Key Idea: At Higher Level, Topic 6.5 requires more detailed evaluation of business plans, including financial projections, market analysis depth, and the assessment of plan viability using quantitative and qualitative criteria.
Core structure (must know)
- A business plan = formal document outlining goals, strategies and finances
- Purpose: attract investment, plan ahead, set milestones, identify risks
- Key elements: executive summary, market analysis, marketing strategy, financial forecasts
- Financial forecasts often include cash flow, projected profit and loss, break-even and start-up costs
- Investors focus heavily on realism and evidence
✅ Why business plans matter: Helps secure finance. Forces clear planning. Sets targets and milestones. Highlights risk before launch.
⚠️ Main limitations: Based on forecasts and assumptions. Can become outdated quickly. Time-consuming to prepare well. May create false confidence if unrealistic.
Sections that examiners expect
- Marketing section: target market, USP, marketing mix, competitive strategy
- Operations section: production method, location, suppliers, equipment
- Finance section: cash flow forecast, break-even, P&L projection, funding sources
- All sections must fit together logically
HL answers should move beyond listing sections. The key is explaining whether the plan is realistic, internally consistent and convincing to investors or lenders.
Evaluation tip: a business plan may look strong on paper but still be weak if the market research is shallow, the sales forecasts are optimistic or the funding assumptions are unrealistic.
Important: Common trap: students list sections of a business plan without explaining why those sections matter or how they support viability.
- Identify the purpose of the business plan in the question
- Select the most relevant section or sections
- Explain what information those sections should contain
- Judge whether the information is realistic and evidence-based
- Comment on whether the plan would help decision-making or finance raising
- Add a supported judgement if asked to evaluate