd, its development must be managed carefully. Given that Tended Ltd is experiencing rapid expansion, a well-prepared business plan could be invaluable for attracting further investment. However, it is essential for the entrepreneur to balance the complexity of the plan with their capabilities, especially considering the possibility of funding from non-traditional sources like family and friends who may not require formal documentation.