Last updated: 10 October 2025
If you are developing a new venture or seeking funding, understanding the purpose of a business plan can mean the difference between approval and rejection. This guide clarifies that purpose through the lens of 20 years of consulting experience in South Africa and across SADC.
When starting a new business, it can be hard to know where to begin. What should you do first? Where do you get started? How do you know if your idea will work?
For most people, creating a new business is one of the riskiest things they will ever do. You have probably heard all the statistics about how many startup businesses fail. Many entrepreneurs still take that leap of faith and go for it anyway. Writing a business plan is one of the earliest and perhaps most essential steps in starting any new venture.
But what is the Purpose of a Business Planning?
What Is the Purpose of a Business Plan in 2025 | Expert Guide by JTB Consulting
South African investors, banks, and DFIs assess business plans not for style but for substance. The plan’s purpose is to demonstrate viability, risk management, and credible financial forecasting. In markets like Nigeria, Kenya, and South Africa, credible business planning remains the investor’s first test of management competence.
It’s not just about coming up with fantastic ideas and brainstorming; it’s about creating a realistic document detailing how to implement those ideas into a profitable business venture with a good chance of long-term success.
The Purpose of a Business Plan ― What Investors Look for in a Business Plan
A business plan is a written document that outlines all aspects of your business in great detail. A business plan is essentially a roadmap for success. A good business plan will include the following:
- An Overview of the Business: Provide readers with an overview of the business —what it is, what it does, who it serves, and the company’s general nature.
- Company Description: This section gives readers an in-depth description of your business. You should discuss the products or services you plan to sell, the prices you expect to charge, your target market, and your overall business strategy.
- Company Management: In this section, you briefly overview your management team’s key members and discuss each individual’s strengths and weaknesses. You should also include a short biography for each key member of the management team.
- Marketing Strategy: In this section, you discuss how you plan to promote your business and generate new customers. You should discuss the methods you plan to use to create new business and the expected costs for each technique. You should also consult your business’s positioning in the marketplace.
The Purpose of a Business Plan ― Why Should a Business Plan be Written Down?
The main purpose of a business plan is to serve as a roadmap for a new venture, project, or idea. It allows you to explore every aspect of your business idea and anticipate potential problems before they occur. When writing your plan, adopt the same mindset an investor would when reviewing your proposal. You should critically examine every aspect of your project and determine its viability. The purpose of a Business Plan can be summarised in the following five steps:
Business Plan Purpose ― Step 1: Research Your Target Market
When writing a business plan, you should research your target market extensively. To be successful, any new business must first understand its customers. You need to know your target market and why they would buy from you. You must also be able to identify your target market’s needs and how your business satisfies them.
One of the best research methods is to interview your potential customers. Get in touch with people who fit your target demographic and ask them questions about their buying habits and what they look for when purchasing products and services like those you plan to sell.
You should also read online reviews and talk with current and potential business partners similar to the types of businesses you want to start. By conducting this research, you’ll understand your target market and what they are looking for in a product or service like the one you plan to offer.
Business Plan Purpose ― Step 2: Determine Your Company’s Unique Value
Next, you should determine your company’s unique value. You must identify what makes your company different from all the others. What do you do that sets you apart from your competitors? What value do you offer that others do not? You must fully understand what makes your company different. This must be inherent in your business. You cannot rely on something superficial like a catchy slogan or a flashy logo. It must be genuinely inherent to the core of your business.
For example, if you plan to open a coffee shop, your value might lie in providing your customers with a high-quality coffee experience. You might also offer coffee-related products for purchase, such as coffee gift baskets or coffee-making appliances.
Business Plan Purpose ― Step 3: Estimate the Costs of Running Your Business
After determining your company’s unique value, you must now estimate the costs of running your business. This includes overhead expenses such as utility bills, payroll, and rent, as well as more indirect costs such as marketing and advertising, and research and development for new products or services. You must be completely honest with yourself and understand that any new business venture will incur some startup costs.
