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When and why is a business plan useful?
The business plan is a key document for the assessment, but also for the management of future business activities. The business plan has to prove that the company founder is actually able to create real enterprises from his business idea. The business plan is the basis for any cooperation or investment with banks, investors and business partners.
The business plan usually comprises to parts:
The written formulation of the business idea
- a reference to the product, service, customer use, market size and target description, market entry and copying, marketing, management and key positions, opportunities and risks, etc.
The financial part
- is used to provide an overview of cash flows so that there are also sufficient funds available to meet all payment obligations in due time. If it is not possible to pay debts at any time without disrupting the operating procedure, the best profit outlook would not be enough to prevent insolvency.
- The period covered by liquidity planning should be around three to five years, given the fact that longer periods would be difficult to predict and therefore be meaningless.