Business Planning - IELTS General Reading Sample with Explanation

The IELTS reading section tests a candidate’s understanding skills through passages and forty questions. This IELTS reading topic - Business Planning is a general topic. Candidates will need to read the passage thoroughly to answer different types of questions. This IELTS reading passage has question types like:

• Yes/No/Not Given
• Sentence completion

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Section 1

Read the Passage to Answer the Following Questions

Business Planning IELTS General Reading Sample 

What is a Business plan?

It is probably best described as a summary and evaluation of your business idea, in writing.

Preparation of a business plan is the first and most important task for the business starter. The plan should include details concerning the industry in which you operate, your product or service, marketing, production, personnel and financial strategies.

What purpose does it serve?

A business plan allows you to think through all the factors of a business, and to solve potential problems before you come to them. It will identify strengths and weaknesses and help to assess whether the business can succeed. It is a blueprint for starting, maintaining or expanding a business. It is a working plan to use in comparing your achievements to the goals you set. It should provide the information required by financial institutions when finance is sought.

How to produce a Business plan

Step 1: Collect Information

Gather as much relevant information as possible concerning the industry in which you intend to operate (the number of businesses already operating, the size of their operations, where they are located). Use books, industry associations, and existing business owners to help you.

Collect all possible information regarding the market/s you are aiming for (who buys, why do they buy, what are the key features the customer looks for).

Learn all you can about the product/s or services you intend to produce, distribute or offer.

Step 2: Analysis

Read over all the material you have collected and decide what is relevant to your business idea. You may have to modify your idea depending on what your research shows. The key question to ask is:

“Can you design a business that will earn enough to cover costs and pay a wage and reasonable profit to you as a proprietor?”

When Steps 1 and 2 are completed, you should have decided if there is a market for your product or service which is large enough and sufficiently accessible to make your new business financially worthwhile. Now you are ready to commit your plan to paper.

Step 3: Strategy Formulation

Decide how the business will operate. You should describe how the business will be managed, and the staff and organizational structure that will be in place. Diagrams may be useful to show how these areas will work. Don’t forget to include the areas of responsibility for each member of staff. This is especially important if some of your staff will be family members.

There are three further parts that go together to make a comprehensive business plan:

A Marketing plan, which includes location, method of selling, packaging, pricing and so on. In all these areas you must be aware of consumer trends to make sure that your business does not become outdated or irrelevant.

An Operational plan, which describes the day-to-day running of the business. You should include supply sources, cost and quantities of materials, processes, equipment and methods of extending the services or products offered.

A Financial plan, which is a master budget for the operation and includes:

• cash flow forecast
• balance sheet
• profit and loss statement
• sources of finance
• sales forecast and target.

The financial aspects of the plan are most important and you should develop or access financial skills to make sure this part of your plan is accurate and realistic. Don’t forget set-up costs and the money needed to see you through an initial period of low cash flow when calculating your first year’s budget.

Update your Business plan

Nothing remains constant in business; circumstances change, markets change, fashions change, methods change.

From time to time you must check your sources of information and reassess your business plan. What is relevant when you start is not necessarily so in five years’ time. You may also need to revise targets and budgets if external factors (such as interest rates) vary.

Keep your information up-to-date and be prepared to change as circumstances demand. A business plan should be thought of as flexible, not fixed. If you use these steps to develop a business plan, changing it according to circumstances, you will be well on the way to a successful business.

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Section 2

Read the text below and the answers to the 28-40 questions on your answer sheet.

Questions 28-34
Do the following statements agree with the views of the writer in the passage "Business Planning"?
In boxes 28-34 of your Answer Sheet write:

YES- if the statement agrees with the writer's views
NO- if the statement contradicts the writer's views
NOT GIVEN-if it is impossible to say what the writer thinks about this

Question.28. A business plan has to be written.

Answer: YES

Supporting Sentence: The business plan is probably best described as a written summary and evaluation of your business idea. The creation of a business plan is the first and most important task of the entrepreneur. The plan should include details about the industry you are in, your product or service, marketing, manufacturing, human resources, and financial strategies.

Keyword: Summary, business idea

Keyword Location: 1st Paragraph, 1st line

Explanation: A business plan can be used to help set goals, resolve disputes, and ensure that the company is on track to remain successful. The business plan is an important task for the business starter. so the answer is yes the business plan has to be written.

Question.29. The creation of a business plan is only necessary for a new business.

Answer: NOT GIVEN

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Question.30. A business plan should include a diagram of your proposed office or shop layout.

Answer: NOT GIVEN

Question.31. A company must make enough money to pay the owner wages and a certain profit.

Answer: YES

Supporting Sentence: Read over all the material you have collected and decide what is relevant to your business idea. You may have to modify your idea depending on what your research shows. The key question to ask is:

“Can you design a business that will earn enough to cover costs and pay a wage and reasonable profit to you as a proprietor?”

Keyword: costs, Reasonable salary, profit

Keyword Location: Heading 3- “how to produce a business plan” step 2-analysis, paragraph 1

Explanation: You may need to change your idea depending on what your research shows. you need to design a business that will earn enough to cover the costs and pay you a reasonable salary and profit as the owner. So the answer is yes, a company must make enough money to pay the owner wages and a certain profit.

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Question.32.The roles of family members in the business must be clearly defined in the business plan.

Answer: YES

Supporting Sentence: Don’t forget to include the areas of responsibility for each member of staff. This is especially important if some of your staff will be family members.

