advantages and disadvantages of the business plan

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What are the advantages and disadvantages of a business plan?

The hands of a businessman in front of a spiral notebook containing business plan ideas.

Almost every business starts with a business plan. These documents are used to map out the steps you want to take to get your business off the ground. However, do these strategy documents work for all businesses?

Whether you’re an entrepreneur or an investor, business plans are considered an essential part of starting a new business . For business owners and other stakeholders, it acts as a manual that can be used to chart a business’ success. Similarly, business plans can generate confidence, helping to convince potential lenders that investment is a risk worth taking.

However, business plans can also be expensive and time-consuming to create. Additionally, there is also no guarantee that a business will succeed just because a sound plan has been put in place.

To help you decide if a business plan would benefit your new venture, this guide runs through the main advantages and disadvantages.

The advantages of a business plan

Although a business plan takes time and money to create, it can help save both in the future if done properly. Below we take a look at some of the key advantages of creating a business plan:

1. It helps you forecast future steps The primary purpose of a business plan is to give you (and investors) an idea of whether your business has the potential to be successful. By mapping out your next steps and setting milestones, you can spot strengths and weaknesses in your ideas and set targets. This is helpful as it may prevent you from proceeding with a business idea that may end up costing you money.

On the other hand, these initial forecasts may provide the positive projections you need to actually get started and even attract outside investment. Even if your business plan produces an uncertain forecast, it still provides a small glimpse of the direction your business wants to head in and how it may perform on the way. This is valuable information, both for business owners and third-party stakeholders.

2. It is required if you want to apply for credit In order to secure a business loan from an official lender, a business plan is essential. Most banks will not even meet with you to discuss financing unless you have a business plan to present. This is because financial institutions like banks and credit unions need a way to accurately gauge their lending risks.

A well-thought-out business plan gives you the opportunity to show lenders how organised and prepared you are. It should explain how your business will use any capital you are lent and how you intend to make repayments. This level of detail can help to instil confidence in your business by persuading lenders you are a good risk.

3. It helps you to identify future cash flow issues A business plan should contain detailed cash flow forecasts and analysis. This shows potential lenders how money is expected to travel in and out of your business. It can also be useful for owners to determine if/when the business is expected to have cash flow problems under certain strategies. Having this information at hand can make it easier to financially plan, ensuring the business is always properly funded.

4. It helps you to allocate resources One of the biggest challenges for new business owners is resource management. From how much inventory you should buy to setting initial budgets, these decisions can be difficult. A business plan encourages you to create a workable budget and allocate resources before you start spending. This ensures you can afford everything you need and you don’t overspend before your business can start making money.

5. It helps you better understand your competition Creating a business plan requires a great deal of industry research. While you may think you have a strong handle on what you want your business to achieve, only by analysing your competition will you be able to see the full picture. A business plan can help you produce highly valuable insights into competitor demographics. This includes existing consumer trends and preferences, as well as costing insights. These findings are not always viable without conducting business plan competitor analysis.

6. It can help to secure talent In order for a business to be successful, attracting talented workers is crucial. A business plan can help to secure this talent by setting out a clear vision for the business. From management to skilled entry level staff, by showing individuals the direction and potential of the business, you can start to build a strong and coherent team.

The disadvantages of a business plan

Business plans can be time-consuming and expensive to produce. On top of this, there is also no guarantee that they will be accurate or help you to achieve the investment you are looking for. With this in mind, below we outline a number of disadvantages when it comes to creating a business plan:

1. It may not be accurate Putting together credible business plans is a highly skilled process. For this reason, many businesses seek the help of experienced business advisors when creating one. However, even with the help of a broad range of expert opinions, there is no guarantee that what is produced will be accurate. Industries and even wider business climates can change very quickly. This means that even taking the time and money to create an in-depth business plan can be risky.

2. It can make you become ‘tunnel-visioned’ In a world where nothing is 100% certain, treating your business plan as an uncompromising manual is a bad idea. The fact is, they are nothing more than a set of forecasts. If followed religiously, these strategy documents can ultimately do more harm than good. This is especially true if you become tunnel-visioned by your business plan and fail to adapt when market forces and changing economic environments demand it.

3. It can waste precious time and money Creating a business plan can take a lot of time and money to produce. It may require the help of third-party experts, such as business advisors, lawyers and accountants, all of which will charge for their services. Additionally, it can also take you and other employees away from the day-to-day tasks involved with launching a new business. This can lead to precious resources being wasted on a task whose cost may exceed its benefits.

The above points show that although business plans represent an essential component for most new businesses, comprehensive plans may not be 100% necessary in all circumstances. Luckily, if you are looking to put one together but are struggling to know where to start, the Markel Law Hub can help. We have a simple, easy-to-follow business plan template for you to download. To learn how you can access the Markel Law Hub, click here .

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Advantages and Disadvantages of Business Plan

Every business starts with a business plan because starting a business without a plan is like going on a chilled winter night without warm clothes and since starting a business involves money and where there is money one cannot take chances of going ahead without a plan. In order to understand it better let’s look at some of the advantages and disadvantages of business plan –

Advantages of Business Plan

The first and foremost advantage of business plans is that once the company has business plan ready then only it can take it forward and present it to prospective investors who in turn if they like the plan will finance the business plan and we all know how important capital is for starting a business because without capital no business can start.
Another benefit of business plans is that it helps the promoter in getting things right because if plans are in mind only then it can lead to confusion as mind has dozen of ideas but once the plan in mind is put into paper in the form of business plan than it gets more clarity and the owner can concentrate on one plan only rather than thinking about dozen of plans.
Another advantage of the business plans is that it helps in prioritizing the work and also putting the right people for right job which in turn increases the possibility of the business plan being a success as the owner can keep track of milestones of business as envisaged in the business plan.

Disadvantages of Business Plan

The biggest disadvantage of the business plans is that it involves time and expenses and as far as small businesses are concerned they neither have money and expertise to make a proper business plan which in turn can lead to business suffering more rather than gaining from the business plan.
Another drawback of it is that due to the presence of business plans the owners may lose flexibility and become rigid also they will keep sticking to the business plan even if it detrimental to the interests of the business. So for example, if business plan has envisaged 10000 units of production but due to change in consumer taste sales of only 5000 units can be done and if the owner sticks to the business plan then it will be a loss making the decision. Hence a good business plan is one which has the scope of flexibility in it.
Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other problems and it is next to impossible that plans are carried out in exact fashion as set out by the top management or the owner of the company.
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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

advantages and disadvantages of the business plan

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

A business plan is a document describing a company's business activities and how it plans to achieve its goals.
Startup companies use business plans to get off the ground and attract outside investors.
For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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14 Reasons Why You Need a Business Plan

Female entrepreneur holding a pen and pointing to multiple sticky notes on the wall. Presenting the many ways having a business plan will benefit you as a business owner.

10 min. read

Updated April 19, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The process of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed.

You don’t have to just take our word for it. Studies have proven that companies that plan and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience cash flow crises that threaten to close them down.

2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture.

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality.

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money.

3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations.

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans.

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones.

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

If there is a market for your product or service
Who your target audience is
How you will gain an edge over the current competition
If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase.

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your cash flow statement is one of the three key financial statements you’ll put together for your business plan. (The other two are your balance sheet and your income statement (P&L).

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills.

8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

What is your competition doing well? What are they doing poorly?
What can you do to set yourself apart?
What can you learn from them?
How can you make your business stand out?
What key business areas can you outcompete?
How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete.

9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind.

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business.

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers.

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc.

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there.

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale.

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Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one.

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Start your business plan with the #1 plan writing software. Create your plan with Liveplan today.

Table of Contents

6. You’ll make big spending decisions with confidence
7. You’re more likely to catch critical cash flow challenges early

7 Min. Read

8 Business Plan Templates You Can Get for Free

10 Min. Read

Use This Simple Business Plan Outline to Organize Your Plan

3 Min. Read

How Long Should a Business Plan Be?

12 Min. Read

Do You Need a Business Plan? Scientific Research Says Yes

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Business Plan

Who should write a business plan, pros and cons of a business plan, the anatomy of a business plan, .css-uphcpb{position:absolute;left:0;top:-87px;} what is a business plan, definition of a business plan.

A business plan is a strategic document which details the strategic objectives for a growing business or startup, and how it plans to achieve them.

In a nutshell, a business plan is a written expression of a business idea and will describe your business model, your product or service, how it will be priced, who will be your target market, and which tactics you plan to use to reach commercial success.

Whilst every enterprise should have a plan of some sort, a business plan is of particular importance during the investment process. Banks, venture capitalists, and angel investors alike will need to see a detailed plan in order to make sound investment decisions — think of your plan as a way of convincing them your idea is worth their resources.

Roadmapping From A to Z

Business plans can also be useful as a guide to keeping a new business on track, especially in the first few months or years when the road ahead isn’t too clear.

Starting a business isn’t an exact science. Some companies organically develop out of trial and error, while others are plotted out from start to finish.

So if you’re asking whether your company needs a lengthy business plan, the answer would be ‘no’. That said, there are definitely a few situations in which writing a plan makes sense and can help increase the chances of a business becoming successful:

In situations when the market is new and untested — or simply volatile — it can be very helpful to have a business plan to refer back to when the road ahead isn’t clear.

For those who have an exciting business idea but haven’t necessarily distilled it down into black-and-white. Writing a business plan is a great way to look at a concept from all angles and spot any potential pitfalls.

How to write a business plan?

The most important step in writing a business plan is to identify its purpose.

Who are you trying to attract with it, and why?

Here are a few key pointers for writing a business plan:

Are you looking to secure a bank loan, get funding from private investors, or to lure skilled professionals to join you?

Include a brief history of your business, the concept, and the products or services. Keep it professional and transparent.

Don’t exaggerate your experience or skills, and definitely don’t leave out information investors need to know. They’ll find out at some point, and if they discover you lied, they could break off their involvement. Trust is crucial.

