The Association of Business Executives

QCF
Business Plan for
Enterprise Start-up
Tuesday 9 June 2015, Afternoon

1. Time allowed: 3 hours.

2. Read the instructions at the top of each section carefully.

3. Follow the recommended timing guide for each question.

4. No books, dictionaries, notes or any other written materials are allowed in this
examination.

5. Calculators, including scientific calculators, are allowed provided they are not
programmable and cannot store or recall information. All other electronic devices,
including mobile phones, are not permitted.

6. Candidates who break ABE Examination Regulations will be disqualified from the
examinations.

7. Question papers must not be removed from the examination room.

Structure of paper: Answer all three sections

Section A: Answer all three questions Q1

Q2
Q3

Section B: Answer one question Either Q4 or Q5

Section C: Answer one question Either Q6 or Q7

4BPES0615 ABE 2015 J/504/4410

 Read the following Case Study, which provides the context for the questions in all three
sections of this paper. You must ensure that your answers are related to the Case Study.
Candidates should make appropriate assumptions if necessary when answering the
questions and base their answers on a country of choice and use that countrys currency.

Nathan, Ethel and Anita are electrical engineers who have been working as sole traders for
five years. The three went to school with you before you began to move up the management
career ladder with a large electrical appliances manufacturer. They went to college together and
completed their qualifications and after gaining experience with large companies all decided to set
up their own separate small businesses. Over the years that they have been in the industry they
have met and worked with a large number of other workers, businesses and stakeholders.

They have now decided to pool their skills and resources and set up a limited company of which
they will be the directors, but will also look to use around 15 of the reliable operatives they know
well by the end of their second year. Importantly they wish to set up the company - called Naset
- to operate in the renewable energy field, developing and installing domestic and commercial
environmental technologies such as solar thermal systems, heat pump systems, biomass
systemsand water recycling.

This is a growing and largely untapped emerging market and they see great opportunity in
offering design and build services as well as installation services to domestic, commercial and
local government customers. Also, all three directors wish to expand their operations into new
geographical areas in the next year.

The renewable energy industry will mean using natural resources such as the sun, wind, water,
wood and waste to power households and businesses. This is a relatively new area of business
forthem and the industry as a whole and they will need to forge new links with suppliers,
customers and other potential stakeholders. It is unclear as to who will be interested in supporting
them and who will buy their products. In fact they are not sure how much the general public
understand this new technology.

They will also need to think about the resource needs, as much of the work they will undertake will
be very similar to what they already do, but the technology will be different. They will still be setting
up power and electricity for buildings but the units supplying the power and electricity will be new.
Much of the tools and equipment they currently use will be useful for the new business. However
they will need some new equipment in order to work with the new technology and this could be
quite expensive to buy. Also they will need to think about the implications of using other workers
asthey will need to be managed.

The change in size, resources, personnel and business will necessarily require the development
of new financial information. The three will need some financial information for their own decision-
making and they know that they will need it for other stakeholders including anybody who they
might need to lend or invest in the business. They will need to think how this information is laid out
and the statements they will need for internal and external decision-making - and for stakeholders.

The three realise that they have operated in a fairly informal style up to now and they are not
used to much structure in running and developing their businesses. However in order to start up
the new company they have had to ask Anitas father who used to be the Chief Executive Officer
of BigEnergy, a large multi-national company whether he will invest a fairly large sum into the
company to get it started. He admires the ambition of the three but has asked them about their
business plan and how they intend to manage the new SME for short term survival and long
termgrowth.

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After a lot of discussion Nathan, Ethel and Anita have asked you to help them convince Anitas
father that they can strategically manage the company and offer sustainable development in return
for his funds.

By answering the following questions, you should be able to reassure Anitas father as to the
strength of their business proposal and to advise Nathan, Ethel and Anita on what they should
include in their business plan.

Turn over for the questions

4BPES0615 3 [Turn over

 This paper consists of three sections.
Follow the instructions at the top of each section.

Section A
You must answer all three questions in this section.
You should spend approximately 35 minutes on each question.

Q1 
The investor is not convinced the business has been thought out well. To convince him, the
directors of Naset need to put together the information required for the introductory section of
the plan.

Describe the types of information that should be included in the introductory section of the
business plan, pointing out any particular information that the directors of Naset might want
an investor to focus on.

Q2 
Despite having a lot of experience in this sector, the investor has little idea of the risks
involved in setting up a start-up and of the legislation and regulations the small business
would need to comply with.

(a) Explain three critical stages in the implementation of the business plan.

(b) 
Identify and explain three types of legislation or regulation Naset will need to comply
with as a new business and explain the insurance requirements it will need to comply
with.

Q3 
The three directors of Naset realise that after explaining the financial plans they will be asked
to implement those plans.

Identify and explain six types of resources a business will require in its first year of trading.

End of Section A

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 Section B
You must answer one question in this section. Do not answer both Q4 and Q5.
You should spend approximately 35 minutes on your chosen question.

EITHER:

Q4 
The investor is worried about supporting a business that is entering a relatively new market.
He wants to know what market research the directors intend to carry out before Naset starts
up.


Explain the market research activities that should be undertaken to determine the potential of
the business proposal.

OR:

Q5 
The three directors of Naset have always used word-of-mouth for marketing up to now and
now realise the business plan will need to prepare the company to attract and keep a wider
customer base.

Describe how customer care policies and quality standards for staff can ensure that
customers will be encouraged to use the company.

End of Section B
Turn over to Section C

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 Section C
You must answer one question in this section. Do not answer both Q6 and Q7.
You should spend approximately 35 minutes on your chosen question.

EITHER:

Q6 The investor wants to know that Naset is set up and organised with long-term growth in mind.

Identify four additional types of finance, other than the investment from Anitas father, that
Naset might consider and outline the advantages and disadvantages of each type of finance.

OR:

Q7 
The investor is worried that the three directors of Naset may not have done as much financial
planning as they could have.

Identify and briefly explain three types of financial information that an investor would expect
to see in a business plan.

End of Section C
End of question paper

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