The business plan is necessary when you are trying to obtain funds from investors or banks because it will provide them answers for all the queries or concerns they have about your existing or planned business. A well thought out business plan contains all information about the legal, financial, and organizational matters. It also conveys your knowledge about the marketing and matters relating to human resources.
Getting advice becomes easier
When you consult business professionals and seek their advice, the presence of a business plan helps in getting free advice. You will also get free advice for how to launch the business and suggestions for how to improve it. Some organizations may assign an executive specifically for your business.
Potential problems can be identified
When you are in the process of creating the business plan, you have to take into account various considerations and to make estimates of funds required for different stages of the business. These things need thorough research and knowledge about material costs, official licenses or permits, initial budget estimation, labor costs, zoning, leases and real estate matters, etc. You may commit mistakes in your estimates but a good business plan allows you to correct or amend according to the situation. Another important aspect of running a business is managing cash flow; a complete business plan includes budgetary allocations for this concern.
Takes care of the legal problems
There are various legal as well as financial matters which arise from time to time while operating a business. The list of such matters includes timely payment of taxes according to the requisite procedures and by filling the specific forms; the obtaining of the necessary licenses and/or permits issued by the authorities at local, provincial, or country level. Some other rules and regulations governed by Internal Revenue or Business Federations also need to be followed. Your business plan will tackle all these issues and will provide protection from penalties, surcharges, fines, etc.
Offers ways to close a non-sustainable business
The basic purpose of a good business plan is to suggest tactics and measures which pave the way for success of your business, but at the same time it has the provisions for closing down a business venture if the business is failing or not doing well. This precautionary step prevents the loss of money on something which is not fruitful.