Explain what the product or service your business offers in simplistic terms.

Watch out for complex language and do whatever you can to prevent readers from becoming confused.

Focus on the benefits the business offers, how it solves the core audience’s problem(s), and what evidence you have to prove that there is a space in the market for your idea. It’s important to touch on the market your business will operate in, and who your main competitors are.

Another essential aspect of writing an effective business plan is to keep it short and sweet. Just focus on delivering the crucial information the reader has to know in order to make a decision. They can always ask you to elaborate on certain points later.

Still, deciding whether or not a business plan will benefit you at this stage of your venture?

Let’s look at a few reasons why you might (or might not) want to write a business plan.

A business plan will help you to secure funding even when you have no trading history. At the seed stage, funding is all-important — especially for tech and SaaS companies. It’s here that a business plan can become an absolute lifesaver.

Your business plan will maintain a strategic focus as time goes on. If you’ve ever heard of “mission creep”, you’ll know how important an agreed can be — and your business plan serves exactly that purpose.

Having a plan down in black and white will help you get other people on board . Again, with no trading history, it can be hard to convince new partners that you know what you’re doing. A business plan elegantly solves this problem.

Your business plan can cause you to stop looking outward. Sometimes, especially in business, you need to be reactive to market conditions. If you focus too much on your original business plan, you might make mistakes that can be costly or miss golden opportunities because they weren’t in the plan.

A lot of time can be wasted analyzing performance. It’s easy to become too focused on the goals and objectives in your business plan — especially when you’re not achieving them. By spending too much time analyzing past performance and looking back, you may miss out on other ways to push the business forward.

A business plan is out of date as soon as it’s written. We all know how quickly market conditions change. And, unfortunately, certain elements in your business plan may have lost relevance by the time you’re ready to launch. But there is another way — by transferring your strategic plan into an actionable roadmap , you can get the best of both worlds. The business plan contains important detail that is less likely to change, such as your mission statement and target audience, and the roadmap clarifies a flexible, adaptable, route forward.

So, you’ve decided to write a business plan — a great choice!

But now comes the tricky task of actually writing it.

This part can be a little frustrating because there is no one-size-fits-all template appropriate for all business plans. The best approach, in fact, is to look at common ingredients of a business plan and pick out the ones that make sense for your venture.

The key elements of a great business plan include:

An overview of the business concept . This is sometimes referred to as an executive summary and it’s essentially the elevator pitch for your business.

A detailed description of the product or service. It’s here that you’ll describe exactly what your core offering will be — what’s your USP , and what value do you deliver?

An explanation of the target audience. You need a good understanding of who you’ll be selling your product or service to, backed up by recent market research.

Your sales and marketing strategy. Now that you know who you’re targeting, how do you plan to reach them? Here you can list primary tactics for finding and maintaining an engaged client base.

Your core team . This section is all about people: do you have a team behind you already? If not, how will you build this team and what will the timeline be? Why are you the right group of people to bring this idea to the market? This section is incredibly important when seeking external investment — in most cases, passion can get you much further than professional experience.

Financial forecasts . Some investors will skim the executive summary and skip straight to the finances — so expect your forecasts to be scrutinized in a lot of detail. Writing a business plan for your eyes only? That’s fine, but you should still take time to map out your financial requirements: how much money do you need to start? How do you plan to keep money coming in? How long will it take to break even ? Remember, cash is king. So you need a cash flow forecast that is realistic, achievable and keeps your business afloat, especially in the tricky first few years.

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Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

What is the purpose of a business plan – why is it really required?
How is it going to benefit my business if I write a business plan?
Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

External: industry, target market of prospective customers, competitive landscape
Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
Accountability: Track your progress toward goals and benchmarks
Course-correction: make changes to your business as you learn more about your market and what works and what does not
Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

Industry, market, customers and competitors
Financial projections (e.g., revenue, expenses, assets, cash flow)
Operations, technology and logistics
Human resources (management and staff)
Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
Weaknesses in your business idea, business model and strategy – so you can fix them.
Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

Seeking financing for new assets , such as equipment or property
Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
Forecasting to allocate resources according to strategic priority and operational needs
Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.

Here’s an overview of a few fundamental types of business plans.

Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments.
Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them.

Here are the key elements of a good business plan:

Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.
Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time.
Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

Create a business plan to determine your company's direction, obtain financing, and attract investors.
Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success.

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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Business Planning - Introduction

Last updated 22 Mar 2021

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The business plan sets out how the owners/managers of a business intend to realise its objectives. Without such a plan a business is likely to drift.

The business plan serves several purposes:it

(1) enables management to think through the business in a logical and structured way and to set out the stages in the achievement of the business objectives.

(2) enables management to plot progress against the plan (through the management accounts)

(3) ensures that both the resources needed to carry out the strategy and the time when they are required are identified.

(4) is a means for making all employees aware of the business's direction (assuming the key features of the business plan are communicated to employees)

(5) is an important document for for discussion with prospective investors and lenders of finance (e.g. banks and venture capitalists).

(6) links into the detailed, short-term, one-year budget.

The Link Between the Business Plan and the Budget

A budget can be defined as "a financial or quantitative statement", prepared for a specific accounting period (typically a year), containing the plans and policies to be pursued during that period.

The main purposes of a budget are:

(1) to monitor business unit and managerial performance (the latter possibly linking into bonus arrangements)

(2 )to forecast the out-turn of the period's trading (through the use of flexed budgets and based on variance analyses)

(3 )to assist with cost control.

Generally, a functional budget is prepared for each functional area within a business (e.g. call-centre, marketing, production, research and development, finance and administration). In addition, it is also normal to produce a "capital budget" detailing the capital investment required for the period, a "cash flow budget", a "stock budget" and a "master budget", which includes the budgeted profit and loss account and balance sheet.

Preparing a Business Plan

A business plan has to be particular to the organisation in question, its situation and time. However, a business plan is not just a document, to be produced and filed. Business planning is a continuous process. The business plan has to be a living document, constantly in use to monitor, control and guide the progress of a business. That means it should be under regular review and will need to be amended in line with changing circumstances.

Before preparing the plan management should: - review previous business plans (if any) and their outcome. This review will help highlight which areas of the business have proved difficult to forecast historically. For example, are sales difficult to estimate? If so why? - be very clear as to their objectives - a business plan must have a purpose - set out the key business assumptions on which their plans will be based (e.g. inflation, exchange rates, market growth, competitive pressures, etc.) - take a critical look at their business. The classical way is by means of the strengths-weaknesses-opportunities-threats (SWOT) analysis, which identifies the business's situation from four key angles. The strategies adopted by a business will be largely based on the outcome of this analysis.

Preparing the Budget

A typical business plan looks up to three years forward and it is normal for the first year of the plan to be set out in considerable detail. This one-year plan, or budget, will be prepared in such a way that progress can be regularly monitored (usually monthly) by checking the variance between the actual performance and the budget, which will be phased to take account of seasonal variations.

The budget will show financial figures (cash, profit/loss working capital, etc) and also non-financial items such as personnel numbers, output, order book, etc. Budgets can be produced for units, departments and products as well as for the total organisation. Budgets for the forthcoming period are usually produced before the end of the current period. While it is not usual for budgets to be changed during the period to which they relate (apart from the most extraordinary circumstances) it is common practice for revised forecasts to be produced during the year as circumstances change.

A further refinement is to flex the budgets, i.e. to show performance at different levels of business. This makes comparisons with actual outcomes more meaningful in cases where activity levels differ from those included in the budget.

What Providers of Finance Want from a Business Plan

Almost invariably bank managers and other providers of finance will want to see a business plan before agreeing to provide finance. Not to have a business plan will be regarded as a bad sign. They will be looking not only at the plan, but at the persons behind it. They will want details of the owner/managers of the business, their background and experience, other activities, etc. They will be looking for management commitment, with enthusiasm tempered by realism. The plan must be thought through and not be a skimpy piece of work. A few figures on a spreadsheet are not enough.

The plan must be used to run the business and there must be a means for checking progress against the plan. An information system must be in place to provide regular details of progress against plan. Bank managers are particularly wary of businesses that are slow in producing internal performance figures. Lenders will want to guard against risk. In particular they will be looking for two assurances:

(1) that the business has the means of making regular payment of interest on the amount loaned, and

(2) that if everything goes wrong the bank can still get its money back (i.e. by having a debenture over the business's assets). Forward-looking financial statements, particularly the cash flow forecast, are therefore of critical importance. The bank wants openness and no surprises. If something is going wrong it does not want this covered up, it wants to be informed - quickly.

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Home » Pros and Cons » 14 Pros and Cons of a Business Plan

14 Pros and Cons of a Business Plan

Should you create a business plan? Most people will say that you should have at least some sort of outline that helps you guide your business. Yet sometimes an opportunity is so great that you’ve just got to jump right in and grab it before it disappears. If you want funding or growth to be sustainable, however, there is a good chance that you’ll need to create a business plan of some sort in order to find success. Here are some of the pros and cons of a business plan to consider as you go about the process of creating and then running your business.

What Are the Pros of a Business Plan?

A business plan is a guide that you can use to make money. By understanding what your business is about and how it is likely to perform, you’ll be able to see how each result receive can impact your bottom line. With comprehensive plans in place, you’ll be prepared to take action no matter what happens over the course of any given day. Here are some more benefits to think about.

1. It gives you a glimpse of the future. A business plan helps you to forecast an idea to see if it has the potential to be successful. There’s no reason to proceed with the implementation of an idea if it is just going to cost you money, but that’s what you do if you go all-in without thinking about things. Even if the future seems uncertain, you’ll still get a glimpse of where your business should be.

2. You’ll know how to allocate your resources. How much inventory should you be holding right now? What kind of budget should you have? Some resources that your business needs to have are going to be scare. When you can see what your potential financial future is going to be, you can make adjustments to your journey so that you can avoid the obstacles that get in your way on the path toward success.

