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Business Studies for Secondary Schools
Activity 4.2 Significance of a business plan
A business plan serves as a guide to all types
Read the following scenario and of businesses seeking to start, expand,
answer the questions that follow: and excel in their fields of specialisation.
Fatma and Amina both decided to start It effectively responds to essential issues
FOR ONLINE READING ONLY
a food stall business independently. about a business’s everyday activities as
Amina was excited and started well as long-term operations. A business
immediately without much thought; plan has the following significance:
she bought ingredients, set up her Helps in starting an enterprise: A business
stall, and began selling. She did not plan is considered as a roadmap for the
calculate her costs, set clear prices, business to be undertaken. It describes
or plan how much to make each day. the nature of the business, marketing,
Fatma, however, took time to prepare. and operational strategies necessary for
She listed what she needed, calculated its survival. The business plan shows the
her costs, and thought about which steps in starting and managing a business.
customers to serve. She also planned It also help in the allocation of the needed
her pricing to ensure she generates resources for the business.
profits. After two weeks, Fatma’s Aids in decision-making: Decision-making
business was running smoothly, while is an important task for an entrepreneur.
Amina struggled; some days, she had Some decisions like when to rent a new
too much food left, and other days, she space or expand the business are not always
ran out of ingredients. Eventually, she easy to make. With a clear business plan,
realized she was losing money and had entrepreneurs can determine the specific
to stop the business. times or goals they must meet to make these
important decisions. A good business plan
Questions:
will help an entrepreneur identify critical
1. (a) What mistakes Amina did? business priorities and milestones to focus
(b) What Fatma did differently? on.
2. How did planning help Fatma’s Helps in setting objectives and benchmarks:
business succeed? A detailed business plan helps in setting
3. What challenges could Fatma still short and long-term objectives for the
face, even with planning? business. Specific objectives can be set, and
appropriate strategies can be implemented
4. If you were starting a business,
what would you do to avoid within a short time. Also, business plans
Amina’s situation? set benchmarks from which performance
can be measured.
Student’s Book Form Three 68
