Define a business plan and reasons for
writing a business plan?
‘’A business plan is a written document
that describes all the aspects of a business venture in a concise manner’’
“A business plan is a written document
that describes in detail how a business—usually a startup—defines its
objectives and how it is to go about achieving its goals. A business plan lays
out a written roadmap for the firm from marketing, financial, and operational
Business plans are important documents
used for the external audience as well as the internal audience of the company.
For instance, a business plan is used to attract investment before a company
has established a proven track record or to secure lending. They are also a
good way for companies’ executive teams to be on the same page about strategic
action items and to keep themselves on target towards the set goals.
Although they’re especially useful for
new businesses, every company should have a business plan. Ideally, the plan is
reviewed and updated periodically to see if goals have been met or have changed
and evolved. Sometimes, a new business plan is created for an established
business that has decided to move in a new direction.
The followings are the reasons for writing a
The internal reason for writing a business
plan is a force that compels the firm’s founders to systematically think through
each aspect of their new venture. It usually takes several days or weeks to
complete a well-developed business plan. A clearly written business plan also
helps a firm’s rank-and-file employees working in the organization move forward
in a consistent and purposeful manner. The existence of a business plan is
particularly useful for the functional department heads of a young firm.
The second reason to write a business
plan is to create a selling document for a company. It provides a mechanism for
a young company to present itself to external stakeholders who are being
recruited to join a firm such as potential investors, suppliers, business
partners and key job candidates.