3. It is necessary to have a business plan for credit. In order for a financial institution to give you a line of credit, you’ll need to present them with your business plan. This plan gives the financial institution a chance to see how organized you happen to be so they can more accurately gauge their lending risks. Most institutions won’t even give you an appointment to discuss financing unless you have a formal business plan created and operational.

4. A business plan puts everyone onto the same page. When you’re working with multiple people, then you’re going to have multiple viewpoints as to what will bring about the most success. That’s not to say that the opinions of others are unimportant. If there isn’t any structure involved with a business, then people with a differing opinion tend to go rogue and just do their own thing. By making sure that everyone is on the same page with a business plan, you can funnel those creative energies into ideas that bring your company a greater chance of success.

5. It allows others to know that you’re taking this business seriously. It’s one thing to float an idea out to the internet to see if there is the potential of a business being formed from it. Creating a business plan for that idea means you’re taking the idea more seriously. It shows others that you have confidence in its value and that you’re willing to back it up. You are able to communicate your intentions more effectively, explain the value of your idea, and show how its growth can help others.

6. It’s an easy way to identify core demographics. No matter what business idea you have, you’re going to need customers in order for it to succeed. Whether you’re in the service industry or you’re selling products online, you’ll need to identify who your core prospects are going to be. Once that identification takes place, you can then clone those prospects in other demographics to continue a growth curve. Without plans in place that allow you to identify these people, you’re just guessing at who will want to do business with you and that’s about as reliable as throwing darts at a dartboard while blindfolded.

7. There is a marketing element included with a good business plan. This allows you to know how you’ll be able to reach future markets with your current products or services. You’ll also be able to hone your value proposition, giving your brand a more effective presence in each demographic.

What Are the Cons of a Business Plan?

A business plan takes time to create. Depending on the size of your business, it could be a time investment that takes away from your initial profits. Short-term losses might happen when you’re working on a plan, but the goal is to great long-term gains. For businesses operating on a shoestring budget, one short-term loss may be enough to cause that business to shut their doors. Here are some of the other disadvantages that should be considered.

1. A business plan can turn out to be inaccurate. It is important to involve the “right” people in the business planning process. These are the people who are going to be influencing the long-term vision of your business. Many small business owners feel like they can avoid this negative by just creating the business plan on their own, but that requires expertise in multiple fields for it to be successful. A broad range of opinions and input is usually necessary for the best possible business plan because otherwise the blind spots of inaccuracy can lead to many unintended consequences.

2. Too much time can be spent on analysis. Maybe you’ve heard the expression “paralysis by analysis.” It cute and catchy, but it also accurately describes the struggle that many have in the creation of a business plan. Focus on the essentials of your business and how it will grow. Sure – you’ll need to buy toilet paper for the bathroom and you’ll want a cleaning service twice per week, but is that more important than knowing how you can reach potential customers? Of course not.

3. There is often a lack of accountability. Because one person is generally responsible for the creation of a business plan, it is difficult to hold that person accountable to the process. The plans become their view of the company and the success they’d like to see. It also means the business plan gets created on their timetable instead of what is best for the business and since there isn’t anyone else involved, it can be difficult to hold their feet to the fire to get the job done.

4. A great business plan requires great implementation practices. Many businesses create a plan that just sits somewhere on a shelf or on a drive somewhere because it was made for one specific purpose: funding. When a solid business plan has assigned specific responsibilities to specific job positions and creates the foundation for information gathering and metric creation, it should become an integral part of the company. Unfortunately poor implementation has ruined many great business plans over the years.

5. It restricts the freedom you once had. Business plans dictate what you should do and how you should do it. A vibrant business sometimes needs its most creative people to have the freedom to develop innovative new ideas. Instead the average plan tends to create an environment where the executives of the company dictate the goals and the mission of everyone. The people who are on the front lines are often not given the chance to influence the implementation of the business plan, which ultimately puts a company at a disadvantage.

6. It creates an environment of false certainty. It is important to remember that a business plan is nothing more than a forecast based on plans and facts that are present today. We live in a changing world where nothing is 100% certain. If there is too much certainty in the business plan that has been created, then it can make a business be unable to adapt to the changes that the world is placing on it. Or worse – it can cause a business to miss an exciting new opportunity because they are so tunnel-visioned on what must be done to meet one specific goal.

7. There are no guarantees. Even with all of the best research, the best workers, and a comprehensive business plan all working on your behalf, failure is more likely to happen than success. In the next 5 years, 95 out of 100 companies that start-up today will be out of business and many of them will have created comprehensive business plans.

The pros and cons of a business plan show that it may be an essential component of good business, but a comprehensive plan may not be necessary in all circumstances. The goal of a business plan should be clear: to analyze the present so a best guess at future results can be obtained. You’re plotting out a journey for that company. If you can also plan for detours, then you’ll be able to increase your chances to experience success.

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Introduction

A business plan strategy is a document that outlines and outlines the goals and objectives of a business. It also contains information about the company's objectives, strategies, and resources. As business owners or entrepreneurs, it is important to develop strategies that will allow the business to reach its goals in the long-term.

There are two primary strategies when it comes to business planning: complete and incomplete. A complete business plan strategy covers all aspects of the business, including management, marketing, finance, operations, and more. An incomplete business plan strategy typically focuses on one or two aspects of the business, such as finance or marketing.

Advantages and Disadvantages of Complete Strategies

Creating a business plan that takes a complete approach involves including all information wherein all factors are considered. When a business plan is created with a complete strategy, the goals and objectives of the organization are stated clearly and in detail. Furthermore, when taking a more detailed approach, every aspect of the business strategies is taken into account and can account for facets such as business environment, competitive market positioning, and supportive channels. These strategies are designed to enhance visibility, credibility, and reliability within the markets in which the organization looks to compete.

Disadvantages

The major disadvantage of developing a complete approach business plan is the high cost and time involved. Generally, a complete plan comprises of a complex set of components and intensive research. This includes research on technology, people, and competitive landscape, that can be quite expensive. Additionally, a complete business plan could take a few months and possibly even more than a year for completion. Furthermore, although a complete plan provides clear direction, since it focuses on more elements, it becomes very difficult and challenging to track progress. A complete approach can be too overwhelming at times, especially for smaller businesses.

Advantages and Disadvantages of Incomplete Strategies

Businesses that prefer an incomplete business plan strategy often find it less time consuming and more cost effective to implement. They do not invest more time into creating complex goals or analysis, which helps to save time, energy, and money. In addition, they allow businesses to easily adjust to changes in their markets or to develop in different directions without having to invest too much in planning.

A disadvantage of incomplete strategies is that they may not account for the true state of the business's operations due to their simpler set of objectives. This type of strategy could also fail to consider external influences, such as changes in the competitive environment, or the interests of stakeholders. Ultimately, developing an incomplete strategy can lead to inadequate or misdirected goals, and may prevent a successful outcome.

In addition, due to their simplified nature, incomplete strategies may not be able to thoroughly recognize potential risks and exploits that could ensue. This could lead to volatile decision making and a chaotic business environment. Furthermore, the strategies may lack the structure, focus, and vision that are necessary for any long-term business success.

Considerations for Choosing Between Complete and Incomplete Strategies

Choosing between complete and incomplete business plan strategies ultimately comes down to two major considerations: size and scale of business, and type and scope of planning.

Size and Scale of Business

The size and scale of your business is a key factor when deciding between complete and incomplete strategies. For smaller and more agile operations, an incomplete strategy may be preferable, as it requires less start-up cost and can be implemented quickly. And while larger operations are typically better-suited to a comprehensive approach, incomplete strategies may still be applicable depending on the nature of the business.

Type and Scope of Planning

The type and scope of planning is also a major factor when choosing between a complete and incomplete strategy. For example, companies that require detailed and elaborate plans may find that a complete strategy is more effective and efficient. Alternatively, less complex companies may find that an incomplete strategy is more suitable to their needs.

In addition to size and scope of business and type and scope of planning, there are a number of other considerations to take into account when selecting between complete and incomplete strategies. Such considerations may include budget, resources, timeline, and overall objectives. Ultimately, the strategy chosen should be tailored to the unique needs of the organization.

Examples of Suitable Industries for Complete Strategies

When it comes to creating a business plan, there is no one-size-fits-all approach. For some industries, a more complete strategy may be best while a more incomplete one may be better suited for others. Two industries that may require a more complete approach include the financial sector and the manufacturing industry.

Financial Sector

The financial sector is one of the most highly regulated industries in the world. When it comes to creating a business plan, it is critical to take a comprehensive approach that understands the legal and regulatory frameworks that govern this industry. A financial business plan should include an in-depth analysis of the competitive landscape as well as a detailed roadmap for how the business plans to achieve its financial goals. The business plan should also outline the risks associated with entering the industry and how the business will mitigate them.

Manufacturing Industry

The manufacturing industry is all about efficiency and cost savings. A successful manufacturing business plan must take a holistic view of the whole manufacturing process and include a detailed cost-benefit analysis. It should outline the costs associated with manufacturing, including capital costs, labor costs, raw materials, and other overhead expenses. The plan should also provide a clear timeline for when the business expects to achieve certain production goals and be able to generate revenue.

The manufacturing business plan should also include strategies for ensuring quality across the production process and meeting safety standards. A good plan should also include contingency plans for dealing with unexpected challenges and unexpected markets.

Examples of Suitable Industries for Incomplete Strategies

Incomplete business strategies can be a great fit for certain industries depending on the specific type of services or products they provide. The following is a list of two industries that are particularly suited for an incomplete business plan strategy.

Food & Beverage Service

Food and beverage service industries such as restaurants, catering, and cafes can benefit from an incomplete business plan strategy. As customers' tastes change drastically and the market shifts, businesses in these industries often face an ever-evolving landscape. By not having a rigid business plan to adhere to, these businesses can quickly adapt their approach and reevaluate their goals.

Likewise, retail businesses can also use an incomplete strategy as the market rapidly changes due to customer demands as well as technological advancements. With a plan that is not set in stone, such businesses can easily introduce new products or services to their customers as the need arises and keep up with the competition.

