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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 plays a crucial role in the development of any startup, such as Tended Ltd. It allows the company to outline its goals and strategies for growth, providing a clear framework for both management and investment decision-making.
One of the main advantages of having a business plan is that it helps investors assess the scale of the risk involved in financing the startup. In Tended Ltd's case, since it is a new entrant in the high-risk wearable technology market, this assessment is particularly important. A well-structured business plan can increase the chances of securing financial support, by demonstrating a clear path forward, including detailed forecasts of cash flow and profit.
For instance, Tended Ltd secured a £50,000 loan from Enterprise Loans, reflecting the importance of a well-prepared business plan in gaining financial backing.
Step 2
Potential Counterbalance
Answer
However, creating a business plan may come with its challenges. There is the potential for a significant opportunity cost, particularly when considering the time required to develop such a document. This time might otherwise be spent on product development, which is critical for a startup like Tended Ltd.
Additionally, the young entrepreneur Leo Scott Smith may lack the necessary knowledge and experience to draft an effective business plan, especially given the dynamic nature of the wearable technology industry.
Step 3
Potential Judgments
Answer
Nonetheless, the rapid expansion of Tended Ltd suggests that a business plan could be beneficial in securing further investment necessary to support this growth. Although Tended Ltd is still a relatively small business, it may find support from family and friends, who might not require a detailed business plan. Nevertheless, a comprehensive plan could enhance credibility when dealing with formal investment sources.