Purposes of the Plan
The business plan could be the most useful and important document you, as an entrepreneur, ever put together. When you are up to your ears in the details of starting the business,
the plan keeps your thinking on target, keeps your creativity on track, and concentrates
your power on reaching your goal.
The plan can he a useful money-raising tool to attract venture capital for those entrepreneurs
who are willing to dilute control of their company. Although few owners use a plan to attract
venture funds, many more use a formal business plan to obtain loans from lending agencies.
But an effective plan does more than just help convince prospective investors that the new
business is sound. It provides a detailed blueprint for the activities needed to finance the business, develop the product, market it, and otherwise manage the new business. Business plans arc
also used for planning the continuing operations of a firm, as the following example illustrates.