Final answer:
Owners develop a business plan to demonstrate their commitment to the business and to provide essential information to potential investors like angel investors and venture capitalists. It serves as a road map for the business and helps in strategizing for growth.
Step-by-step explanation:
One of the main reasons why owners develop a business plan before starting a new business is to demonstrate a belief in the business's prospects and to provide detailed information to potential investors. In the case of angel investors and venture capitalists, a business plan offers a means to assess the viability of an investment as these types of investors are often heavily involved in the early stages of a startup. They rely on the plan to overcome information asymmetries by getting to know the management team's experience, the firm's strategic direction, and offering advice based on their understanding. Furthermore, a well-structured business plan serves as a road map for the business, crucial for guiding decision-making and strategizing future growth.