The Ernst & Young Business Plan Guide, Third Edition

Part I. The Purpose of a Business Plan

In this section, we discuss the basic purposes of a business plan, how the business plan is used as a tool for securing financing, and how to think through the issue of the proper legal form for a newly created or defined business.

Chapter 1 covers the business plan in general. Many people think that the business plan is the unique province of start-up companies and entrepreneurs. In reality, a business plan is an integral tool for any business (or any not-for-profit entity as well) as a way to map out a desired short- and medium-term future.

Large companies often demand comprehensive annual business plans from each division or operating entity in order to allocate corporate resources. A company looking to buy or merge with another entity needs a business plan that shows the implications of such a combination and how the unified business will operate going forward. On the flip side, a company selling off a unit needs a business plan of how it will operate without the sold-off portion.

Companies should require a business plan for any new operating group, division, or subsidiary being formed, and some businesses require a business plan for every new product or project. Indeed, our publisher required of our editor a business plan for this book that detailed content, marketing, distribution, costs, and projected revenues.

Chapter 2 deals with the business plan as a specific tool for acquiring financing for a new or growing privately held business. ...