Evaluating the Business Plan. This section requires you to evaluate the likely chances of success of your plan. Providing you have completed the previous.

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Presentation transcript:

Evaluating the Business Plan

This section requires you to evaluate the likely chances of success of your plan. Providing you have completed the previous sections correctly this should not take very long. There are a number of calculations you need to make but it is the quality of your evaluation that is important. As this is the hardest skill it carries 18 marks, as shown on the next slide. You can use Pages of your textbook to help and there are numerous internet sources available on these topics.

Evaluating the Business Plan Assessment Objective 4 This worth 18 marks. It is the quality of your judgements based on the previous information that is important in this task. Mark Band 1 A judgement based on limited evidence of the viability of the plan(0-4 marks) Mark Band 2 A judgement with some justification of the viability of the plan(5-8 marks) Mark Band 3 An evaluation of the viability of the plan(9-13 marks) Mark Band 4 A comprehensive evaluation of the viability of the plan(14-18marks)

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Which Ratio Which ratio is this and what does it tell your business?

Financial Ratios Calculate the whichever of the following ratios are relevant to your business and include them as an appendix: Gross profit to sales Net profit to sales Return on capital employed Current ratio Acid Test Stock Turnover Debtor Collection Period Creditor payment period Return on Assets com_content&view=article&id=44&Itemid=120 com_content&view=article&id=44&Itemid=120

Financial Ratios In your main business plan, write the heading financial viability. Discuss the Profitability; Solvency and Efficiency Ratios. You must state clearly what each of the ratio means and how it affects the success of your plan. Do not forget to explain the effects of the ratio on your business. What do you need to do as a result?

Payback Investment appraisal measures whether you r business investment was worthwhile. There are 3 ways to measure it of which we will use the payback method.In a capital budget, this is the amount of time it takes to repay the original investment. Study the following presentation. studies/comments/revision-presentation-making- investment-decisions-introduction studies/comments/revision-presentation-making- investment-decisions-introduction Calculate the payback period for your business. Is your project worth it?

What If - Cash Flow - Chaining Starter Quiz /quiz.html /quiz.html What would happen to a business if the following occurred on a cash flow? Chain your answer – by adding extra links, after each consequence. 1. Sales drop due to unexpectedly heavy snow fall in late march 2. Increase in gas and electricity bills 3. Reduce the hours worked by your staff

What If Scenario – Cash Flow In your cash flow spreadsheet change some of the variables. Change the: Sales – lower and higher Some of your outgoings. Include a separate new spreadsheet in your appendices for each change. Write the heading “What If Scenario” in your business plan, explain the effects of changes in your cashflow. If you do not understand this topic search

What if – Break Even - Chaining Study the break even generator studies/comments/free-teaching-resource-breakeven-simulator studies/comments/free-teaching-resource-breakeven-simulator Chain your answer – by adding extra links, after each consequence. What happens when you Increase Fixed costs Lower the price Increase the variable cost

What If Scenario – Break Even In your break even spreadsheet change some of the variables. Change the: Fixed costs Variable Costs Price Include a separate new spreadsheet in each of your appendices Under the heading “What If Scenario” in your business plan, explain the effects of changes in your break even variables

Contingency planning There are many risks associated with your plan. Different risks could affect different parts of your plan – some could be marketing; others operational or financial. Therefore you need to assess the risks and suggest possible plans in case something goes wrong. Use the template on the next slide and include it as an appendix

Contingency plan RiskLikelihoodPotential impact Action Needed to Prevent It Contingency Plan

Contingency plan For each of the risks identifies in your table, write a paragraph which: Describes the risk States how likely it is Suggest impacts Explains what could be done to avoid it Explains the contingency plan.