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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 crucial for Tended Ltd as it outlines the strategy to develop over time, helping in various ways:
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Risk Assessment: It helps investors gauge the scale of risk associated with the start-up. Given Tended Ltd’s innovative yet competitive landscape in wearable technology, the inherent risks are significant.
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Loan Application: Tended Ltd secured a £50,000 loan from Enterprise Loans. A solid business plan could have bolstered their chances of obtaining this funding, as it would have demonstrated their preparedness and understanding of market dynamics.
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Risk Mitigation: By creating a business plan, Tended Ltd would be forced to consider external factors that could impact success, such as competition in the market. This foresight can lead to better-informed decisions.
Step 2
Possible counterbalance
Answer
Despite its benefits, there are downsides to consider:
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Resource Intensity: The process of crafting a business plan can incur costs, whether through time or other resources, impacting product development.
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Lack of Experience: Given that Leo Scott Smith is relatively inexperienced, there could be challenges in developing a comprehensive and accurate business plan that addresses the dynamic nature of their market.
Step 3
Potential judgment
Answer
In conclusion, while Tended Ltd is rapidly expanding and may require a detailed business plan to attract further investment, its relatively small size could also allow for flexibility in financing through informal means. Therefore, a business plan could be beneficial, but it may not be strictly necessary for their early stages, as they may obtain funds from family or friends without extensive documentation.