What is one primary purpose of a business plan?

A business plan serves multiple purposes, and one of its primary functions is to obtain finance, such as a bank loan. Financial institutions and investors require a detailed plan that outlines the business's goals, strategies, market analysis, and projected financial performance. This provides them with the necessary insights to assess the viability of the business and the risks associated with lending money or investing.

When seeking funding, a robust business plan demonstrates to potential lenders that the business owner has carefully considered how they will operate, compete, and generate revenue. It also reflects a level of professionalism and preparedness that can instill confidence in stakeholders. Without a well-structured business plan, it may be challenging for a new or existing business to secure financing, as investors would lack the information they need to make informed decisions.