A business plan is a tool with
three basic purposes: communication, management, and planning.
As a communication tool, it is used to attract investment capital,
secure loans, convince workers to hire on, and assist in attracting
strategic business partners. The development of a comprehensive
business plan shows whether or not a business has the potential
to make a profit. It requires a realistic look at almost every phase
of business and allows you to show that you have worked out all
the problems and decided on potential alternatives before actually
launching your business.
As a management tool, the business plan helps you track, monitor
and evaluate your progress. The business plan is a living document
that you will modify as you gain knowledge and experience. By using
your business plan to establish timelines and milestones, you can
gauge your progress and compare your projections to actual accomplishments.
As a planning tool, the business plan guides you through the various
phases of your business. A thoughtful plan will help identify roadblocks
and obstacles so that you can avoid them and establish alternatives.
Many business owners share their business plans with their employees
to foster a broader understanding of where the business is going.
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