what are the 3 main purposes of a business plan

What are the 3 Main Purposes of a Business Plan?

What are the 3 main purposes of a business plan? 

What is a Business Plan?

A business plan is a written document that describes your business’s purpose, the marketplace in which you will operate, your products or services, how you will begin and operate your business, how you will generate sales and profits, how much money you will need to get started, how you will use the money if you get it and what you intend to do with the profits once they start coming in.

Here are the 3 main purposes:

1. To secure financing for the business venture.

2. To organize your business and set its direction.

3. To provide a written record of your plans, goals, and achievements.

Let us discuss each of these below:

What are the 3 Main Purposes of a Business Plan?

1. To secure financing for the business venture.

The first purpose is to secure financing for the business venture. A business plan is an important tool in securing financing for a business venture. Banks, financial institutions and sometimes even venture capitalists finance businesses based on their evaluation of a comprehensive business plan written by a professional. 

A well-written plan shows them that you have carefully considered every aspect of starting and operating your proposed business before asking them to finance it. It also shows that you have carefully considered all possible outcomes and contingencies before making any final decisions about starting or expanding your business or committing yourself financially or emotionally to it. 

In addition, a good business plan demonstrates that you know what you’re doing and reassures them that this is not just some wild hare idea that might lead to disaster for them if they invest in it. They want to see that it’s been thought out well enough to get past this first hurdle – the preparation of a well-written business plan – before they commit any money to it.

2. To organize your business and set its direction. 

The second purpose of a business plan is to organize your ideas about starting your new small business into an organized format. So that you can set its direction by deciding where it should be heading. For instance, who should work there and how many people will be needed; and what they should be doing when they arrive at work on Monday morning. 

This means not just saying “I want to start a bakery” but saying “I want this bakery to sell only organic bread made from the finest ingredients available because I’m very concerned about health issues caused by eating artificial ingredients.” or “This bakery is going to be a multinational company with outlets all over the world, manufacturing and selling the best bread known to man. It’s going to take time and a lot of hard work but it’s going to be worth it in the long run.”

It also means deciding what you want your business to do for you in monetary terms. How much money do you want your business to produce for you every month? What percentage of that figure is your goal, whether it’s $500 a month or $500,000? Once you know what you want your business to do for you financially, how are you going to get there? Are you going to advertise in local newspapers, on local radio stations, and unhealthy food”? 

When you write a business plan, you are forced to think about your business in a way that you might not have thought about before. You must ask yourself difficult questions and answer them. This is how you organize your thoughts about how you will start, operate and grow your business. 

3. To provide a written record of your plans, goals, and achievements. 

Finally, a business plan is a written record of your plans and goals for your business that can be used to help you achieve those goals. Writing a business plan helps you clarify your goals and organize the information about your business so that it’s easy for others to understand. If you plan to go into business with others, having a written business plan is helpful because it lets each person know what his or her responsibilities will be in the operation of the new venture. 

It can also help when legal issues come up later if there are disagreements among partners or with outside parties because they can refer to the document they all helped create when they first started the venture and which was modified as needed over time.

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