Build and use a simple business plan
Explain a business plan's main elements and how it can help coordinate a start-up while remaining uncertain.
Exam scope and assessment notes
Cambridge IGCSE (9–1) Business Studies 0986, 2026 syllabus, Version 2. This is the separate 9–1 legacy route; 0774 replaces it for first assessment June 2027. Candidates are not assessed on constructing income statements or statements of financial position, nor on price-elasticity or exchange-rate calculations. Simple cash-flow forecast construction is assessed. Written practice is self-checked, not an official Cambridge grade; timed-paper evidence and human subject-teacher review remain outstanding.
Before you begin
- No previous business study is assumed. Read each scenario for the decision-maker, objective, available evidence and constraints.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which statement best describes a business plan?
What you will learn
- Identify the purpose of a business plan
- Recognise its key elements
- Explain how plans support decisions and funding
Connect the plan's parts
A plan may summarise the idea and objectives, required resources, market research, marketing, finance, people and operations. These parts should support one another.
For example, a sales forecast in marketing should be consistent with expected production capacity, staffing and cash needs. A plan is more useful when assumptions and evidence are visible.
Use it as a tool, not a promise
A plan can guide decisions, coordinate tasks and communicate a proposal to a lender or investor. Government support may require an applicant to show that the venture has been considered.
A plan cannot guarantee finance, customer demand or success. Forecasts can be wrong, so the owner should update the plan when new evidence appears.
Pause and explain
Why can a business plan help a start-up seek finance?
Worked example
A start-up forecasts 1,000 monthly orders but has a kitchen that can make only 500. Which parts of its business plan conflict, and why does it matter?
Show the worked solution
- Compare sales assumptions with production capacity.
- Check staffing, resources and finance needs too.
- Explain one consequence of the mismatch.
Answer The marketing sales forecast conflicts with operations capacity. The business may miss orders or need additional equipment, staff and finance; the plan should align these assumptions.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Name four useful parts of a plan for a small online store and explain how two should connect.
Give me a hint
Choose parts that describe the customer, resources and delivery.
Compare my reasoning
- Consider summary/objectives, market research, marketing, finance, people and operations.
- Link sales forecasts to stock and delivery capacity.
- Link the marketing budget to available finance.
A plan could include objectives, market research, marketing, finance, people and operations. Expected online orders should be consistent with stock, staffing and delivery capacity.
Look for these in your work
- Four or more elements named
- At least two linked
- Context applied
A government offers start-up training and low-cost loans. Explain how a business plan may help an applicant and one reason support may still be refused.
Give me a hint
Show the plan's communication role and a limitation.
Compare my reasoning
- A plan can set out objectives and resources.
- It can explain market evidence and funding needs.
- Eligibility, evidence or scheme conditions still matter.
The plan can help show the proposal, market assumptions and finance needs. Support may still be refused if the applicant does not meet scheme conditions or the proposal lacks convincing evidence.
Look for these in your work
- Plan role explained
- Application connected
- No automatic approval assumed
A business plan is six months old and actual costs are higher than forecast. Recommend one response and explain why simply following the old plan may be harmful.
Give me a hint
Compare the plan with current evidence.
Compare my reasoning
- Update cost and cash assumptions.
- Reconsider price, output or funding using current information.
- An unchanged forecast may understate finance needs.
Update the plan using current costs and revise decisions such as output or financing. Following outdated figures could cause the business to underestimate cash needs or price below cost.
Look for these in your work
- Response specific
- Evidence used
- Risk of stale plan explained
Common mistakes
- Treating a business plan as a guarantee of success
- Listing sections without explaining how they connect
- Assuming government support is automatic
What can you explain now?
Which statement best describes a business plan?
Compare with the explanation
A document linking objectives, market, resources, finance, people and operations
These parts help explain how the venture may work.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Why should a business plan be revised when actual results differ from its assumptions?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.