A business plan is a statement developed before a business is established containing the background of the business, the goals of the business and all measures put in place to ensure they are achieved (Berry, 2004, pg 9). A business plan is however also required whenever there is any major changes in the business. A business plan should be simple and easy to understand.
A business plan is an important piece of document when starting up a business. It serves as a communication tool. It is used to attract investors and also to secure loans. It provides relevant information to investors showing how the business plans are and the strategies put on ground to meet those plans. Every financer of a business must demand for a business plan and it is impossible to obtain loans and other financing without the business plan (Kate & Stephen, 2011).
A business plan is also used for monitoring and evaluating a business. It is necessary to keep track of the business, how it is performing over time. This is one of the ways to finding out if the business to be established will be making losses or profits. However the business plan keeps changing from time to time. This helps in the progress of the business to suit a market and its changes (Kate, 2011).
In starting up a business, a business plan is important as it contains a plan for the future. This future plan is a guideline of what is to be done for good progress. Proper researching is important during the creation of a business plan so as to put all important matters in it. This helps to avoid all obstacles that may arise to challenge the progress of the business (Kate, 2011). The business plan contains goals and targets to be achieved. This acts as a guide to the businessman to work in achieving them a business plan is an important tool in a business.