Choosing a business plan strategy is essential for companies that wish to achieve their business goals. There are several options available, including complete and incomplete strategies. Each strategy is beneficial in different scenarios, but both should be thoroughly considered in order to determine which is the best fit for a company.

Summary of Complete and Incomplete Strategies

A complete strategy involves strategizing enterprise-wide goals and implementing the necessary tactics to achieve them. This kind of strategy is best suited to businesses that have well-defined goals, the right resources, and the capacity to implement a long-term plan. An incomplete strategy, on the other hand, emphasizes flexibility and adapting to changing business needs. It is best suited to companies that need to adjust their plans quickly, as the market shifts.

Final Considerations for Choosing a Strategy

When choosing between a complete and incomplete business plan strategy, business owners should take into account their goals, resources, and needs. It is essential to evaluate each option carefully in order to determine which strategy is best suited for the company's specific needs. Additionally, business owners should also consider any outside factors, such as the current market and competitors, that could influence their decision.

By understanding the differences between complete and incomplete business plan strategies, companies can make an informed and effective decision for their business. With the right strategy in place, businesses can develop and grow on their own terms.

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Disadvantages Of A Business Plan

by Nmesoma Emmanuel
August 3, 2023
No comments
9 minute read

Table of Contents Hide

#1. false confidence, #2. lack of liberty, #4. time and resources, who should write a business plan, how to write a business plan, advantages of a business plan, disadvantages of a business plan faq, what is the disadvantages of a business plan, what are the advantages of a business plan.

Effective business planning is comprehensive yet adaptable, cognizant of its constraints. By contrast, poor business planning is sloppy and overreaching, putting a small business on the wrong track. In this article, we will talk about both the advantages and disadvantages of a business plan.

A business plan is a strategic document that outlines the business’s or startup’s strategic objectives and how it intends to accomplish them.

In other words, a business plan is a written expression of a business idea. It will detail your business model, your product or service, how it will be priced, who your target market will be, and the strategies you intend to employ to achieve commercial success.

When done properly and effectively, business planning is a priceless tool for charting overall direction and anticipating changes. However, business planning is not a panacea and can occasionally result in the emergence of new problems such as:

Creating a detailed plan for business operations has the potential to instill an unwarranted sense of security. Plans and projections are based on a planner’s or manager’s best guess about how a business will evolve; however, unforeseen circumstances, such as the overall economic climate and the entry of new competitors, will always exist. A business that is rigidly committed to a plan runs the risk of being unable to adapt to new threats or opportunities.

Businesses that are vibrant thrive in part because employees have the freedom and opportunity to be creative. Business planning is typically a top-down process; managers articulate missions and objectives, and employees are tasked with achieving them. This process may not provide employees with sufficient freedom to influence the company’s long- or short-term objectives. This lack of freedom is detrimental to the business, as it deprives itself of exciting new ideas. It is also detrimental to employees, as they miss out on opportunities for engagement.

While effective business planning strives for objectivity in order to produce honest and accurate results, it is nearly impossible to be completely objective and dispassionate when envisioning your business’s future course. Even the most well-intentioned planners’ results may be skewed by wishful thinking. Additionally, a manager or owner with a vested interest in securing financing from a bank or investor may inflate projections intentionally or even subconsciously in order to portray future potential that is likely to attract capital.

Planning a business can be time-consuming and costly. It may necessitate the assistance of outside professionals, such as accountants, lawyers, and marketing experts, and it may divert time away from more immediate benefits, such as short-term problem-solving. Businesses that lack additional funds to spend on professional services or additional time to devote to collecting and interpreting data risk squandering valuable resources on an endeavor whose costs may outweigh its benefits.

Establishing a business is not a precise science. Some businesses grow organically through trial and error, while others are meticulously planned from start to finish.

Therefore, if you’re wondering whether your business requires a lengthy business plan, the answer is ‘no.’ That said, there are a few instances in which writing a plan makes sense and can help increase a business’s chances of success:

A business plan can be an invaluable tool for securing long-term funding for technology startups with no trading history, such as SaaS companies.
When entering a new and untested market — or when the market is simply volatile — it can be extremely beneficial to have a business plan to refer to when the road ahead is unclear.
For those who have an exciting business idea but have not yet refined it to a black-and-white proposition. Writing a business plan is an excellent way to examine a concept holistically and identify potential pitfalls.

The first and most critical step in writing a business plan is determining its purpose. What audience are you attempting to reach with it, and why? The following are some critical points to remember when writing a business plan:

Are you looking to obtain a bank loan, private investor funding, or to recruit skilled professionals?
Include a synopsis of your business’s history, concept, and products or services. Maintain a professional and transparent demeanor.
Exaggerate your experience or abilities, but most importantly, do not omit information that investors require. They’ll discover it eventually, and if they discover you lied, they may withdraw their involvement. It is critical to establish trust.
Simplify how your business’s product or service works.
Keep an eye out for convoluted language and do everything possible to keep readers from becoming confused.
Concentrate on the benefits the business provides, how it solves the core audience’s problem(s), and the evidence you have to demonstrate that your idea has a market opportunity. It’s critical to discuss the market in which your business will operate and who your primary competitors are.
Another critical component of writing an effective business plan is keeping it succinct. Concentrate solely on delivering the critical information that the reader requires in order to make a decision. They can always contact you later to clarify certain points.

Now let us take a look at the advantages and disadvantages of a business plan.

Advantages & Disadvantages Of A Business Plan

The advantages and disadvantages of a business plan demonstrate that while it is an essential component of a sound business, a comprehensive plan is not always necessary. The purpose of a business plan should be obvious: to analyze the present in order to make an educated guess about the future. You’re charting a course for that business.

A business plan is a road map for generating revenue. By gaining a thorough understanding of your business and its likely performance, you’ll be able to assess the impact of each result received on your bottom line. With comprehensive plans in place, you’ll be prepared to act regardless of what occurs during any given day. Consider the following additional benefits.

#1. It provides a glimpse into the future.

A business plan enables you to forecast the potential success of an idea. There is no reason to proceed with the implementation of an idea if it is going to cost you money, but that is precisely what happens when you go all-in without considering the consequences. Even if the future appears uncertain, you’ll gain insight into the direction your business should take.

#2. You’ll have a better idea of how to allocate your resources.

How much inventory should you have on hand at the moment? What budget should you set aside? Certain resources that your business requires will be scarce. When you have a clear picture of your potential financial future, you can adjust your journey to avoid the roadblocks that obstruct your path to success.

#3. It is necessary to have a business plan for credit.

To obtain a line of credit from a financial institution, you must present them with your business plan. This plan enables the financial institution to assess your organization, allowing them to assess their lending risks. Most institutions will not even schedule an appointment to discuss financing unless you have developed and implemented a formal business plan.

#4. A business plan brings all stakeholders together.

When you collaborate with multiple people, you’re going to have a variety of perspectives on what will result in the greatest success. That is not to say that others’ perspectives are irrelevant. When a business lacks structure, individuals with divergent viewpoints tend to go rogue and do their own thing. By ensuring that everyone understands the business plan, you can direct those creative energies toward ideas that increase your company’s chances of success.

#5. It demonstrates to others that you are serious about this business.

It’s one thing to throw an idea out on the internet to see if it has the potential to become a business. By developing a business plan for that idea, you demonstrate that you are serious about it. It demonstrates to others that you believe in its worth and are willing to defend it. You can more effectively communicate your intentions, explain the value of your idea, and demonstrate how its growth can benefit others.

#6. It’s a simple method for determining core populations.

Whatever business idea you have, it will require customers to succeed. Regardless of whether you’re in the service industry or selling products online, you’ll need to determine who your primary prospects are. After identifying those prospects, you can clone them in other demographics to maintain a growth curve. Without plans in place to identify these individuals, you’re left guessing about who will want to do business with you, which is about as reliable as blindfolded dart-throwing at a dartboard.

#7. A sound business plan includes a marketing component.

This enables you to determine how your current products or services will be able to penetrate new markets. Additionally, you’ll be able to fine-tune your value proposition, ensuring that your brand has a stronger presence in each demographic.

A business plan is a lengthy process. Depending on the size of your business, this may require an investment of time that reduces your initial profits. While short-term losses may occur while developing a strategy, the ultimate goal is to achieve tremendous long-term gains. For small businesses operating on a shoestring budget, a single short-term loss may be sufficient to force them to close their doors. Here are a few additional disadvantages to consider.

#1. A business plan may prove to be unreliable.

It is critical to involve the “appropriate” individuals in the business planning process. These are the individuals who will have a long-term impact on your business’s vision. Many small business owners believe they can avoid this negative by developing the business plan independently, but this requires expertise in multiple fields. A diverse range of perspectives and input is typically required to create the best possible business plan, as blind spots of inaccuracy can result in a slew of unintended consequences.

#2. An excessive amount of time can be spent on analysis.

Perhaps you’ve heard the phrase “analysis paralysis.” It’s adorable and catchy, but it also accurately describes the struggle many entrepreneurs face when creating a business plan. Concentrate on the fundamentals of your business and how it will expand. True, you’ll need toilet paper for the bathroom and cleaning service twice a week, but isn’t knowing how to reach potential customers more important? Obviously not.

#3. Frequently, there is a lack of transparency.

Because a business plan is typically created by a single individual, it is difficult to hold that individual accountable for the process. The plans become their vision for the company and the level of success they desire. Additionally, it means the business plan is created on their schedule rather than the business’s, and because no one else is involved, it can be difficult to hold their feet to the fire to get the job done.

#4. A strong business plan necessitates strong execution practices.

Many businesses create a plan that sits on a shelf or in the trunk of a car for the sole purpose of funding. When a sound business plan assigns specific responsibilities to specific job positions and lays the groundwork for data collection and metric development, it should become an integral part of the business. Unfortunately, over the years, poor implementation has ruined numerous excellent business plans.

#5. It prevents the freedom you once possessed.

