A well-defined and updated business plan as a business proceed will lead it to success. A business plan serves two main purposes:

  • It serves as a business’s road map. Banker venture capitalists and other folks who see a lot of business proposals have discovered that viable ideas are important. The idea itself won’t make or break a business, the person behind the idea and the idea’s execution holds the key to business success.
  • To attract capital through loans and investments. This points out why every business should have a plan even if you do not tend to solicit outside funding.


Pros and Cons of a Business plan:


  1. It helps understand financing by:
  • Budget forecast
  • Expected costs/revenues
  • Break even output
  • Manage risk
  • Cash-flow forecast
  1. Increase chances of obtaining external finance.
  2. Allows closer inspection of the various business areas.


  1. For most business this is only a plan, reality likely to be different
  2. Who made the plan? Do they have business experience? This may lead to the danger of inflating revenues and deflating costs. Liquidity issues may arise.