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The Importance of Business Plans

A well thought out business plan "is an essential must-do for start-up ventures... required for any credit or other financing" and capable of keeping an entrepreneur "focused on what you know will create success" (Allen, 2009, p. 1). Business plans for entrepreneurial ventures are important because they not only provide a detailed statement of what the business is designed to do and how it will accomplish these goals; they also are useful in identifying the best team members, directors (if a public company is expected), and value-added investors.

Business plans are "used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, deal with suppliers or simply to understand how to manage their companies better" ("An Introduction to Business Plans, 2009, p. 1). Such plans are written more often than not to appeal to specific constituencies or stakeholder groups. The business plan is the foundation upon which investors, both individual and institutional, will base a decision about supplying funds to the venture. It is also the document which will let potential directors or team members know the purpose of the business and gain insight into the capacity of the entrepreneur to articulate this vision.

Tim Berry (2006, p. 1) takes the position that the business plan is a mechanism for determining the kind of staffing that will be needed as well as the kinds of alliances required for success and the amount of capital needed to realize a vision. Even a relatively rudimentary business plan serves the purpose of identifying the key components that will facilitate the success of the venture or, at the most basic, be needed to get it off the ground. Berry (2006, p. 1) says that the business plan should be incorporated into employee training and recruiting because it will allow trainers as well as recruiters...

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