Business plans specify what should be done and how it should be done. A thriving business occasionally requires its most innovative employees to be given the freedom to develop novel ideas. Rather than that, the typical plan creates an environment in which the company’s executives dictate the company’s goals and mission to everyone. The people on the front lines are frequently denied the opportunity to influence the implementation of the business plan, which ultimately disadvantages the company.

#6. It fosters an atmosphere of incorrect certainty.

It is critical to remember that a business plan is nothing more than a forecast based on current plans and facts. We live in an ever-changing world in which nothing is certain. If a business’s business plan contains an excessive amount of certainty, it may render it incapable of adapting to the changes imposed by the outside world. Or, worse, it can cause a business to miss an exciting new opportunity because it is so focused on completing a specific task.

#7. No guarantees are made.

Even with the best research, best employees, and a comprehensive business plan on your side, failure is more likely than success. 95 out of 100 businesses that start today will fail within five years, and many of them will have developed comprehensive business plans.

From the above article, we can now understand what a business plan is all about, which includes both the advantages and the disadvantages. Now from both side, we can see that a business plan has some things in it that proves its advantages and also disadvantages to the persons writing it.

However, business planning is not a panacea and can occasionally result in the emergence of new problems such as:

Lack of confidence…
Lack of liberty

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Nmesoma Emmanuel

Emmanuel Nmesoma Praise is a Content Writer with an experience of 2years. Also, she is a business consultant having deep knowledge of business-related matters; Organised, and competent in her writing skills. A BSc holder in Education Biology in one of the most renowned schools, Nnamdi Azikiwe University, in Nigeria.

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Home » What Is Business Plan and How To Write It? [Template]

What Is Business Plan and How To Write It? [Template]

July 20, 2021 max 7min read.

This article covers:

What Is a Business Plan?

Who is in charge of writing a business plan.

How To Write a Business Plan?

What Are the Advantages and Disadvantages of Writing a Business Plan?

What Is the Skeleton of a Business Plan?

Business Plan Definition

A business plan is a document that outlines the strategies and objectives that a startup or organization wants to achieve and how they plan to achieve them.

A business plan is like a map for starting or growing your company. It lays out the essential details of your business and how you plan to succeed.

Simply put, a business plan is a written copy of the business idea, what financial model it will adopt, the product or service, who will be the target audience, their marketing strategies, etc. It is conducive in the initial stages of establishing your enterprise.

The business plan is essential for the investment process. A detailed plan is crucial to attract stakeholders , venture capitalists, and investors or angel investors to pitch your business idea. In such a case, your business plan becomes your way of convincing them to invest their resources in your plan because it is worth it.

The core of a good plan tells the story of your business idea – what problem you’re solving and for whom. Are you hoping to start a bakery downtown? Create a new software tool? The plan explains who your potential customers are and why they’ll love what you offer.

It also includes specifics like who’s on your team, what you’re selling or the service you provide, and how you’ll spread the word (marketing). You’ll want to estimate sales projections and costs so folks understand how you’ll make money. This shows profits down the road.

A big part is differentiating from the competition. What makes your approach unique? Why pick you over similar options? The plan convinces potential backers or partners that you’ve thought it through and have a clear path to profits.

Overall, taking time to craft a solid plan is super helpful in the long term. It guides you through launch and growth. Review it yearly to check if your assumptions are still tracked, or if changes are needed. A plan keeps momentum on your side.

Starting or developing a business plan isn’t a science or learned through a degree. Some companies develop through trial and error, while others are drafted from head to toe.

Hence, the answer is No if we are talking about a particular person responsible for writing a business plan. Similarly, there is no need for an extended, lengthy business plan to be written with each plan elaborated.

Irrespective of all this, there are still some conditions in which a business increases its chances of becoming successful by drafting a business plan. Such conditions are as follows:

For tech startups, a business plan can be a medium to gain long-term funding, especially with no trading history.
When the market is new, untested, or volatile, a business plan can come in handy and serve as a document to fall back upon, mainly to tackle uncertainties and unclarity.
If you have an excellent business idea and haven’t given it much thought or put it on paper, drafting a business plan can be a good option. Writing a business plan can help you carefully structure and evaluate your thoughts from different angles to spot risks.

How To Write a Business Plan?

First and foremost, when writing a business plan, you need to identify the problem your business will aim to solve and the purpose your business serves.

Once that is sorted, you need to consider who you are trying to attract with it, what kind of customers, and why. Following are some additional key points to consider while drafting your business plan:

Note how you plan to secure your funding through private investors, bank loans, etc.
Write about your business history, the concept, and what products or services you are trying to sell.
Ensure you are transparent with your investors and do not keep any information from them. Do not exaggerate or bluff about your experience and skills. Gaining trust is crucial.
Explain the details about your product or service in layperson’s terms. Avoid jargon as much as possible to avoid confusing the reader.
Focus on the business’s strengths, the problem it aims to solve, and the evidence you have to prove the same.
Understanding the market you are penetrating is crucial, as is conducting competitor analysis, knowing who your competitors are, learning about your competitive advantage , and finding your unique selling proposition (USP) .
Last but not least, ensure your business plan is brief. Instead, keep it as short and precise as possible. Your aim through the business plan is to deliver crucial information so the reader can decide.

It’s quite easier to write a business plan if you consider the given points. However, it’s still not a walk in the park. If you still have trouble drafting your plan, consider hiring a writer—an affordable business plan writer who can help you put the first version of your plan on paper.

If you are still trying to decide whether or not you should dedicate your time to making a business plan, here are a few advantages and disadvantages of a business plan to help you make this decision.

Advantages of a Business Plan

A business plan can be your golden document to secure funding for your business . Initially, funding is crucial, especially for tech and SaaS startups.
The strategic focus of your business is preserved after the first stage. You can read about scope creep and understand how a company occasionally diverges from its goal, which could lead to stagnancy. In such a case, it is essential to understand the success factors in a business and plan exactly to serve the purpose.
Having a business plan on paper invites other passionate people on board . When you have a trading history, it is easier to get people on board. However, if you have a plan, it convinces potential investors that you are sure about what you are doing.

Disadvantages of a Business Plan

A business plan can hamper you from looking forward. This means you may depend too much on your plan without considering other external factors such as market conditions, trends, etc. Such a dependency can lead you to make mistakes and miss potential golden opportunities just because they were not in the plan.
Analyzing performance can become time-consuming. A business plan can make you dwell on your past mistakes by focusing on the goals and objectives you could not achieve. Analyzing past performance could save time and resources by focusing on moving forward with strength.
Constant change makes a business plan outdated as soon as it’s written. We know that the world is changing quickly, so your business plan will likely lose its relevance by the time you are ready to launch. A great alternative to the business plan is a strategic project roadmap . This is because a business plan has a lot of essential details, such as the mission statement , which are less likely to change either way. Moreover, a roadmap can help pave the most adaptable and actionable path.

What Is the Skeleton of a Business Plan?

Since you are still reading, I am sure you’ll want to know what the skeleton of a business plan looks like.

Remember that it can be frustrating because critical thinking is involved, and there is no hard-fast rule for a business plan. However, the best approach is to look at other business plan templates and write yours in a way that makes sense to any layman.

Here is what a Business plan constitutes of:

Overview: In this section, you summarize your business concept and its execution.
Detailed Description: In this section, you will describe the kind of product or service you are offering, what the unique selling point is, and how valuable your business is.
Target audience: In this section, you will explain your market segmentation , the target market , their essential traits, etc., backed up by user research .
Marketing strategy: Once you know your target audience well, you must document how you will reach them through a marketing strategy. A marketing strategy is often defined within the marketing plan , where primary establishment and engagement strategies are explained in detail. However, as a subsection in a business plan, it need not be as detailed as a market plan.
Core team: This section will discuss your people and the team behind the development process. If you don’t have a team yet, you must discuss how team members will be selected, what candidates suit you, and the timeline. This section is critical to procure external investments such as passion and enthusiasm.
Financial Predictions: Remember that investors are mainly concerned about finances because no one wants to invest in a loss-making company. Hence, your financial sedition is going to be scrutinized a lot more than anything else. Therefore, it is crucial to be thorough with the same. Make sure you talk about how much money you need to get started and how you plan to keep the money rolling in. Ensure that your cash flow forecast is realistic and achievable, which will help keep your business floating for the first few years.

More like this:

What is Product Marketing? (Strategies and Examples)
Product Marketing Manager: Everything You Need To Know
How to Align Your Product Roadmap with Business Goals
How to Create Effective Product Release Plans
What Is an Execution Plan? Definition and Overview

A business plan consists of the overview of your business idea, detailed descriptions of your product or service and its unique selling proposition, your target audience, your marketing strategy, the core team and how to hire it, and the financial model or predictions.

A business plan helps you pitch your business idea to potential investors and secure funding. When your business is on the brink of losing focus after a few initial years, a business plan helps you to stay on track. Lastly, it invites other potential employees, partners, or investors to invest their resources in your business.

A business plan expires fast because of our constantly evolving world. It is not dependable in the long run because of its ignorance towards changing marketing conditions. It can obstruct you from looking forward to external factors and golden opportunities since it compels you to focus on the plan, creating dependency.

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8.4: Advantages, Disadvantages, and Considerations

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What you’ll learn to do: discuss the advantages, disadvantages, and important considerations of starting a small business

As author and retired entrepreneur Carol Denbow writes in Are Your Ready to Be Your Own Boss?, “If you want your new business to succeed, you must know why most businesses fail.” New business survival statistics are grim. From 2005–2017, approximately 21% of new businesses failed in the first year. Roughly half of new business fail within 4 years. And only 33% of new businesses survive for 10 or more years. Why do you think that is? Denbow’s next sentence provides a clue: “Most people spend more time planning their vacations than they do their new businesses.” In this section, we’ll discuss the pros and cons of starting a small business and, in particular, how to improve the odds of success.

