Page three of the Station Road plan: Now open the Station Road plan. The loan officer turned straight to page three, the market. If nobody buys, no other page matters.
In 6.5.1 the bank asked Lena and Marco for their plan for a fourth shop, and you saw its order: the summary, the business, the market, how it will work, the finance, the risks.
The market analysis answers one question: who will buy, and how many of them are there? It holds the evidence, from research the bakery did itself (primary research, 4.4.1) and from figures others had already published (secondary research, 4.4.2).
| What the market analysis shows | In the Station Road plan |
|---|---|
| The customers (the target market) | Commuters on their way to the train, and office workers at lunchtime |
| How many there are (market size) | 1,850 people pass the station between 6.30 and 9.00 a.m.; the rail company reports 4,200 passengers a day |
| Who else sells to them (competitors) | Crumbline plc's kiosk in the station sells coffee and a pastry for $3.50 |
| What is changing (trends) | A 900-worker office block opens nearby in 2027 |
| The evidence | A count of passers-by, the rail company's figures, and interviews with five office managers about lunches |
The marketing plan comes next. The market analysis says who the customers are; the marketing plan says how the shop will win them. It sets out the marketing mix (4.5): what the shop sells, at what price, where and when, and how people will hear about it.
The Station Road marketing plan
Product
Bread from Mill Lane, a $3 coffee-and-croissant deal for commuters, and a lunch menu for the offices.
Price
Loaves at $3, as in the other three shops. The $3 deal sits 50 cents under Crumbline's $3.50.
Place
Next to the station, open from 6.30 a.m. so the early trains are served.
Promotion
$15,000 for the first three months: a tasting week, leaflets, a station poster, online adverts and loyalty cards (4.2.2).
Market analysis
- Who will buy, and how many
- 1,850 passers-by each morning
- Crumbline's kiosk already there
Marketing plan
- How the shop will win them
- A $3 deal against a $3.50 one
- $15,000 of launch spending
The sales forecast
- The number both lead to
- About 250 loaves and 300 customers a day
- A target of 150 lunches a day
The foundation: Every number later in the plan starts from the sales forecast, and the sales forecast starts here. A market section built on real evidence makes the whole plan believable.
Free preview
This is the free notes preview
You're reading the free notes. Aimnova Pro unlocks the full study experience — and you can try it with your first topic free to keep:
- FlashcardsLock in vocabulary and key terms with spaced repetition.
- Practice questionsAnswer exam-style questions and get instant AI marking.
- Mock exams & past-paper vaultSit full mocks and see exactly how examiners award marks.
- Personalised study planA daily plan built around your exam date and weak areas.
After the market, the bank had a second worry: can the bakery actually make and sell all this? Two components answer it.
The two components
- The operations plan says how the products are made and delivered.
- The human resources plan says who will do the work.
| The operations plan covers | In the Station Road plan |
|---|---|
| Location and premises | A shop next to the station; a $120,000 fit-out of counters, a coffee machine and seating |
| How the products are made | Bread is baked at Mill Lane, not in the shop: 1,450 loaves a night instead of 1,200, the 250 more a day the new shop needs |
| Suppliers | Flour and ingredients from Valley Grain, paid 30 days after delivery |
| Capacity | One oven bakes 600 loaves an hour; a second $45,000 deck oven is planned |
| Delivery and opening hours | Vans leave Mill Lane at 5 a.m.; the shop opens at 6.30 a.m. |
A plan that sells more than it can deliver: Writing the operations plan showed a problem: two vans reach three shops by opening time (3.2.1), and four shops do not fit.
So the plan had to say what happens: lease a third van for $750 a month. An operations plan that skips a problem like this makes the sales forecast impossible to deliver.
The human resources plan (a workforce plan, 2.1.1) sets out the people: how many are needed, with what skills, how they will be recruited and trained, and who manages them.
The people in the Station Road plan
How many
Three people at the counter for the 7 to 8 a.m. rush, fewer later in the day.
Recruitment
The shop team is advertised locally; experienced staff can move across from the other three shops.
Training
New staff learn the tills and the coffee machine at Park Road before opening. At Mill Lane, Priti trains two more bakers for the bigger night bake.
Who manages
Lena and Marco, the directors, answer to the bank; each shop has its own manager, as Aisha runs High Street.
Why the bank reads these pages: A lender does not need to know how to bake bread. It needs to see that someone has worked out how the bread gets made, carried and sold on time, and by whom.
If these pages are vague, the sales forecast may be right and the business may still fail to deliver it.
Stop wasting time on topics you know
Our AI identifies your weak areas and focuses your study time where it matters. No more overstudying easy topics.