There is no way around it. There are, however, some ways you can minimise these costs. One of the best ways to do this is to find a cheap rental and furnish it on a budget. You can also minimise your advertising costs using social media, inexpensive or free online advertising, and word-of-mouth marketing.
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Business Plan Purpose ― Step 4: Create a Marketing Strategy
Next, you should create a marketing strategy. This is the plan you will use to sell your product or service. This marketing strategy must align with the image you want your company to project. It must also directly relate to the value you offer your customers. No marketing strategy works for everyone, so you must find the marketing strategy that best suits your target market. You must also put in the time and effort to ensure your marketing strategy is successful.
You will not see an immediate return on your investment, so you must be willing to put in the time and effort required to make your marketing strategy successful in the long term. No amount of strategising or marketing will help your business succeed if you are unwilling to work and see the results over time.
Business Plan Purpose ― Step 5: Conclusion
Finally, you must write a conclusion to your business plan. You should discuss what you learned from your research, how your unique value relates to your customer’s needs, and how your company’s costs affect your ability to turn a profit. You must also discuss the marketing strategy you plan to implement and how it will help you achieve the success you want for your business.
To write a good business plan, you must be sincere and understand that any new business venture will entail specific risks. There is no way around it. There are, however, some ways you can minimise this risk. One of the best ways to do this is to create a business plan and follow it as closely as possible. A business plan is your roadmap to success. It allows you to explore every aspect of your new business idea and anticipate potential problems before they occur.
Something Extra! The Importance of Business Planning to Your Startup’s Future Success.
Starting a business from scratch can be intimidating. With so many moving parts and details to manage, it’s easy for first-time entrepreneurs to get tripped up along the way. To help your new venture avoid roadblocks, it’s essential to have an organised plan. A business plan is a document that outlines your company’s goals, market strategy, and financial projections. It also serves as a document you can refer to at any time to check your progress or track your growth. As you begin this new journey, here are some reasons why having a business plan is vital to your startup’s future success.
Why Business Planning is Important ― Set Course for Future Growth and Development
A business plan outlines the company’s future goals and helps you keep the company on track while growing. It outlines the company’s goals, target market, strategies to achieve those goals, and financial forecast. This information allows you to set a course for future growth and development. This document will help you stay focused in times of change. This is especially important for startups that may experience growing pains.
Why Business Planning is Important ― Create a Roadmap for Marketing Strategies
Determining which marketing strategies will help you achieve your long-term goals would be best. You may want to consider which avenues will be most beneficial for your company and which will reach your target audience. Sitting down and outlining these marketing strategies will help you stay on track and achieve your goals.
It will also make it easier to identify when to pivot or change your strategies as the business changes. When it comes to marketing strategies, it’s essential to keep in mind that these may change as the business grows. You may consider implementing several processes to change course as needed.
Why Business Planning is Important ― Helps You Determine Product Mix and Offerings
Another important aspect of your business plan is outlining the product or service mix that you plan to offer. This will help you determine which products or services you will provide as part of your business. Depending on your industry and target market, you may want to consider offering multiple products. These could include anything from physical products to services.
If you are considering offering a range of products and services, outline what each entails. This will make it easier to determine prices and help you stay organised moving forward.
Why Business Planning is Important ― Serves as a Marketing Tool
One of the best things about having a business plan is that it can be a marketing tool. A business plan will make it easier to approach potential investors or lenders. It will also make it easier to pitch your business to customers and investors. One of the best ways to use your business plan as a marketing tool is to print and bind it. This will make it easier to read and reference when needed.
A printed business plan will also help you stand out among other entrepreneurs. It will make it easier to impress potential investors and lenders. Having a printed business plan also makes it easier to track your progress as you move through the process.
Purpose of a Business Plan for Funding ― Establish your Company’s Financial Footing
A business plan is also essential because it will help establish your company’s financial footing. This will help you determine how much money you will need to start and operate the business in the early days. This will also help you determine how much money you need to break even. It’s important to note that the financial forecast you put in your business plan will not always be 100% accurate.
