Reasons

There are a number of reasons for compiling a Business Plan:

• To get the proprietor’s ideas clear in his or her own mind. Usually a business will start with an idea. Perhaps the entrepreneur discovers a ‘gap in the market’ and thinks of a way of filling it, or simply hits on a new way of marketing a product that has been around for a long time. Maybe the idea will arise in the course of conversation with friends or work colleagues. It will quickly develop into some thoughts ‘on the back of an envelope’, the first step in the production of the Plan.
• To act as a discussion document with professional advisors. Once the first draft of the Plan is completed it can be discussed with professional advisors: such as one of Wenta’s specialist advisors, a bank manager, or an accountant, perhaps. Such advisors may well be able to point out potential weaknesses not so far thought of, and ways of overcoming them.
• To use as an application to obtain finance. Although many Business Plans are compiled exclusively for this purpose it is perhaps the least important reason for writing a comprehensive plan. Many businesses need to supplement the working capital of the proprietor with borrowing from the bank, input from an investor, or any grants or ‘soft’ loans which might be available in their area.
• To minimise risks of failure. Perhaps the most important reason for the Plan. Risks are minimised because a properly constructed Plan will contain market research to show demand for the product or service being offered, and financial projections to show the anticipated viability of the business. If, when compiled, these show continuing losses, the sensible proprietor will either abandon the idea for the business altogether, or modify the way in which it is planned to operate so that it does project a profit.