An effective business plan serves at least four useful purposes:
- It helps entrepreneurs focus their ideas. It also helps determine whether a business idea is feasible
- It creates a track for management to follow in the early stages of the business
- It creates benchmarks against which the entrepreneur and management can measure progress
- It provides a vehicle for attracting capital to help finance the business
A well written business plan is an important document for any business seeking financing. However, a thorough business plan is an essential tool for all businesses, regardless of financial needs. Most lenders will not even discuss financing without a business plan. The business plan brings together all the goals, plans, strategies and resources of a business. In addition, if you write a comprehensive business plan prior to the commencement of operations, it may save you from significant financial and professional losses in an unprofitable business. Both the federal and state governments provide assistance in helping you create your business plan and in locating financing opportunities. Refer to the Sources of Assistance and Financing Options chapters of this guide.