The loan officer's first question: In January 2026 Lena and Marco went to the bank to borrow $120,000 for a fourth shop, on Station Road. The loan officer did not ask to taste the bread. She asked for the plan.
Lena had written one before, for her very first shop, with $18,000 of set-up costs (1.1.4). This one had to cover a company with three shops, a bakehouse, and a $350,000 loan already owed.
A business plan is a written document that sets out what a business, or one project inside it, is trying to achieve, how it will get there, and how much money it needs and where that money will come from.
It looks forward. Every number in it is a forecast, not a result.
When a business writes one
Starting up
Lena's first shop. No sales yet, so the plan is the only thing a lender can judge.
Growing
A fourth shop on Station Road: new premises, new staff, $120,000 of new debt.
Launching something new
A lunch range, a new product line or a new market, where the business has no track record yet.
Asking for money
A bank loan, or an investor such as Farida Rahman, who offered $120,000 for 400 new shares (3.2.2).
Changing direction
A new strategy for the next five years, where every function has to change at once.
A planning tool: A SWOT analysis describes where a business stands now (6.1.1). The Ansoff matrix helps it choose a direction (6.2.1).
A business plan does a third job: it sets out the route, step by step, from where the business is to where it wants to be, before the money is spent.
| Document | What it shows | Which way it looks |
|---|---|---|
| Business plan | The objectives, how they will be reached, and the money needed | Forward, often several years |
| Mission statement | Why the business exists, in a sentence, with no numbers | Forward, with no end date |
| Cash-flow forecast | Cash in and out, month by month: one part of a plan's finance section | Forward, months |
| Final accounts | What the business earned, spent, owns and owes | Back, at last year |
So the Station Road plan was not the bakery's mission and not its accounts. It was the document that said: here is what the fourth shop is for, here is how it will work, here is the $120,000, and here is how it comes back.
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The Station Road plan had two very different readers. One sat across the desk at the bank. The others were Lena, Marco, and everyone who would have to make the new shop work.
Outside the business (external purposes)
- Raise finance: the bank lends $120,000 only if the repayments look safe
- Attract investors, who want to know what their share will be worth
- Persuade other stakeholders: the Station Road landlord, suppliers asked for credit
- Show donors or grant givers the good a social enterprise plans to do
Inside the business (internal purposes)
- Set objectives and targets: 150 lunches a day at Station Road
- Think it through and find the problems on paper first
- Coordinate the functions: marketing, operations, people and finance work to one set of dates
- Plan resources: bakers, ovens, vans and cash, in the right order
- Check progress: compare each month's results with the forecast
The question each reader asks: The bank reads the plan to answer one question: will this money come back? It checks the market, the sales forecast, and whether the cash covers repayments of $33,600 in the first year.
Lena and Marco read it to answer a different one: what do we do next, and in what order?
What the plan did inside the bakery
It found a problem on paper
Two vans leave Mill Lane at 5 a.m. and reach three shops by opening time (3.2.1). Writing the plan showed that four shops would not fit, before a single loaf arrived late.
It set the targets
150 lunches a day at Station Road, and two more bakers trained by March. A target on paper can be checked; 'do well' cannot.
It lined up the functions
The opening date fixed everything else: Priti's training, the lease, the fit-out, and the $15,000 launch plan of tasting week, leaflets and a station poster (4.2.2).
It gave a yardstick
Marco forecast cash in of $30,000, $33,000 and $36,000 in the first three months (3.7.2). Each month the real figure is set beside it, and a gap is spotted early.
One document, two jobs that can pull apart: A plan written only to impress the bank tends to use its best guesses and play down its risks. Inside the business, it then sets targets nobody can hit.
Written only for the owners: A plan written only for the owners may skip what a lender must see: how much, for what, and how it is repaid.
What a good plan does: A good plan is honest enough to run the business with and clear enough to lend against.
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Business plans differ in length, from a dozen pages for Station Road to a hundred for a new Goldcrust factory, but most follow the same order.
The order follows the questions a reader asks
- What is this?
- Who will buy?
- How will it work?
- What will it cost?
