Role and importance

• A business plan is a document created by a business or entrepreneur that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business
• A business plan is usually made up of several sections:

  • the business idea – what product or service the business will provide
  • the business’ aims and objectives – using the SMART principles
  • target market – determined through market research
  • revenue forecast
  • projected costs and profit
  • cash flow forecast
  • sources of finance – long-term and short-term finance
  • location – where the business will be located
  • marketing mix – the four Ps (product, price, place and promotion)
• By completing each section of the business plan, an entrepreneur gains a full understanding of each element of their business. This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not. If there is a chance the business might not succeed, the entrepreneur can amend the business plan in order to minimise this risk