F: What is business plan?

A business plan is a formal written document containing the goals of a business, the methods
for attaining those goals, and the time-frame for the achievement of the goals.

G: Who should write the business plan?

So, the primary responsibility for writing the business plan is with you, the founders. You can
hire someone (consultant) to help prepare the plan. He/she can challenge and question
assumptions and conclusions. But you are responsible for the content of the plan.

H: Types of Business (Internal and External)

An internal business plan is used to define your business strategy, define who your ideal
customers are, outline a more detailed marketing plan, and set your revenue goals and expense
budgets.

An external business plan is a way for a developing company to stand out from other
businesses while showing that goals and aspirations have been considered and documented.
These plans begin by following boilerplate sections and explanations. They then become unique
documents.

An internal business plan is the tool used to communicate these goals in a clear, effective, and
calculated manner. External business plans serve the purpose of raising capital. Banks
constantly visit with small businesses desiring a loan to finance a new project.

I: Importance of business plan

It will help you steer your business as you start and grow. Think of a business plan as a GPS to
get your business going. A good business plan guides you through each stage of starting and
managing your business. You'll use your business plan like a GPS for how to structure, run, and
grow your new business.

1. Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and
assign stipulated time for those goals to be met. This results in long-term profitability. It also
lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its
goals.

2. Maximizes resource allocation: A good business plan helps to effectively organize and
allocate the company’s resources. It provides an understanding of the result of actions, such
as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps
the business estimate the financial impact of such actions.
3. Enhances viability: A plan greatly contributes towards turning concepts into reality. Though
business plans vary from company to company, the blueprints of successful companies often
serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps
existing firms to market, advertise, and promote new products and services into the market.

4. Aids in decision making: Running a business involves a lot of decision making: where to
pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out
business plan provides an organization the ability to anticipate the curveballs that the future
could throw at them. It allows them to come up with answers and solutions to these issues
well in advance.

5. Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of
the past and what worked for them and what didn’t, it can help them save time, money, and
resources. Such plans that reflect the lessons learnt from the past offers businesses an
opportunity to avoid future pitfalls.

6. Attracts investors: A business plan gives investors an in-depth idea about the objectives,
structure, and validity of a firm. It helps to secure their confidence and encourages them to
invest.