- What could go wrong?
| Section | The question it answers | In the Station Road plan |
|---|---|---|
| Executive summary | What is planned, what is asked for, and why will it work? | A fourth shop from September 2026; $120,000 over five years |
| The business and its objectives | Who are we, and what are we trying to achieve? | Three shops and a bakehouse; eight shops within five years |
| The market | Who will buy, and who else sells to them? | Commuters and office workers; five office managers interviewed |
| Marketing, operations and people | How will it be sold, made and staffed? | Launch offer; bread from Mill Lane; two bakers trained by March |
| Finance | What will it cost and earn, and when is cash short? | Fit-out $120,000; three-month cash-flow forecast |
| Risks | What could go wrong, and what then? | Fewer lunches than forecast; vans that cannot reach four shops |
Written last, read first: The executive summary sits at the front but is written at the end, because it summarises everything behind it. A busy reader may read nothing else.
The Station Road summary fitted on half a page: the shop, the $120,000, the forecast, and how the loan is repaid.
Objectives
what for
- Eight shops within five years
- Station Road is shop four
Market
who buys
- Commuters and office workers
- About 150 lunches a day
Functional plans
how
- Bakers, vans, menu, launch
- Each with a date
Finance
what it costs and earns
- Fit-out, forecasts, repayments
- Built on the lunch forecast
The structure shifts with the reader. For the bank, the finance section and the repayments come early and in detail. For the staff, a short version with the targets, the dates and who does what is enough. A social enterprise adds a section on the good it plans to do: how many people it will help, and how it will show it.
The structure in one line: What, who buys, how, how much, what if. And a summary on top that says all five in half a page.
A number is not a lunch: Marco's plan says 150 lunches a day at Station Road. The number came from five interviews and a count of people passing the station.
Suppose the first month brings 90. The plan did nothing wrong; it said what Lena and Marco expected. But every figure built on the 150, from the cash forecast to the repayments, is now too high.
What a business plan cannot do
Its figures are guesses
Sales, costs and cash are forecasts built on assumptions. If the assumption is wrong, so is every figure that uses it.
It goes out of date
Crumbline opens a kiosk at the station, flour prices rise: the plan written in January is describing a world that has changed.
It takes time and money
Research, forecasts and drafts took Lena and Marco weeks. A very small business may not have that time to spare.
It can look more certain than it is
Neat tables of numbers feel reliable. Owners who want the project to happen tend to pick the hopeful figures, and then believe them.
It can make a business rigid
Sticking to the plan because it is the plan, after the situation has changed, can do more harm than having no plan at all.
A plan used badly
- Numbers. Guessed, and the most hopeful guess chosen.
- After the loan. Filed in a drawer.
- Risks. Left out, so the plan looks safer.
- When things change. Followed anyway.
A plan used well
- Numbers. Built on research, with a line on what happens if sales are lower.
- After the loan. Checked each month against the real figures.
- Risks. Listed, each with what the business would do.
- When things change. Rewritten.
So is a business plan worth writing? For Station Road, clearly: the bank would not lend $120,000 without one, and the van problem was found on paper. For a market stall run on savings, one page may be enough. The answer depends on how much money is at stake, who else must be persuaded, and how fast the market changes.
What a plan is worth: A business plan is worth as much as the evidence under its numbers, and the attention it gets after the money arrives.
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How this comes up: Short questions ask you to define a business plan, state two of its purposes, or explain one purpose or one limitation for a named business.
The long question gives you a business with a list of concerns, often with figures, and asks you to recommend a plan of action for the next two years or more.
The order of a business plan is how you organise the answer
- The objective.
- The actions, in sequence.
- The money.
- The risks.
- The decision.
The plan-of-action pattern
- Start from the objective. One sentence on what the plan must achieve, taken from the case.
- Actions in order, each with a time. What comes first and why first. Tie every action to a concern and a figure from the stimulus.
- The money. What each action costs and where the money comes from, checked against the figures given.
- The other side. For each main action, what it costs the business or who loses out.
- Decide. The plan you recommend, the condition it depends on, and what the stimulus does not tell you.
The trap: a shopping list: Five concerns, five fixes, one line each, is not a plan. There is no order, no cost, and no downside, so the answer is one-sided and descriptive.
A plan that never uses the figures in the stimulus could be written about any business. Use the numbers to decide what comes first.
Using the information in the stimulus, recommend a plan of action to address Lena's concerns for the next two years (2027 to 2028).
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.