Its completely correct path for a founder of startup to write business plan which serves as blue print document on the thought process of the founder and the services or the product offering he has.
So first step founders do is as usual Google what is business plan, which will show lot of samples, which are correct for a generic approach, it cannot be used to customize as per your startup.
So founder start to write in word file based on the format they got in Google this approach is purely theoretical approach where in you start with executive summary and start writing who is you target segment and who are going to be your customers, what’s the market size, SWOT analysis and many more as shown in the Google format.
This is just hypothetical representation with out understanding the amount required for raising or required for boot strapping for the startup, so the founders write a huge length 40 page word document and think that every component is covered.
Yes all components are covered without the financial component that is more crucial for investor to understand the financial viability of the startup and also these report or so called project report use to be in existence in early 1970’s in USA where in the investors wanted to get clarity of the company.
With changes in the industry and consumer behavior and maturity of markets these project reports have become redundant and mundane as changing dynamics of market has also changed the parameters which investors look at.
Founders while writing these project reports write with one side of view which is their own view rather than looking at the other perspective of what investors look at which is more essential for raising funds.
Project reports are good for MBA exams where in you are supposed to submit a project report beyond this document does not serve any purpose.