When and why does a business plan make sense?

The business plan is a key document for assessing, but also for directing the future business activity. It is intended to document that the founder(s) of the new company are in a position to turn a business idea into a real company. The business plan forms the basis for all cooperation and/ or investment decisions by potential business partners, banks and providers of venture capital.

The business plan consists of two components:

• The business idea in writing encompasses:
  references to the product, the service, the value for the customer, market size and description of target group, market entry and reproducibility, marketing, management and key positions, opportunities and risks, etc.
• The finance part serves to obtain an overview of payments falling due, so that sufficient liquid assets are made available to be able to settle all payments in due time. It is essential that a company is in a position to pay debts falling due at any time and without interfering with the company's operative processes. Otherwise even the highest prospective profits cannot prevent insolvency.
  The term covered by the liquidity planning should be approximately three to five years. It is usually very hard to make estimates of the required liquid assets beyond this term, meaning that planning figures would hardly be significant.