The purpose of the initial business plan is to communicate professionally what you have conceived to others who may not be familiar as you are about your project and of the opportunities you are after.
Mr Inderjit Singh – The Art and Science of Entrepreneurship
In the early stages of the start up, the business plan acts as a guide and as a plan. It will be used to show structure to 3 groups of people; namely the team, the investors and the of course the entrepreneur.
1. The Team
The business plan is the document that will be used by the team to see that everything is well thought out and planned. This will also be the binding agent that will convince them to jump aboard.
The business plan will also act as a guide of how your business will be conducted to ensure that people are focused on the goal and to avoid any misunderstandings later.
2. The Investors
To the investors, the business plan is a sanity check, to see if the business is viable and has been planned properly. It shows the credibility of the entrepreneur, as to whether he/she can execute such a business. There have been many people who can make great inventions/products, but they falter when it comes to starting and building a business.
This is where the investors can gauge, if the entrepreneur will be able to take the idea/product to the next level will he/she be able to make it a success. There have been many instances where after looking at the business plan, the founding entrepreneur has been told to take a more technical role, so that the company can be led by someone who can grow the business.
If the business plan has been made properly, it will reflect back on the entrepreneur.
3. The Entrepreneur
The business plan is important for the entrepreneur. It is the organization of the idea in their head. The plan is the structure of the business, as to how it will be run and how it will grow. The business plan needs to be looked at and planned properly to ensure the success of the business. Though it’s a guide, it should also not be rigid and has to allow for flexibility. There will be twists and turns along the way, which may cause the company to pivot their plans in order to achieve their goals.
The plan will also contain the vision of the entrepreneur that will help ensure that everyone is on track to achieve that vision.
As it serves quite a number of purposes, the business plan is a very important document. Take the time to research and to prepare your business plan thoroughly. A strong business plan will take you a long way. A weak business plan will not attract other stakeholders to your venture.