The page the bank checks twice: The market pages say people will buy. The financial plan turns that into money: what the project costs, where the money comes from, and whether the cash will cover the repayments.
| The financial plan covers | In the Station Road plan |
|---|---|
| Start-up costs (capital expenditure) | $120,000 to fit out the shop |
| Sources of finance (3.2) | A five-year bank loan at 8%: $24,000 of the loan plus $9,600 of interest, $33,600 in the first year |
| Sales forecast | About 250 loaves and 300 customers a day, taken from the market analysis |
| Cash-flow forecast (3.7.2) | Cash in and cash out, month by month, for the first months after opening |
| Profit and payback (3.8) | Net cash flows of $30,000 in year one, rising to $38,000 in year five; payback in 3 years 8 months |
| Break-even (5.5) | How many sales the shop needs each month to cover its costs |
Of all these, the cash-flow forecast matters most to a lender, because a shop can make a profit over the year and still run out of cash in one month. Here is Marco's forecast for the first three months after opening, in thousands of dollars.
| $000 | Month 1 | Month 2 | Month 3 |
|---|---|---|---|
| Opening balance | 8 | 4 | 6 |
| Cash in | 30 | 33 | 36 |
| Cash out | 34 | 31 | 33 |
| Net cash flow | (4) | 2 | 3 |
| Closing balance | 4 | 6 | 9 |
How the bank reads the forecast
Month 1
Cash out beats cash in by $4,000: stock, wages and the launch all come at once. The balance falls from $8,000 to $4,000.
Months 2 and 3
Sales grow and the balance climbs to $6,000, then $9,000. The cash never runs out.
The safety net
If the first month goes worse, the bakery has a $30,000 overdraft limit to fall back on.
The payback
$30,000, $32,000 and $34,000 in the first three years make $96,000. The last $24,000 comes 8 months into year four.
A chain of numbers: The market analysis gives the sales forecast. The sales forecast gives the cash in. Cash in, less the costs, shows whether the loan can be repaid.
Change the first number and every number after it moves.
A plan that only shows the good news is hard to trust. The risk assessment lists what could go wrong and what the business would do about each problem.
| Risk in the Station Road plan | What Lena's Bakery would do |
|---|---|
| Fewer lunches than the 150 a day forecast from five interviews | Start with a short lunch menu and review it after three months |
| Crumbline cuts the price of its $3.50 coffee and pastry | Keep the $3 deal, and use the loyalty cards to hold on to commuters |
| Two vans cannot reach four shops by opening time | Lease a third van for $750 a month |
| A slow first month drains the cash | Use the $30,000 overdraft limit |
Risks make a plan more believable: A plan with no risks looks as if nobody looked for them. Each risk named with its response shows the lender that the owners have thought ahead.
The responses are a plan B for each risk (a contingency plan).
Two short components sit at the front. The business description says who is asking: Lena's Bakery Ltd, a private limited company run by its directors Lena and Marco, with three shops, a bakehouse and the objective of eight shops within five years (1.3.2). The executive summary then gives the whole plan in brief; it is written last, once every other component exists (6.5.1).
The Station Road executive summary, in five lines
The project
A fourth shop on Station Road, opening in September 2026.
The market
1,850 people pass the station each morning; a forecast of 250 loaves and 300 customers a day.
The money asked for
$120,000 over five years, to fit out the shop.
The forecast
Net cash flows of $30,000 in the first year, rising every year after.
How it is repaid
From those cash flows: the fit-out pays for itself in 3 years 8 months.
Market analysis
the evidence
- 150 lunches a day, from five interviews
- The first month sells 90
Sales forecast
the numbers
- Lunch sales fall by 60 a day
Cash-flow forecast
the cash
- Less cash in every month
Repayments
the bank
- $33,600 in year one is harder to meet
The test of a good plan: Every component tells the same story. The market supports the sales forecast, operations and people can deliver it, the finance shows the loan is repaid, and the risks say what happens if it is not.
See how examiners mark answers
Answer exam-style questions with model answers. Learn exactly what earns marks and what doesn't.
How this comes up: Short questions ask about one component: define the executive summary, state two financial forecasts a plan includes, or explain why a plan needs market research or an operations plan.
The long question gives you a business and its plan and asks you to discuss whether the plan will do its job, often whether it will persuade a lender.
Judge it component by component: Which parts rest on evidence, which are missing, and whether the finance adds up.
The ten-mark pattern
- Name the job. What must the plan achieve here: persuade a bank to lend how much?
- The components that help. Each with its evidence from the case and why a lender would trust it.
- The weak or missing ones. Each with the figure that shows the gap, and what it could cost.
- Check the numbers. Work out a figure the plan leaves out, such as the repayments or a year's rent.
- Judge. Will it persuade as it stands? What would have to be added, and what does the case not say?
The trap: listing the components: Writing out what a business plan should contain, section by section, answers a different question. The case gives you a real plan: judge that one.
The other trap is a one-sided answer. A plan with gaps usually has strengths too, and the judgement weighs both.
Using the information in the stimulus, discuss whether Maren's business plan is likely to persuade the bank to lend her $50,000.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.