Learning Objectives

Explain why some business ventures fail
List important considerations in deciding to start a business

Advantages and Disadvantages of Small-Business Ownership

Photo of a man sitting in an office or library with a small typewriter on the table. His head rests on his hand, and he looks contemplative.

Starting a small business is a matter of self-selection and self-determination. While the founders of small businesses still are a part of the society they live in, their business ventures can allow them to step into an alternate reality, part of a social order in which each person—regardless of gender, race, ethnicity, religion, birth or circumstances—can achieve their fullest potential and receive recognition for their achievements.

A small business owner has an extreme amount of latitude in both business and lifestyle choices, from developing the business concept and operating environment to defining success. The benefits—measured in impact, revenue, or infrastructure terms—are essentially unlimited. Perhaps the most nebulous, but important, benefit of being a small business owner is the freedom to choose your business’s purpose and goals.

The flip side is that you own the decisions and the results of those decisions. Evasion is not an option: you can’t say, “it’s not my job,” point fingers, shrug or check out. Additionally, as a small business owner, you will probably be risking your own (and, perhaps, friends & family) capital. Essentially, you’re flying without a net. There’s no guarantee of a regular paycheck and no paid or subsidized benefits (including a retirement plan, holidays, or perks). You’re responsible for business development, business planning, HR, IT, and every other function as well.

Freedom from an employer’s expectations comes at a cost: you’re responsible for setting and managing expectations—for yourself and others—and for making the magic happen.

practice question $\PageIndex{1}$

This section is a discussion of the advantages and disadvantages of starting a small business. According to the author, the underlying advantage to starting a small business is the freedom to make your own decisions regarding what the business is and what it does. But on the other side of the coin, the author reminds us that there is a price to pay- what is that price for the freedom from an employer’s expectation?

The founder owns all of the responsibility for expectations and results.
The founder sets the hours of operation for the business.
The hounder is responsible for selecting employees
The founder must maintain accurate records

a. To be free of the expectations of an employer, the entrepreneur must accept the responsibility of self-expectation, as well as, the results of the business venture

Why Some Ventures Fail

Cartoon, showing a red fish with a small stand advertising "World's Best Scuba Gear."

Inability to execute on the business concept
Lack of or insufficient market demand
Lack of product or service (competitive) differentiation & other marketing issues (the four Ps of marketing)
Lack of awareness of and/or ability to respond to emerging trends, relevant developments (technology, regulatory, geo-political, environmental) and competitive actions
Overdependence on a single customer
Inability to manage growth
Inadequate cash reserves or failure to effectively manage cash flows. Related point: inadequate cash controls or personal/business separation, including using business revenue as a personal slush fund
Insufficient management experience or product/services expertise
Lack of self-awareness and related personal/professional development
An inability to acknowledge weakness and/or compensate for skill and expertise gaps

One of the most critical risk factors is the founder’s attitude and self-awareness, including the ability to objectively assess his or her management skills (or accept external feedback on this point), recruit to address skill and expertise gaps and effectively delegate responsibilities.

Statistics aside, it’s important to understand that failure isn’t final. The upside of failure is experience, a factor that contributes to success. Thus, the phrase “fail forward.” As Mike Maddock notes in his take-off on this concept: “the most inventive people are usually the best at failing forward, i.e., learning from what went wrong.”

practice question $\PageIndex{2}$

What are the underlying factors of the causes for small business failure?

Government regulation
Economic recession
Failure to do the research, analysis and financial projections and the founder's attitude and self-awareness
Failure to attract the right business partners

c . According to the author, these are the most critical factors contributing to the various causes of small business failure.

Considerations When Starting a Business

Photo of a man stepping out of the ocean onto the sand and another man, in the distance, heading into the surf.

Do you have what it takes?

Do you have a viable concept?

Is the reason you want to start a business consistent with your character and concept?

The entrepreneurial assessments discussed earlier this module are a good starting point for self-assessment. Additionally, you might want to take the Grit Test developed by psychology professor and researcher Angela Duckworth.

Another way to approach the question is to review the type of questions a founder might ask in an interview and consider whether you would hire yourself. For perspective, scan the questions —and thought process behind the questions—shared by startup leaders and others in Firstround.com’s The Best Interview Questions We’ve Ever Published. According to Anne Dwane, one of the serial entrepreneurs interviewed, “the most important quality any start-up leader (current or aspiring) can have is adaptability.” To get at that, she asks (and you might want to ask yourself – and reflect on your responses) the following questions:

What have you started?
How would you describe yourself in your own words?
How would a colleague describe you in three adjectives?
What current trends are you seeing in your profession? (Substitute your target industry/market for your profession)
What new things have you tried recently?

Additional questions to consider include Koru co-founder and CEO Kristen Hamilton’s questions regarding grit, rigor, impact and ownership.

Your Concept

Viability is something that will come out of the business planning process, which we will discuss in the next few sections. Before you dive into a business, it’s essential to do careful planning to ensure that the venture has potential to succeed. Jumping in with no information and no plan is a recipe for disaster.

Your Business

The third consideration is doing a reality check on why you want to start a business. Consider Dwane’s opening question: “what motivates you and what do you want to do next?” Can you connect the dots? Starting a new small business will require a lot of time and energy—if you’re not truly passionate about your venture, especially when it’s new, it (and you!) won’t be able to stand up to the stress of day-to-day business.

practice question $\PageIndex{3}$

Besides the importance of self-assessment (does the founder have what it takes) and matching the venture with the founder’s character (is the business consistent with what the founder wants to do), what is the third most-important element in deciding to start a small business?

Conducting a self-interview
Conducting a customer survey
Conducting a business planning process to create a viable concept
Conducting a reality check

c. Besides the characteristics of the entrepreneur's personality and make up, conducting a rigorous planning process is vital to an informed decision to start a small business

Starting a business

Starting a business doesn’t have to be an all or nothing proposition. A number of successful entrepreneurs developed their business concepts while in school or working a traditional job. In his “The Surprising Habits of Original Thinkers” TED Talk, Organizational psychologist, professor and author Adam Grant discusses the mistake he made in passing on an opportunity to one of his student’s start-ups. He assumed that because the founders were working internships while developing the concept and had lined up jobs as a Plan B, they didn’t have the commitment to make the business a success.

The business the students launched: Warby Parker, a glasses e-tailer that Fast Company named as the world’s most innovative company in 2016. Warby Parker is currently valued at $1.75 million. For additional perspective, read Jason DeMers The Pros and Cons of Starting a Business While Working A Full-Time Job for Entrepreneur.

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The Top 5 Benefits of Having a Business Plan

Whether you’re starting a small business or exploring ways to expand an existing business, a Business Plan is an important tool to help guide your decisions. An effective Business Plan is a roadmap to success, providing clarity on all aspects of your business, from marketing and finance, through to operations, products, services, people and how you will be better than your competitors.

The purpose of a business plan is to help articulate a strategy for starting or changing your business. It defines how you will achieve your most important business objectives. A good Business Plan should help you to sleep at night if you are a business owner.

For existing businesses, a business plan should be updated annually as a way to guide growth and navigate expansion into new markets. Your plan should include explicit objectives for hiring new employees, what structure you will have, what products and services your business will provide, how you will promote them and how you will finance business operations.

If you are considering starting a business, a Business Plan can help you to check the viability of a business before investing too much time or money in it. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

The Benefits of Having a Business Plan:

1. Increased Clarity

A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on.

2. Creation of a Marketing Roadmap

Marketing is an important aspect of a business plan. It helps to define your target market(s), target customers and how you will promote and place your product / service to these markets / customers.

3. Support for Funding

Whether you’re seeking credit from a bank or capital from investors, a business plan that answers questions about profitability and revenue generation is often required.

4. Helps to Secure Talent

For a business to succeed, attracting talented workers and partners is vital. Part of a business plan’s purpose is to help bring in the right talent, at the right time. Staff want to understand the vision, how the business will achieve its goals, and how they can contribute to this in their own roles.

5. Provides Structure

A business plan provides structure and defines business management objectives. It becomes a reference tool to keep the business on track with sales targets and operational milestones. When used properly and consulted regularly, it can help measure and manage your priority areas of focus.

Download your Business Plan template for $49.99 + GST here.

Many people engage us as business coaches to take a weekly / fortnightly step-by-step approach to the development of their own Business Plans, with the added benefit of our expertise and guidance throughout the process. In this way, you learn the essential aspects of running a successful business, while crafting your very own business plan over 8-12 weeks.

If you would like more information about how to create an effective Business Plan for your business, with our guidance, then please don't hesitate to contact Business Agility. We are business coaches who are former CEOs and MDs. We know what it takes to be successful in business.

The Disadvantages of Business Planning

by Devra Gartenstein

Published on 18 Apr 2018

When executed thoughtfully and effectively, business planning is an invaluable tool that enables you to chart overall direction and anticipate changes. However, business planning is not a panacea and can sometimes lead to an entirely new set of troubles. Effective business planning is thorough yet flexible, cognizant of its limitations. In contrast, disadvantageous business planning is sloppy and it overreaches, setting a small business on a faulty path.

False Certainty

Developing a concrete plan for business operations has the potential to convey a false sense of certainty. Plans and projections are based on a planner's or manager's best guess as to how a business will evolve; however, there will always be unforeseen circumstances, such as overall economic climate and new competition entering the market. A business that adheres rigidly to a plan runs the risk of being unable to adapt to new threats and take advantage of new opportunities.

Lack of Freedom

Vibrant businesses thrive in part because employees have the license and opportunity to offer creative input. Business planning tends to be a top-down endeavor; in other words, managers articulate missions and goals, and employees are enlisted to pursue these aims. This process may not allow employees sufficient freedom to influence either the company's long-term objectives or its short-term strategies. This lack of freedom is disadvantageous to the company, which robs itself of the potential for exciting new ideas. It is also disadvantageous to the employees, who miss out on opportunities to become engaged.