Keyword: Responsibility, Staff, family members

Keyword Location: Heading 3- “how to produce a business plan” step 3- strategy formation, paragraph 1

Explanation: Decide how the business will operate and you should describe how the business will be managed and the staff and organizational structure that will be in place. Diagrams can be useful to show how these areas will work. Remember to include the areas of responsibility of each staff member. This is especially important if some of the staff will be family members. So the answer is yes, the roles of family members in the business must be clearly defined in the business plan.

Question.33. Expect not to make a lot of money in the first year.

Answer: YES

Supporting Sentence: The financial aspects of the plan are the most important and you need to develop or access financial skills to make sure that this part of your plan is accurate and realistic. Don't forget the setup costs and the money it takes to get through an initial period of low cash flow when calculating your first year budget.

Keyword: Initial period, low cash flow

Keyword Location: Heading 3- “how to produce a business plan” step 3- strategy formation, Last paragraph

Explanation: A financial plan, which is a primary budget for the operation and includes: a cash flow forecast, a balance sheet, an income statement, sources of funding, a sales forecast, and a target. First two years in business are the toughest, especially for someone who is new to business management, has no experience in human resources management or dealing with accounting or bookkeeping. So the answer is yes, one should not expect to make a lot of money in the 1st year.

Question.34. Once a business plan is in place, no further changes are required.

Answer: NO.

Supporting Sentence: A business plan should be seen as flexible, not fixed. If you use these steps to develop a business plan, change according to the circumstances, you will be well on your way to a successful business.

Keyword: Business Plan, Change

Keyword Location: Heading 4-"Update your business plan"

Explanation: Update Your Business Plan Nothing stays constant in business; Circumstances change, markets change, fashions change, methods change. Keep your information up to date and be prepared to change when circumstances require.

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Questions 35-40

The text describes how to create a business plan.

Select the correct word or phrase from the table to complete the following flowchart for creating a business plan.

1. Advertise
2. Keep Your Business Updated
3. Find Information
4. Create a Sample Product
5. Finding a good location
6. Organizational structure
7. Can I find good employees?
8. Operations
9. Create your business plan
10. Can my business make enough money?

Answer: 35. C. Find Information

Supporting Sentence: Gather as much relevant information as possible about the industry you want to be in (number of companies already in operation, size of their business, location). Use existing books, industry associations, and business owners to help you. Gather as much information as you can about the markets you are targeting (who is buying, why are they buying, what key traits the customer is looking for).

Keyword: Information, books, associations

Keyword Location: Heading 3- “how to produce a business plan” , step1-collect information

Explanation: Gather the maximum amount of data as you'll concerning the markets you're targeting. By using books, industry associations and owners of various businesses we can get relevant information to make a business plan. So the answer is C. Find information

Answer: 36. J. Can my business make enough money?

Supporting Sentence: Read all the materials collected and decide what is relevant to your business idea. You may need to modify your idea based on the results of your research. The key question is: “Can you design a business that bears the costs and pays you, as the owner, a decent salary and a decent profit?

Keyword: costs, Reasonable salary, profit

Keyword Location: Heading 3- “how to produce a business plan” step 2-analysis, paragraph 1

Explanation: The person who is planning his business must analyze and ask himself/herself: Can my business make money? It is an important question as the owner of the business must earn enough money to recover the costs. Owner of the business should also modify business ideas from time to time.

So the answer is J can my business make money?

Answer: 37. I. Create your business plan

Supporting Sentence: Preparation of a business plan is the first and most important task for the business starter. The plan should include details concerning the industry in which you operate, your product or service, marketing, production, personnel and financial strategies.

Keyword: Heading 1- What is a business plan?, Paragraph 1

Keyword Location: Business Plan, Task, Details

Explanation: The creation of a business plan is an important task of the entrepreneur. A business plan is a very important and strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs to focus on the concrete steps that are necessary for the success of business ideas, but also helps them to achieve short and long-term goals.

So the answer is I. Create your business Plan.

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Answer: 38. F. Organizational structure

Supporting Sentence: Decide how the business will operate. You should describe how the business will be managed, and the staff and organizational structure that will be in place. Diagrams may be useful to show how these areas will work.

Keyword: Organizational Structure, operate, diagrams

Keyword Location: Heading 3- “how to produce a business plan” step 3- strategy formation

Explanation: Organizational structure is a form or method by which. organizational activities are split up, organized and coordinated. The organizations created the structures to coordinate the. Activities of labor factors and control of members' performance. The organizational structure is shown in the organizational chart.So the answer is F. Organizational structure

Answer: 39. H. Operations

Supporting Sentence: An Operational plan, which describes the day-to-day running of the business. You should include supply sources, cost and quantities of materials, processes, equipment and methods of extending the services or products offered.

Keyword: Operational Plan, business

Keyword Location: Heading 3- “how to produce a business plan” step 3- strategy formation, 3rd paragraph

Explanation: An operational plan is a practical document that outlines the main activities and objectives that an organization will undertake over a period of time, typically a year. ... A deployment plan covers a period of one year. Your strategic plan should be supported by annual operational plans. So the answer is H. Operations

Answer: 40. B. Keep Your Business Updated

Supporting Sentence: Keep your information up-to-date and be prepared to change as circumstances demand. From time to time you should review your sources of information and reevaluate your business plan. A business plan should be thought of as flexible, not fixed. If you use these steps to develop a business plan, changing it according to circumstances, you will be well on the way to a successful business.

Keyword: Up-to-date, Demand, reevaluate

Keyword Location: Heading 4-Update your business plan

Explanation: Nothing stays constant in business; Circumstances change, markets change, fashions change, methods change. What is relevant at the beginning may not necessarily be relevant in five years. You may also need to review your goals and budgets if external factors (such as interest rates) vary. So the answer is B. Keep your Business Updated.