What is one of the primary purposes of a business plan?

One of the primary purposes of a business plan is to secure funding and outline strategies. A business plan serves as a comprehensive roadmap for the business, detailing its goals, operational strategies, market analysis, and financial projections. This plan is critical when seeking investment from banks, venture capitalists, or angel investors, as it demonstrates the viability and potential for success of the business. Investors and lenders need to see that there is a well-thought-out strategy in place for how the business will operate and grow, making them more confident in providing the necessary financial support.

Establishing a legal entity, hiring employees, and promoting products are important aspects of running a business, but they do not encompass the primary reasons for creating a business plan. A business plan focuses more on the overall vision and strategy of the company, which includes financial planning and securing funding, rather than day-to-day operations or promotional activities.