A business plan is a document which outlines the objectives of a business and how it intends to achieve these objectives.  These are used mainly when starting out in business.  You need to find out if it is financially viable (wise) to actually set the business up in the first place.  You will need to work out all your costs and carry out market research on potential customers to find out if sales income will be enough to cover these costs and earn profit. 

 The entrepreneur can therefore decide whether it is worthwhile going ahead with the business idea or whether the anticipated profit is too low a level to justify financing his/her idea.   

 It is also likely to be used to convince investors, for example, a Bank Manager to lend the business cash in order to get it started.  Banks and other lenders are more likely to lend to entrepreneurs who have been thorough in their planning and research. 

 To be convincing, it must therefore contain essential information: 

• General details – the name of the business, proposed location and what it is going to produce; 

• The market – who are the potential customers?  

• Human resources – who will be employed and work for the business? 

• Finance – what are the expected costs of running the business, what sales income is expected and what is the expected profit?  Also where is the start-up cash coming from, ie, all from the owner/s or partially from a loan? 

The Business Plan can also be used when planning for expansion.  You may want to redo your business plan with  

the new costs and benefits – this will help you decide if expansion is the right thing for your business. 

Sample Business Plan