Lesson 1, Topic 1
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5.2 Business Planning Purposes


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Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. The most common external purpose for a business plan is to raise capital.

Internal Purposes

  • The business plan is the road map for the development of the business because
    • defines the vision for the company
      • establishes the company’sstrategy
      • describes how the strategy will be implemented
      • provides a framework for analysis of key issues
      • provides a plan for the development of the business
      • is a measurement and control tool
      • helps the entrepreneur to be realistic and to put theories to the test
    it

External Purposes

The business plan is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It also provides the most complete source of information for valuation of the business.