Things often take longer than anticipated or cost more than expected. A business plan helps you determine the general ballpark of these figures.
Why Business Planning is Important ― Conclusion
In short, a business plan is essential to any new business. It will help you outline your goals, determine the best strategies, and forecast your company’s financial situation. A business plan will help you stay organised and keep your company on track as it grows.
When starting a business, it can seem like there is a never-ending list of things you need to take care of. It is easy to get overwhelmed by the volume of tasks and invest time in market research because it doesn’t seem as crucial as other activities.
Purpose of a Business Plan: What Investors Look for in a Business Plan: JTB Consulting’s Top 20 List
- The purpose of a business plan is to clearly articulate your vision for the future.
- Investors want to see that the business plan shows deep market understanding.
- A strong purpose of a business plan is demonstrating how the business solves real problems.
- Evidence of product/market fit and early customer traction is critical.
- The plan must outline realistic financial projections and cash flow forecasts.
- Clear explanation of funding needs and the specific use of those funds.
- The purpose of a business plan includes showing repayment ability or ROI.
- Investors look for a capable and experienced management team.
- Risk analysis and mitigation strategies demonstrate thoughtful planning.
- The business model and revenue streams must be clearly defined.
- The purpose of a business plan is to prove scalability and future growth.
- Clear, measurable objectives and KPIs aligned with business goals.
- Competitive analysis showing market differentiation is essential.
- The plan should include legal structure and compliance readiness.
- Timeline and milestones provide a roadmap for execution.
- Transparency and honesty build investor trust.
- The purpose of a business plan also includes preparing for due diligence.
- Inclusion of an exit strategy to show how investors will realise returns.
- Well-structured and easy-to-navigate content retains investor attention.
- Demonstrating the strategic purpose of a business plan reassures investors of long-term viability.
Something Extra! Market Research and the Purpose of Business Planning.
Market research isn’t as exciting as brainstorming ideas or developing fresh marketing strategies. However, this process is essential for every entrepreneur. It is not enough to have brilliant ideas; they must be executed wisely to turn a profit. Market research provides critical insights into your target customers and the market as a whole. It provides the information you need to make informed decisions about your business venture.
Why is a Business Plan Important? What is Market Research?
Market research collects and analyses data about your target audience, the market landscape, and competitors. It aims to answer critical questions about your business idea, such as the demand for your product or service and potential roadblocks you may face. It is an essential part of the business planning process.
This data can then be used to make critical strategic decisions about your business model, marketing strategies, and more. Market research can be conducted through a variety of methods. The type of research you work on will depend on your business and industry, your goals, and the questions you want to be answered.
There are several ways to conduct market research. They include conducting interviews, polls, focus groups, and surveys, performing secondary research, and using analytics and other data.
Why is a Business Plan Important? Why is market research important for entrepreneurs?
Marketing strategies and business models are built on customer insights and market trends. This type of information cannot be made up or guessed at. It has to be researched and assessed with facts. This data helps you to understand your customers’ needs and expectations. It also lets you see how your business might fit into the marketplace and identify any significant obstacles ahead.
Knowing these things helps you create a profitable business that delivers excellent customer value and has a strong chance of success. Without this information, you might be making a product or service that few people want, or trying to sell it ineffectively.
Why is a Business Plan Important? Why is it hard for entrepreneurs to research the market?
Marketing and business trends change over time. This means that data from a few years ago might no longer be relevant to your situation. Therefore, it must be up to date. However, many entrepreneurs tend to skip the market research step. They might be under the false assumption that it is unnecessary when they have a great business idea or that it will take a lot of time and effort.
In reality, market research should be done at the very beginning of the business planning process. It is an investment in your venture’s future success. A researcher cannot conduct research for you. You have to follow their instructions carefully to receive accurate data. You have to put aside biases and misconceptions to find the information most useful to your business.
Why is a Business Plan Important? How to make market research easier?
If you have never conducted market research, the process may make you feel a little daunted. Don’t worry; you don’t need to be an expert to understand your customers. You need to follow a few simple steps. Before you begin collecting research, you need to decide what you want to know and why. What are your business goals?
