Project report or business plan is a written statement of what an entrepreneur proposes to take up. It is one kind of course of action about what the entrepreneur hopes to achieve in his business and how is he going to achieve it.
An objective without a plan is a dream. This is why the preparation of the project report is very important for an entrepreneur. Anyway, a project report or business plan is important for the following reasons:
(1) A roadman: The project report is like a road map. It describes the direction the enterprise is going in, what its goals are, where it wants to be, and how it is going to get there.
(2) Shows the right direction: A project report enables an entrepreneur to know that he is proceeding in the right direction.
(3) Attract lenders and investors: Through the help of project report, any person can easily know the details, information about any enterprise. Thus, it helps lenders and investors to invest in the right enterprise.
(4) Financial assistance: A project report or business plan must be submitted to the financial institutions and commercial banks to take a loan from them. On the basis of that report, the financial institutions judge the entrepreneur and his enterprise.
(5) Tools of control: On the basis of a project report, an entrepreneur can measure and evaluate the performance of his enterprise. It also helps an entrepreneur in taking necessary corrective actions.
(6) Help in preparing budget: Project report or business plan gives an entrepreneur necessary guidance for preparing a budget for his enterprise.
(7) Source of information: Project, report or business plan acts as a source of information not only for the entrepreneurs but also for the external parties.
(8) Others: Project report or business plan also helps in taking the right decision, proper coordination, proper utilization of resources, reducing costs and wastages, taking strategies.
So, these are the various reasons for preparing a business plan.