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Read the information supplied below and answer the questions which follow - Leaving Cert Business - Question C - 2012
Question C
Read the information supplied below and answer the questions which follow. Zac Computing Ltd, an innovative new technology business, considers its business plan to ... show full transcript
Worked Solution & Example Answer:Read the information supplied below and answer the questions which follow - Leaving Cert Business - Question C - 2012
Step 1
Explain the term "business plan"
Answer
A business plan is a formal written document that outlines a business's goals, the strategy for achieving those goals, and the means for measuring success. It serves as a roadmap for the business, detailing the objectives, market analysis, financial projections, and operational structures necessary for a successful startup. This document is particularly vital in the startup context, as it crystallizes the entrepreneur's vision and direction, guiding decision-making and resource allocation.
Step 2
Evaluate the importance of a business plan to an innovative new technology business
Answer
A business plan is crucial for an innovative new technology business for several reasons:
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Strategic Direction: It sets out both short-term and long-term strategies, providing the entrepreneur with a clear focus on where the business aims to go. For example, setting a target to 'achieve healthy Gross Margin in the first year of operation' helps the business monitor progress over time.
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Funding Acquisition: The business plan acts as a vital document when seeking funds from financial institutions or investors. It demonstrates to potential funders that the business has been well-researched and has a strong likelihood of success, helping to secure the necessary capital.
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Measuring Performance: The business plan allows for the setting of standard benchmarks and performance indicators, such as revenue targets or cost management strategies, which help in measuring success and making necessary adjustments.
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Risk Management: By identifying potential risks and devising mitigation strategies in advance, the business plan provides a framework for navigating challenges that may arise.
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Commercial Viability: Ultimately, a well-structured business plan can serve as a tool for evaluating the commercial viability of the business idea. This not only aids in internal decision-making but also reassures external stakeholders of the project's potential value.
In summary, a business plan is essential for establishing a roadmap for operations, securing funding, monitoring performance, managing risks, and determining commercial viability.