What are the general trends in your industry? Which customers are you hoping to reach? How do they like to be communicated with? Once you have a clear idea of what you want to learn and why, you can collect the data. There are various data collection methods, ranging from quick online surveys to in-depth interviews. You can choose the way that best applies to your situation.
Main Purpose of a Business Plan ― Problem identification through market research
While market research is about gaining insights to inform better business decisions, it can also be used to identify problems in your industry. For example, you can research your competitors if you are in the restaurant business. You can find out what meals they serve when they are busiest and how many customers they have on average. This can give you insight into what your customers want and how they like to be served. It can help you to avoid making costly mistakes.
For example, if your competitors are busy during lunch, you might consider offering a meal that takes less time to prepare. This can help you avoid long wait times and losing customers in a rush. Market research can also help you to understand how customers view your brand. Do they think highly of it? What do they like or dislike about it?
Main Purpose of a Business Plan ― Customer Insights from market research
Understanding your customers helps you reach them best. You can see their preferences, how they like to be communicated with, and what pains they experience. This knowledge can help you create a successful business model.
For example, if you are providing a financial service, you might find that most of your customers are older people who don’t have time to manage their finances. This can help you focus your campaigns on that specific audience. It will help you to save time and money by avoiding marketing to people who are unlikely to use your services. Understanding your customers also enables you to avoid mistakes. You can avoid offending people or creating products and services that no one wants.
Why is it Important to have a Business Plan? Discover your customers’ unmet needs.
Successful entrepreneurs continually seek ways to improve their products and services. They recognise particular unmet needs among their customers and aim to solve them. Market research can help you to identify these needs. Let’s say that you work for a software company. You have a product that helps people organise their finances.
However, after researching, you discover that many of your customers would also like help saving for retirement. This unmet need is one you can address by including retirement planning tools in your original product. This will help you to retain customers and gain new ones.
Main Purpose of a Business Plan ― Business model identification through market research
Every business model has to be profitable. This means you have to earn more than you spend, which keeps the company afloat. This is important because if you are constantly losing money, it is unlikely that you will be able to keep your company open for long. Market research helps you to identify how your business model will work.
It can help you understand your operational costs and how you will earn money. This information helps you to make intelligent decisions and avoid costly mistakes. For example, if you want to start a bakery and sell muffins, you have a few options. You could sell muffins in person, make and sell them online, or offer both. Each of these options has different costs. This data can help you identify the best business model for your situation. It can help you to avoid costly mistakes, like trying to sell your muffins online when you don’t have the resources to do it properly.
There are many benefits to engaging in market research from the very beginning of the planning process. It helps you understand customer needs, avoid common pitfalls, and build a successful business model. However, it is often a task that entrepreneurs avoid because they don’t know where to start or feel they don’t have the resources to do it properly.
Remember that market research doesn’t have to be complicated or expensive. If you follow these guidelines and prioritise market research, you can avoid costly mistakes, better reach your intended audience, and create a profitable business model.
The Purpose of a Business Plan FAQs
Below, we answer the most frequent questions we receive from clients about the purpose and importance of a business plan in Africa.
What is the purpose of a business plan?
A business plan defines how a company will operate, compete, and grow. It sets out objectives, target markets, strategy, and financial forecasts. The main purpose of a business plan is to guide execution and secure stakeholder confidence—especially for funding. JTB Consulting crafts purpose-driven plans that satisfy investors, lenders, and management teams alike.
Why is a business plan important for South African entrepreneurs?
It validates viability, quantifies funding needs, and communicates strategy to investors. In South Africa, where lenders demand structured evidence, a well-developed plan shortens approval times and builds trust. JTB Consulting’s plans follow international standards adapted for African contexts.
What is the primary purpose of a business plan for funding and investors?
To demonstrate that management understands its market, risks, and returns. Investors want clarity on how funds generate cash flow. JTB Consulting structures business plans around value creation, risk mitigation, and exit strategies that appeal to financiers.