Although effective business planning strives for objectivity in order to obtain honest and accurate results, it is virtually impossible to be completely fair and dispassionate when envisioning a future course for your business. Wishful thinking may skew results for even the best-intentioned planners. In addition, a manager or owner with a vested interest in securing financing from a bank or investor may deliberately, or even subconsciously, inflate projections in order to portray future potential that is likely to attract capital.

Time and Money

Business planning can be time consuming and expensive. It may require the services of outside professionals, such as accountants, lawyers and marketing experts, and it may take time away from other endeavors, such as short term problem solving that provide more direct benefits. Business that do not have extra money to spend on professional services or extra time to devote to collecting and interpreting information may risk wasting precious resources on an endeavor whose cost may exceed its benefits.

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Advantages and disadvantages of business planning

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Created on: 13-03-18 21:30
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Business Planning

Report Thu 20th May, 2021 @ 14:55

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Report Fri 5th August, 2022 @ 09:22

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18 Advantages and Disadvantages of Strategic Planning

Strategic planning is a process that involves defining an organization’s goals, developing strategies to achieve those goals, and allocating resources to implement those strategies.

It is a comprehensive and systematic approach that helps organizations achieve competitive advantage and adapt to changing environments.

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Advantages of Strategic Planning

Clear Direction : Strategic planning provides a clear sense of direction for an organization, helping leaders and employees understand where the organization is headed and what it aims to achieve.
Alignment : It aligns the efforts of employees and departments toward common goals, fostering a shared vision and purpose within the organization.
Prioritization : Strategic planning helps organizations prioritize initiatives and allocate resources effectively to focus on high-impact activities.
Adaptability : While it sets long-term objectives, strategic plans are often flexible and adaptable, allowing organizations to adjust to changing circumstances and seize opportunities.
Resource Management : It assists in the efficient allocation of resources, including finances, time, and personnel, to support the organization's strategic goals.
Performance Measurement : Strategic plans often include key performance indicators (KPIs) that enable organizations to track progress and assess the success of their strategies.
Enhanced Decision-Making : Having a strategic plan in place can guide decision-making processes and reduce uncertainty by providing a framework for evaluating options.
Communication : It facilitates effective communication both internally and externally, ensuring that stakeholders, employees, and partners are aware of the organization's objectives.

Disadvantages of Strategic Planning

Time-Consuming : The strategic planning process can be time-consuming, requiring significant input from leaders and employees, which can divert resources from day-to-day operations.
Costly : Developing and implementing a strategic plan can be expensive, especially when consultants or specialized software are involved.
Rigidity : Overly rigid strategic plans can hinder an organization's ability to respond quickly to unexpected challenges or opportunities.
Resistance to Change : Employees may resist changes that are part of the strategic plan, leading to internal conflicts and morale issues.
Complexity : Strategic planning can become overly complex, making it difficult for employees at all levels of the organization to understand and execute.
Uncertainty : The future is inherently uncertain, and strategic plans may not always account for unforeseen events or market shifts.
Limited Focus : In some cases, strategic planning may lead to a narrow focus on achieving specific goals, potentially overlooking broader organizational or societal responsibilities.
Implementation Challenges : Developing a strategic plan is only the first step; ensuring successful implementation can be challenging, and many strategies fail due to poor execution.
Lack of Accountability : Without clear accountability and monitoring mechanisms, strategic plans may not be effectively executed, leading to unmet goals.
Overemphasis on Process : Some organizations become overly focused on the process of strategic planning rather than the outcomes, leading to bureaucratic and time-consuming procedures.

One of the main advantages of strategic planning is that it helps organizations set clear goals and objectives. By having a well-defined strategic plan, organizations can align their resources and efforts towards a common purpose. This clarity of purpose allows employees to understand their roles and responsibilities, which leads to increased motivation and productivity.

Strategic planning also helps organizations identify and leverage their strengths. By conducting a thorough analysis of the internal environment, organizations can identify their core competencies and unique capabilities. This information can then be used to develop strategies that capitalize on these strengths and give the organization a competitive advantage.

Another advantage of strategic planning is that it helps organizations anticipate and adapt to changes in the external environment. By conducting a thorough analysis of the market, industry trends, and competition, organizations can identify potential threats and opportunities. This early identification allows organizations to proactively respond to changes and stay ahead of the competition.

Strategic planning also provides a framework for resource allocation. By setting priorities and making informed decisions about resource allocation, organizations can use their limited resources effectively. This ensures that resources are allocated to the most important and strategic initiatives, maximizing the organization’s impact and return on investment.

In addition, strategic planning helps organizations align their internal processes and functions. By involving different stakeholders and departments in the planning process, organizations can create a shared understanding and commitment to the strategic goals. This alignment improves coordination and collaboration, leading to increased efficiency and effectiveness.

Furthermore, strategic planning provides a basis for evaluating performance and progress. By setting clear goals and key performance indicators, organizations can track their progress and make necessary adjustments along the way. This monitoring and evaluation process allows organizations to learn from their experiences and continuously improve their performance.

Despite its many advantages, strategic planning also has some drawbacks that organizations should be aware of. One of the main disadvantages is the complexity of the process. Strategic planning requires a significant amount of time, effort, and expertise. It involves analyzing large amounts of data, conducting market research, and engaging stakeholders. This complexity can make the planning process challenging and resource-intensive for organizations.

Another disadvantage of strategic planning is the resistance to change it may encounter. Implementing a strategic plan often involves making significant changes to the organization’s structure, processes, and culture. This can create resistance among employees who may be reluctant to change and may fear the unknown. Overcoming this resistance requires effective change management strategies and strong leadership.

Moreover, strategic planning may not always guarantee success. While a good strategic plan provides a roadmap for the organization’s future, its implementation is not always straightforward. External factors, such as changes in the market or unexpected competition, can affect the business and its ability to achieve its strategic goals. Internal factors, such as lack of resources or poor execution, can also hinder the successful implementation of the plan.

Lastly, strategic planning can sometimes overlook the importance of human resources. While strategic plans focus on organizational strategies and objectives, they may not pay enough attention to the people who will execute those strategies. It is essential for organizations to consider the capabilities, skills, and motivation of their employees when developing and implementing strategic plans.

Conclusion of Advantages and Disadvantages of Strategic Management Planning

In conclusion, strategic planning has both advantages and disadvantages for organizations. It helps set clear goals, leverage strengths, adapt to changes, allocate resources effectively, and align internal processes. However, it is a complex process that requires time, effort, and expertise. It may face resistance to change and does not guarantee success. Therefore, organizations should carefully consider these factors when deciding to engage in strategic planning.

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Your business’s legal structure has many ramifications. It can determine how much liability your company faces during lawsuits. It can put up a barrier between your personal and business taxes – or ensure this barrier doesn’t exist. It can also determine how often your board of directors must file paperwork – or if you even need a board. [Related article: What to Do if Your Business Gets Sued ]

We’ll explore business legal structures and how to choose the right structure for your organization.

What is a business legal structure?

A business legal structure, also known as a business entity, is a government classification that regulates certain aspects of your business. On a federal level, your business legal structure determines your tax burden. On a state level, it can have liability ramifications.

Why is a business legal structure important?

Choosing the right business structure from the start is among the most crucial decisions you can make. Here are some factors to consider:

Taxes: Sole proprietors, partnership owners and S corporation owners categorize their business income as personal income. C corporation income is business income separate from an owner’s personal income. Given the different tax rates for business and personal incomes, your structure choice can significantly impact your tax burden.
Liability: Limited liability company (LLC) structures can protect your personal assets in the event of a lawsuit. That said, the federal government does not recognize LLC structures; they exist only on a state level. C corporations are a federal business structure that includes the liability protection of LLCs.
Paperwork: Each business legal structure has unique tax forms. Additionally, if you structure your company as a corporation, you’ll need to submit articles of incorporation and regularly file certain government reports. If you start a business partnership and do business under a fictitious name, you’ll need to file special paperwork for that as well.
Hierarchy: Corporations must have a board of directors. In certain states, this board must meet a certain number of times per year. Corporate hierarchies also prevent business closure if an owner transfers shares or exits the company, or when a founder dies . Other structures lack this closure protection.
Registration: A business legal structure is also a prerequisite for registering your business in your state. You can’t apply for an employer identification number (EIN) or all your necessary licenses and permits without a business structure.
Fundraising: Your structure can also block you from raising funds in certain ways. For example, sole proprietorships generally can’t offer stocks. That right is primarily reserved for corporations.
Potential consequences for choosing the wrong structure: Your initial choice of business structure is crucial, although you can change your business structure in the future. However, changing your business structure can be a disorganized, confusing process that can lead to tax consequences and the unintended dissolution of your business.

If you have to expand your business to another state , you won’t have to create a new company or structure, but you may have to register it as a “foreign entity.”

Types of business structures

The most common business entity types are sole proprietorships, partnerships, limited liability companies, corporations and cooperatives. Here’s more about each type of legal structure.

Sole proprietorship

A sole proprietorship is the simplest business entity. When you set up a sole proprietorship , one person is responsible for all a company’s profits and debts.

“If you want to be your own boss and run a business from home without a physical storefront, a sole proprietorship allows you to be in complete control,” said Deborah Sweeney, vice president and general manager of business acquisitions at Deluxe Corp. “This entity does not offer the separation or protection of personal and professional assets, which could prove to become an issue later on as your business grows and more aspects hold you liable.”

Proprietorship costs vary by market. Generally, early expenses will include state and federal fees, taxes, business equipment leases , office space, banking fees, and any professional services your business contracts. Some examples of these businesses are freelance writers, tutors, bookkeepers , cleaning service providers and babysitters.

A sole proprietorship business structure has several advantages.

Easy setup: A sole proprietorship is the simplest legal structure to set up. If you – and only you – own your business, this might be the best structure. There is very little paperwork since you have no partners or executive boards.
Low cost: Costs vary by state, but generally, license fees and business taxes are the only fees associated with a proprietorship.
Tax deduction: Since you and your business are a single entity, you may be eligible for specific business sole proprietor tax deductions , such as a health insurance deduction.
Easy exit: Forming a proprietorship is easy, and so is ending one. As a single owner, you can dissolve your business at any time with no formal paperwork required. For example, if you start a day care center and wish to fold the business, refrain from operating the day care and advertising your services.

