IMPORTANCE OF PREPARING A BUSINESS PLAN

 1. It encourages the entrepreneurs and people involved in the proposed business to think about it in a systematic way, i.e it helps the entrepreneurs and his/her staff to focus on important issues and activities for the new venture.

2. It defines the specific goals and objectives of the business which help to serve as bench marks to measure the progress of the business in implementing the planned activities.

3. It consists of an action plan which acts as a time table for implementation of various business activities in a sequenced way. This helps the entrepreneur to ensure that different activities are implemented at the right time as planned.

4. It provides the entrepreneur with information about where the business is going (future of the business).

5. It helps the entrepreneur to identify challenges in advance and lay strategies of overcoming the challenges before they affect his/her business operations.

6. It helps the entrepreneur to monitor the performance of his business over time using the set goals and objectives as a standard of measurement. If checks are made particularly against goals and objectives, it acts as a useful indicator on how well the business is doing which helps the entrepreneur to run a more efficient business in future.

7. It helps the entrepreneur to calculate and pay the exact amount of tax to the government basing on the profits of the business without which the business might be made to pay higher amounts of tax.

8. It helps the entrepreneur to get financial assistance from the bank, individuals or investors since it is used as a means of showing the lenders how the business will succeed.

9. It is used in assessing the viability and feasibility of a business. It assists the entrepreneur to select the most suitable business opportunity based on his ability to meet the business needs.

10. The business plan helps the entrepreneur to obtain permission to operate legally as it is used by different government departments to control and monitor the activities of the proposed business.

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