How does a business plan help secure funding?
A business plan is essential to secure funding because it clearly shows investors and lenders what they want: financial projections, repayment ability, and aligned assumptions. What investors look for in a business plan are solid numbers that prove the business can generate enough cash to repay loans or deliver strong returns. A plan without sound financials often fails due diligence and funding readiness checks.
At JTB Consulting, each plan includes a detailed Excel financial model tailored to the business, ensuring it is bankable. This meticulous approach builds financiers’ confidence and increases the likelihood of securing capital. Essentially, a business plan acts as a financial roadmap that convinces stakeholders that your business idea is financially viable. This is why business planning is essential for funding success.
Can a business plan improve internal management?
Yes, a business plan is not just for external funding; it’s also a robust internal management tool. The purpose of business planning extends beyond raising capital—it helps companies set key performance indicators (KPIs), allocate responsibilities, and create accountability frameworks. JTB Consulting crafts plans that guide executives to track actual performance against targets each quarter. Additionally, plans support scenario analysis, enabling decision-makers to adapt strategies proactively. This management uses business plans to ensure operational focus, coherence, and measurable progress. This internal discipline is why business planning is essential—not only to secure funds but to run and grow the business efficiently and effectively.
What are the three primary purposes of a business plan?
A comprehensive business plan serves three critical purposes: (1) Planning — it defines strategy, sets clear goals, and outlines how the business will achieve them; (2) Financing — it acts as a convincing document to secure capital or investors by outlining financial projections and risk mitigation; (3) Management — it guides day-to-day operations and progress measurement through KPIs. JTB Consulting’s plans cover all these aspects thoroughly, reflecting what investors look for in a business plan, such as strategic clarity and financial viability. Understanding the purpose of business planning across these three dimensions helps businesses focus their efforts, secure funding, and execute strategy with confidence.
How often should a business plan be updated?
A business plan should be updated at least annually or whenever significant changes occur in market conditions or financial outlook. This keeps the plan aligned with current realities, such as inflation, competitor actions, and customer shifts—factors investors and lenders expect to be reflected. JTB Consulting recommends frequent reviews because outdated plans lose credibility and become less valuable. Regular updates reinforce the plan’s role as a dynamic tool for both funding and management. Staying current is vital for maintaining relevance and trust, which is why ongoing business planning is essential to sustain growth and readiness for new opportunities.
What is the difference between a business plan and a pitch deck?
The difference lies in depth and purpose. A pitch deck is a concise, visual summary designed to capture interest quickly in meetings and presentations. It highlights key business aspects like the problem, solution, market, and financial highlights. In contrast, a business plan is a detailed, structured document that covers market analysis, operations, a comprehensive financial strategy, risks, and implementation plans. JTB Consulting creates both, ensuring clients are not only ready to impress in initial pitches but also prepared for thorough due diligence with a robust business plan. Knowing this difference helps entrepreneurs prepare effectively for funding and growth phases.
Do investors read the entire business plan?
Typically, investors do not read the entire plan at first. They focus on critical sections—the executive summary, financials, and risk analysis—looking for clear, compelling answers to their key concerns. What investors look for in a business plan is a precise, persuasive funding logic sequence that grabs attention and builds confidence quickly. JTB Consulting designs plans with this in mind, structuring content so it retains interest and progresses logically toward commitment. Clear, concise, and well-organised plans significantly increase the chances investors will read beyond the first pages and engage deeply.
How does JTB Consulting add value to the business planning process?
JTB Consulting leverages over 20 years of experience across South Africa and the SADC region, with benchmark data from 125 industries. This expertise enables the creation of custom financial models, detailed risk analyses, and implementation roadmaps that turn plans from documents into actionable strategies. JTB’s value lies in blending local market insight with global best practices to ensure plans meet both investor expectations and operational needs. The firm’s holistic approach helps clients avoid common pitfalls and builds confidence for funding and successful execution. For businesses serious about growth, JTB Consulting is a no-fluff, trusted partner in effective business planning.
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