 TITLE: What Is a Business Plan? CONTENT: What Is The Purpose of a Business Plan?\n---------------------------------------\nWhen you're eager to start your new business or launch a new product line, you may be tempted to skip the business plan stage altogether. In reality, taking the time to write a business plan delivers several benefits.\n*   **It helps validate your business idea.** The research you'll do to write your business plan will show whether your business is viable or not. By calculating projected sales, revenues, cash flow and net income, you'll know what kind of financial return you can expect and when. If your research shows your idea isn't quite ready for prime time, you can regroup and revise until you find a way to make your concept work.\n*   **It documents a company's strategic plan and goals.** Business plans aren't just for getting loans; they're also useful guides to keep your business on the right track. Referring to your business plan regularly as a road map will help you make sure your business is moving in the right direction on the timeline you set.\n*   **It helps you calculate the necessary startup capital.** Whether you're funding the business yourself or seeking a loan, it's crucial to know how much money you need. Otherwise, you might ask for a loan that's too small, or run out of money before your business breaks even.\n*   **You may need it to get approved for business loans or investment capital.** Lenders and investors want evidence that your business startup or expansion plans are likely to succeed. Your business plan helps convince them your business is worth backing. In particular, the financial section of the plan helps demonstrate that you'll make enough money to repay the loan or generate a good return for investors.\nA business plan is different from an _investment proposal_. An investment proposal is a presentation or document you show potential investors to persuade them to invest in your business. It includes some of the same information the business plan contains, but it's designed to convince investors your business is a lucrative opportunity, so it emphasizes your competitive advantages, the size and potential of the market and expected return on investment (ROI). Think of the investment proposal as the \"sizzle\" to get the investors excited, and the business plan as the meaty steak. END