Question 1: Define the term 'business activity' and give two examples of different types of business activity.

Answer: Business activity is any action undertaken by a business to produce goods or provide services for customers. Examples include manufacturing cars and providing hairdressing services.

Question 2: Explain why a business needs a business plan before starting operations.

Answer: A business needs a plan to set clear objectives, attract investors, identify resources needed, and reduce the risk of failure by planning ahead.

Question 3: Identify and explain two main components that should be included in a business plan.

Answer: Two main components are the marketing plan, which outlines how the business will attract customers, and the financial plan, which details how the business will manage its finances and funding.

Question 4: Describe the difference between a 'product' and a 'service' with examples.

Answer: A product is a tangible item that can be bought, such as a smartphone. A service is an intangible action provided to customers, such as haircuts or cleaning services.

Question 5: Sketch a simple diagram to show the basic structure of a business plan. Label the main sections.

Answer: A correct sketch would be a rectangular flowchart or list with sections labeled: Executive Summary, Business Description, Market Analysis, Organization & Management, Product Line or Services, Marketing & Sales, Funding Request, Financial Projections.

Question 6: List three questions a business owner should ask themselves when planning their business activity.

Answer: What product or service will I offer? Who are my target customers? How will I finance and manage the business?

Question 7: Explain how understanding the target market can influence a business's planning decisions.

Answer: Knowing the target market helps a business tailor its products, marketing strategies, and pricing to meet customer needs and preferences, increasing chances of success.

Question 8: Describe what a 'mission statement' is and why it is important in business planning.

Answer: A mission statement is a brief statement of a business’s purpose and values. It provides direction and motivates staff, guiding decision-making.

Question 9: Identify two risks a new business might face during planning and how they can be mitigated.

Answer: Risks include insufficient funding, which can be mitigated by thorough financial planning, and poor market research, which can be reduced by conducting detailed market analysis.

Question 10: Sketch a simple chart that shows the relationship between business activity, planning, and success. Label each part clearly.

Answer: A correct sketch would be a flowchart or Venn diagram with three parts: 'Business Activity' leading into 'Planning,' which then leads to 'Success.' Alternatively, a diagram showing that effective planning enhances business activity, resulting in success.