Importance business plan essay

The financiers could be either the lenders or investors. Business plan does not guarantee success but helps in reducing probability of failure.

If no sensitivity analysis is done then investor might not approve the plan as this is the critical part of the financial plan. Hence bank would be able to invest. A well prepared business plan is one of the most powerful tools in selling a business idea. He should venture in an average size plan which can be personally monitored.

Since the firm can get funds through the line of credit or banks and hence they would not require to take the funds from the investors as investors require equity ownership for the funds which in due course of time could be a threat of loss of control of business.

Certain business plan shows that there is either no or very few competition which implies that there is not enough customer to support the product or service. An entrepreneur when starting a new venture should not entail himself in a highly capital intensive plan as the risk factor is high.

It also helps in communicating goals throughout the organization. Business plan is a blueprint of any business giving a detailed outline of business concept, business opportunity, competitive landscape, key to success and people who are or will be involved. Lenders looks at the riskiness of the loan by seeing the payback periods and cash flow data whereas the investors are interested on the longer term potential of the business and hence they want to know what the break even points are and what will be the return of investment.

They like to invest in the risky business and they neither require the track record of the company.

Essay on the Importance of a Business Plan

The financial aspects plays a critical role in the plan as it converts the other parts of the business such as the operations, marketing, management etc. The investor knows that without the right people no unique opportunity can be turned into reality.

Since the financial data are made on assumptions and it may change in due course of time. The creditors or the lenders could also finance the company because of the goodwill created in the market as its operating for a long time.

A business plan serves more or less as a map for the establishment, it gives the entrepreneur and the team a standard to measure achievements, to see where they are going and whether their current direction aligns with the destination, it is a satisfying experience for any entrepreneur to see ones ideas come to life, even if it almost never happens as we stated on paper in the beginning.

An entrepreneur, when having any idea of a business ,are afraid of writing the business plan fearing for the future. As stated by Brown et all In the initial period the return may be negative i. The firm can also use factoring for financing but this type of financing has a negativity that its too expensive due to high factoring discount and major of the profit shares are also absorbed.

Entrepreneurs stress the importance of business planning in the creation of their companies, many of them tell stories of how creating their business plans elucidated their ideas and gave them the direction they lacked hitherto.

Therefore it acts as an important sales tool which can be used to borrow money or gather support to launch a new product or service. The market analysis helps them to analyze what the market size is and what the future it holds for them and how they are going to target the market, what is the value proposition they are having and what strategies they are going to pursue to target those market.

The investor also looks into the following factors such as what is the product or service ,what pain is being eased through this product or service, history of the product, uniqueness of the product so that the customers are induced to purchase and who are the direct and potential competitors.

A plan written on paper not only helps in identifying the potential problem areas but also helps in working out the solutions without interfacing the real world consequences.

Kuratko and Hodgetts The banks give them credit on the basis of the collateral which could be foreign account receivable. Since profit projections is considered to be the heart and the cash flow is considered to be the blood of the plan, hence the investors are keen to see whether the peak need and the peak availability of cash are shown and what is the expected financial returns i.

Since they take high risk and hence they require high return on investment. Just complete our simple order form and you could have your customised Business work in your email box, in as little as 3 hours.

If proper fund planning, usage of the funds and the repayment of funds are not shown properly then an investor might not invest. It also becomes difficult for the entrepreneur to raise funds without these documents. Hence when providing financial projections one must highlight and explain the importance of the significant figures from the pro forma income statements such as revenue, operating profit, operating margin, net income and net margin over the period of 3 to 5 years.

It is requiring funds for its expansion, hence the firm must be having increasing revenue with positive cash flow. This feature of a business plan is at the heart of every successful establishment.

The business plan does not accommodate multiple individual investors the business plan does not contain any document which sets the terms and conditions i. In the organization itself a business plan serves a very important purpose by informing all involved of the teams targets, strategy and tactics, the team develops understanding and work together better, knowing where they are going and what their part in the journey is.

If proper break even analysis is not done as the investor are interested to know at what level of sales will a break even occur. Since exporting to the foreign country, hence a guarantee is required for the payment. Thus the decision of the prospective funder to consider the proposal would depend on the quality of the plan supported with the funding proposal.

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A business plan gives one the opportunity after clearly defining a realistic target to map out the strategy and tactics that will get the venture there. The limitations could be:In today’s environment, the business plan is the entrepreneur’s most important document when setting up a new business.

Without the help of a well-designed and well- presented business plan the entrepreneur will find it very difficult to express its Importance business plan essay goals or secure financing.

Business plan is a blueprint of any business giving a detailed outline of business concept, business opportunity, competitive landscape, key to success and people who are or will be involved.

Therefore it acts as an important sales tool which can be used to borrow money or gather support to launch a new product or service. A business plan is a way of reaching a company’s goals usually a formal statement.

In this statement there can be information on the background of the organisation of the company. Asma has completed a basic business plan for her business, a business plan is used by a business to try and get other.

A business plan can be used for various purposes including the following: Planning: drawing information from a business plan, a company management can draw a short run or the long run plan for the company.

Planning is a good source of information for lenders, business partners and suppliers. Essay on the Importance of a Business Plan Article shared by A business plan is a detailed outline of every aspect of a business, usually necessary at its onset, a business plan is more or less a super intricate futuristic bird’s eye view of a business, and it touches on essential areas of the establishment; its goals, plans, budget, market and competitors.

Essay about Importance of a Business Plan - A business plan is a way of reaching a company’s goals usually a formal statement.

In this statement there can be information on the background of the organisation of the company.

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Importance business plan essay
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