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 Form 1 Business Studies online lessons on entrepreneurship

Need for a business plan

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Need for the business plan
i. Avoiding mistakes-in the process of drawing a plan; mistakes that would take place in the business are identified and corrected
ii. Identifying strength and weaknesses-A business plan helps in identifying strengths or weaknesses and where weaknesses are detected, remedial actions
may be taken early enough.
iii. Requirement by financiers-Financial institutions such as banks may require a business plan before they can accept to finance the activities of the business.
iv. Allocation of resources-It helps to determine the resources required and plan on how and where to use them. This ensures
that resources are neither underutilized nor used for the wrong purpose.
v. A motivating factor-A business plan is communicated to all employees in the business. This makes them aware of the direction to be taken by the business. This motivates them to work towards that direction.
vi. Adaptability-Normally, not all events occur as predicted in the business plan. However, a well drawn business plan should give room to accommodate any changes that might occur in the future.