The Purpose of a Business Plan
- Mark Day
- Dec 16, 2015
- 2 min read
What Is the Purpose of a Business Plan?
A business plan could be described as the road map you have made for your business. It identifies your goals and it outlines the detail around how you are going to achieve those goals. It tells readers how you plan to run your business and how your business approaches the market you will operate in. Business plans are also an important tool for fundraising and one of the main ways you can show investors, bankers and funding agencies why your business has strong potential to success.
A “To the Point” Overview
A business plan is a chance to tell who you are. It gives readers an overview of your company, an analysis of market conditions and a description of how the company plans to use its profits to profit its investors and lenders. It's the synopsis of how you plan to reach your company's goals and your projections of its profitability.
Highlights Strengths and Weaknesses
The business plan provides a chance to analyse your company's strengths and weaknesses, the opportunities it can embrace and the threats it faces. The SWOT analysis names each of your competitors and discusses their relative strengths and weaknesses. The analysis can also highlight how your company fits into your industry.
Structure and Management
The business plan gives investors insight into the company's management. The principle members of management are profiled to show what each brings to the table. This part of the plan can show you areas where your organization is weak or could use new or more talent. The plan also describes the legal structure -- whether your company is a sole proprietorship, a partnership or some form of corporation.

Identifies Goals
A business plan includes a description of the business that describes its long- and short-term goals. This description allows you to see how and why your company meets a need in the industry. For example, at the beginning of the 20th century, there were thousands of buggy-whip makers. Those who failed to realize that they were in the larger business of "vehicle acceleration" were gone by the beginning of the 21st century. The few who remain downsized and survive in a market niche.
Inspires Investor Confidence
While some investors might like a gamble, most don’t, and all have a vast distaste for losing money. A business plan includes financial statements and projections that will quash investor concerns. This information will also provide you with a financial view of strengths and weaknesses in your business that you can use to stave off disaster or capitalise on potential.
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