A business plan is a document that states what the owner wants to do within the business and how they intend to do it.
Reasons for a business plan:
- It's useful as it is used to get a source of finance e.g a bank loan.
- It shows the financial risk in setting up the business so potential lenders and investors will want to invest in the business. Lenders and investors will also want to see a business plan before they invest.
- It helps the entrepenuer see the strengths and weaknesses of the business and whether thier idea is achieveable and realistic.
- It's an important management tool - it gives details of the businesses objectives which they can compare with the preformance of the business once it starts trading, to track progress.
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