Q&A PRACTICE – resources.ricsapcguide.com

During this post we’ll run through some practice questions and answers focussed on the Business Planning Competency. As a Chartered Surveyor you will have an opportunity to setup in private practice and the assessment panel will look for reassurance that you have a basic understanding of key Business Planning concepts such as the key elements of a business plan, organisational structures and forecasting techniques. From my experience of helping colleagues pass their APC over the last 9 years, I compiled the following questions & answers based on past interviews and really hope this helps candidates feel better prepared for their final assessment. The following Questions & Answers are focussed on the Business Planning Competency and I hope you find this a useful revision tool. Question) What issues would you expect a company to experience with a high staff turnover? Answer) Key issues encountered by the company could include:- Increased recruitment costs. Increased training costs. Inconsistent production & performance. Poor staff morale. Lower customer satisfaction. Loss of customers and repeat business Higher operating expenditure. Reduced profitability. Questions) What is a SWOT analysis? Answer) A SWOT analysis can be used to analyse the internal strengths and weaknesses and external threats and opportunities of a company. This is carried out with a view to exploiting strengths and opportunities and mitigating any weaknesses and threats. Question) Please explain your understanding of the term 'PEST' analysis? Answer) This is a structured method of analysing the key factors influencing market conditions. These factors are made up of:- Political influences. Economical influences. Socio-demographical influences. Technological influences. Question) Please explain your understanding of Porter's Five Forces? Answer) They are used to analyse the competitiveness of an industry and the barriers to entry and typically include:- Substitute products - the risk of the customer to switch to substitute products. Bargaining power of suppliers - the ability of suppliers to apply pressure to companies by raising prices, lowering quality or reducing availability. Bargaining power of buyers - the ability of customers to influence pricing and terms of business. Rivalry amongst existing firms - the extent of competition between existing firms. Threat of new entrants - The potential for new competitors to enter the industry and disrupt the market. https://www.youtube.com/watch?v=bWVEUHT9l5Q&t=1s Question) What is a Client Account Planning session? Answer) This comprises a review of the current workload, resources and fees associated with an existing client appointment. It typically involves the identification of key client personnel who have influence over job opportunities and identification of who the firm should look to build relationships with. A review of pipeline opportunities with that client is also undertaken. Question) What are your firms Terms of Business? Answer) Together with the Engagement Letter, the T&C's will form the contract between our Firm and the Client. Our terms of business are made up of around 14 Sections including:- General Obligations to the client which is to provide Services' detailed in the Engagement Letter with the skill, care and diligence expected of a professional person. The Client’s General Obligations for example they are not to solicit any Partner or Employee with a job offer, if this occurs they must pay £35,000.00 compensation. Additional Service terms for example this sets out the entitlement for additional fees if the work scope varies. My firms’ liability for example any claims raised are to be against the company and not any Partner or Employee. Payment terms and interest entitlement in the event of late payment. Termination and Suspension terms which have a minimum 7 days notice to suspend the works. Force Majeure terms for example the company is not liable for failure to carry out its service obligations if this occurs. Intellectual Property Rights relating to copyright of documents provided by the firm. Assignment and Subcontracting terms set out the requirements for written consent from either party if actioned. Formal communication is to be in writing to the addresses set out within the Engagement Letter. Problems and Complaints handling procedures are included within the terms of business. Question) What is a Business Plan? Answer) A business plan is formal statement of the business’s goals, strategies and financial projections. It contains detailed descriptions of the business including:- Products or services. Target market. Competitive landscape. Marketing and sales strategies. Management and organisation. Logistics and operations plans. Financial Plans. Question) What is contained within a client appointment document? Answer) A client appointment document would typically include:- Clarification of the scope of services being provided. The agreed fee bid and payment terms. The terms of business. Any agreed amendments to the firms’ terms of business. Contact Details of key personnel who are working on the appointment. Details of the firms complaints handling procedure. Question) Does your firm produce an annual account? Answer) Yes it produces a statement of turnover, gross profit & net profit. This must be submitted to Companies House in accordance with the Companies Act. Question) Would you be able to interpret & understand an annual account? Answer) At a high level but I would seek further advice from one of our internal Chartered Accountants if necessary. Question) How do you think an up to date business plan can help an organisation in the current economic climate? Answer) Maintaining an up to date business plan can assist with analysing external threats and opportunities for example the increasing adoption of artificial intelligence, the impact of policies introduced by the labour government, high inflation and subsequent high interest rates. An up to date business plan can also assist with focussing on key internal priorities, responding to market changes, supporting with compiling financial projections and setting of targets for staff. Question) What procedures does your firm adopt to ensure they are profitable? Answer) Procedures adopted include:- The maintenance and review of weekly timesheets to identify both profitable and non profitable commissions. Resource planners are used to support with efficient utilisation of staff and to ensure each commission has sufficient resources to meet client objectives. Fee & cost reconciliation tools are used to monitor profitability levels. Yearly performance reviews with client input are undertaken to support with gaining repeat business, improving on any weak areas and identifying any opportunities to cross sell additional services. Business Development Strategy meetings are undertaken to identify new target clients and review upcoming pipelines of work that can assist with future forecasts. Question) Please provide some examples of fee earning vs. non fee earning staff at your company? Answer) Fee earning examples would include:- Quantity Surveyors. Architects. Project Managers. Building Surveyors. Commercial Real Estate Consultants. Non fee earning examples include:- Administration staff. Business development managers. IT staff. Question) What components would you identify within a business plan? Answer) Key components of a business plan include:- Executive Summary. Marketing Strategy. Vision & Mission Statements. Products & Services. Management Team & Organisational Structure. Financial Forecasts. Responsibilities & Targets. SWOT Analysis. PEST Analysis. Question) How can a business plan help a company to remain profitable? Answer) Business plans can assist with maintaining and increasing profitability by:- Assisting with securing new funding and investments. Growth of existing client base and services provided. Highlighting key business objectives. Assisting with responding to change. Growth of market share. Supporting with accurate forecasting and budgeting. Facilitation of resource planning. Question) What is a business model? Answer) A business model is the strategy implemented by an organisation to generate revenue and make a profit from its operations. The business model may detail the products or services being offered to the client base, the business niche or sector being operated in and the route to market entry including costs associated with bringing the product or service to the target market. Question) What is your firms business plan? Answer) This will be specific to each individual candidate but could include:- Diversification. To become a global industry leader. To increase market share by 20%. Expansion into new geographic territories. Increase turnover to £7m with a net profitability of 20%. Growth within certain sectors for example e-commerce, logistics or data centres. Question) Are you aware of some of the aims within the RICS Business Plan? Answer) Following acceptance of the Levitt Report recommendations, the RICS in its latest Business plan looks to be more open and transparent with members and the public about the operation of the institution including decision making and management of its finances. This includes developing and implementing new, more effective whistleblowing arrangements and reviewing arrangements for the reward of senior executives. The RICS has introduced immediate financial priorities including continued support of the profession and seeking to minimise any increases in the cost of subscription levels and reducing any funding deficit in the close final salary pension scheme. Corporate objectives including the maintenance and increase of demand for RICS qualifications with the primary goal to ensure the RICS qualification remains relevant for future generations. Business Planning Questions & Answers Free PDF To receive a PDF copy of the above questions and answers via e-mail please click here