The sole proprietorship is also one of the most common small business legal structures. Many famous companies started as sole proprietorships and eventually grew into multimillion-dollar businesses. These are a few examples:

Marriott Hotels

Partnership

A partnership is owned by two or more individuals. There are two types: a general partnership, where all is shared equally, and a limited partnership, where only one partner has control of operations and the other person (or persons) contributes to and receives part of the profits. Partnerships can operate as sole proprietorships, where there’s no separation between the partners and the business, or limited liability partnerships (LLPs), depending on the entity’s funding and liability structure.

“This entity is ideal for anyone who wants to go into business with a family member, friend or business partner – like running a restaurant or agency together,” Sweeney said. “A partnership allows the partners to share profits and losses and make decisions together within the business structure. Remember that you will be held liable for the decisions made as well as those actions made by your business partner.”

General partnership costs vary, but this structure is more expensive than a sole proprietorship because an attorney should review your partnership agreement. The attorney’s experience and location can affect the cost.

A business partnership agreement must be a win-win for both sides to succeed. Google is an excellent example of this. In 1995, co-founders Larry Page and Sergey Brin created a small search engine and turned it into the leading global search engine. The co-founders met at Stanford University while pursuing their doctorates and later left to develop a beta version of their search engine. Soon after, they raised $1 million in funding from investors, and Google began receiving thousands of visitors a day. Having a combined ownership of 11.4% of Google provides them with a total net worth of nearly $226.4 billion.

Business partnerships have many advantages.

Easy formation: As with a sole proprietorship, there is little paperwork to file for a business partnership. If your state requires you to operate under a fictitious name ( “doing business as,” or DBA ), you’ll need to file a Certificate of Conducting Business as Partners and draft an Articles of Partnership agreement, both of which have additional fees. You’ll usually need a business license as well.
Growth potential: You’re more likely to obtain a business loan with more than one owner. Bankers can consider two credit histories rather than one, which can be helpful if you have a less-than-stellar credit score.
Special taxation: General partnerships must file federal tax Form 1065 and state returns, but they do not usually pay income tax. Both partners report their shared income or loss on their individual income tax returns. For example, if you opened a bakery with a friend and structured the business as a general partnership, you and your friend are co-owners. Each owner brings a certain level of experience and working capital to the business, affecting each partner’s business share and contribution. If you brought the most seed capital for the business, you and your partner may agree that you’ll retain a higher share percentage, making you the majority owner.

Partnerships are one of the most common business structures. These are some examples of successful partnerships:

Warner Bros.
Hewlett-Packard
Ben & Jerry’s

Limited liability company

A limited liability company (LLC) is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying a partnership’s tax and flexibility benefits. Under an LLC, members are shielded from personal liability for the business’s debts if it can’t be proven that they acted in a negligent or wrongful manner that results in injury to another in carrying out the activities of the business.

“Limited liability companies were created to provide business owners with the liability protection that corporations enjoy while allowing earnings and losses to pass through to the owners as income on their personal tax returns,” said Brian Cairns, CEO of ProStrategix Consulting. “LLCs can have one or more members, and profits and losses do not have to be divided equally among members.”

According to Wolters Kluwer , the cost of forming an LLC comprises the state filing fee and can vary depending on your state. For example, if you file an LLC in New York, you must pay a $200 filing fee, a $9 biennial fee, and file a biennial statement with the New York Department of State .

Although small businesses can be LLCs, some large businesses choose this legal structure. The structure is typical among accounting, tax, and law firms, but other types of companies also file as LLCs. One example of an LLC is Anheuser-Busch, one of the leaders in the U.S. beer industry. Headquartered in St. Louis, Anheuser-Busch is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium.

Here some other well-known examples of LLCs:

Hertz Rent-a-Car

To learn more about LLCs, read our LLC tax guide , our comprehensive overview of starting an LLC , and our guide to creating an LLC operating agreement.

Corporation

The law regards a corporation as separate from its owners, with legal rights independent of its owners. It can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. Corporation filing fees vary by state and fee category.

There are several types of corporations, including C corporations , S corporations, B corporations, closed corporations, and nonprofit corporations.

C corporations: C corporations, owned by shareholders, are taxed as separate entities. JPMorgan Chase & Co. is a multinational investment bank and financial services holding company listed as a C corporation. Since C corporations allow an unlimited number of investors, many larger companies – including Apple, Bank of America and Amazon – file for this tax status.
B corporations: B corporations, otherwise known as benefit corporations, are for-profit entities committed to corporate social responsibility and structured to positively impact society. For example, skincare and cosmetics company The Body Shop has proven its long-term commitment to supporting environmental and social movements, resulting in an awarded B corporation status. The Body Shop uses its presence to advocate for permanent change on issues like human trafficking, domestic violence, climate change, deforestation and animal testing in the cosmetic industry.
Closed corporations: Closed corporations, typically run by a few shareholders, are not publicly traded and benefit from limited liability protection. Closed corporations, sometimes referred to as privately held companies, have more flexibility than publicly traded companies. For example, Hobby Lobby is a closed corporation – a privately held, family-owned business. Stocks associated with Hobby Lobby are not publicly traded; instead, the stocks have been allocated to family members.
Open corporations: Open corporations are available for trade on a public market. Many well-known companies, including Microsoft and Ford Motor Co., are open corporations. Each corporation has taken ownership of the company and allows anyone to invest.
Nonprofit corporations: Nonprofit corporations exist to help others in some way and are rewarded by tax exemption. Some examples of nonprofits are the Salvation Army, American Heart Association and American Red Cross. These organizations all focus on something other than turning a profit.

Corporations enjoy several advantages.

Limited liability: Stockholders are not personally liable for claims against your corporation; they are liable only for their personal investments.
Continuity: Corporations are not affected by death or the transferring of shares by their owners. Your business continues to operate indefinitely, which investors, creditors and consumers prefer.
Capital: It’s much easier to raise large amounts of capital from multiple investors when your business is incorporated.

This structure is ideal for businesses that are further along in their growth, rather than a startup based in a living room. For example, if you’ve started a shoe company and have already named your business, appointed directors and raised capital through shareholders, the next step is to become incorporated. You’re essentially conducting business at a riskier, yet more lucrative, rate. Additionally, your business could file as an S corporation for the tax benefits. Once your business grows to a certain level, it’s likely in your best interest to incorporate it.

These are some popular examples of corporations:

General Motors
Exxon Mobil Corp.
Domino’s Pizza
JPMorgan Chase

Learn more about how to become a corporation .

Cooperative

A cooperative (co-op) is owned by the same people it serves. Its offerings benefit the company’s members, also called user-owners, who vote on the organization’s mission and direction and share profits.

Cooperatives offer a couple main advantages.

Increased funding: Cooperatives may be eligible for federal grants to help them get started.
Discounts and better service: Cooperatives can leverage their business size, thus obtaining discounts on products and services for their members.

Forming a cooperative is complex and requires you to choose a business name that indicates whether the co-op is a corporation (e.g., Inc. or Ltd.). The filing fee associated with a co-op agreement varies by state.

An example of a co-op is CHS Inc., a Fortune 100 business owned by U.S. agricultural cooperatives. As the nation’s leading agribusiness cooperative, CHS reported a net income of $422.4 million for fiscal year 2020. These are some other notable examples of co-ops:

Land O’Lakes
Navy Federal Credit Union
Ace Hardware

The five types of business structures are sole proprietorship, partnership, limited liability company, corporation and cooperative. The right structure depends mainly on your business type.

Factors to consider before choosing a business structure

For new businesses that could fall into two or more of these categories, it’s not always easy to decide which structure to choose. Consider your startup’s financial needs, risk and ability to grow. It can be challenging to switch your legal structure after registering your business, so give it careful analysis in the early stages of forming your business.

Here are some crucial factors to consider as you choose your business’s legal structure. You should also consult a CPA for advice.

Flexibility

Where is your company headed, and which type of legal structure allows for the growth you envision? Turn to your business plan to review your goals and see which structure best aligns with those objectives. Your entity should support the possibility for growth and change, not hold it back from its potential. [Learn how to write a business plan with this template .]

When it comes to startup and operational complexity, nothing is more straightforward than a sole proprietorship. Register your name, start doing business, report the profits and pay taxes on it as personal income. However, it can be difficult to procure outside funding. Partnerships, on the other hand, require a signed agreement to define the roles and percentages of profits. Corporations and LLCs have various reporting requirements with state governments and the federal government.

A corporation carries the least amount of personal liability since the law holds that it is its own entity. This means creditors and customers can sue the corporation, but they can’t gain access to any personal assets of the officers or shareholders. An LLC offers the same protection but with the tax benefits of a sole proprietorship. Partnerships share the liability between the partners as defined by their partnership agreement.

An owner of an LLC pays taxes just as a sole proprietor does: All profit is considered personal income and taxed accordingly at the end of the year.

“As a small business owner, you want to avoid double taxation in the early stages,” said Jennifer Friedman, principal at Rivetr. “The LLC structure prevents that and makes sure you’re not taxed as a company, but as an individual.”

Individuals in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the effect on your return.

A corporation files its own tax returns each year, paying taxes on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes, such as those for Social Security and Medicare, on your personal return.

To simplify payroll complexities and taxation issues, consider using a payroll service. Check out our reviews of the best payroll services to find a partner that fits your needs and budget.

If you want sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice. You can negotiate such control in a partnership agreement as well.

A corporation is constructed to have a board of directors that makes the major decisions that guide the company. A single person can control a corporation, especially at its inception, but as it grows, so does the need to operate it as a board-directed entity. Even for a small corporation, the rules intended for larger organizations – such as keeping notes of every major decision that affects the company – still apply.

Capital investment

If you need to obtain outside funding from an investor, venture capitalist or bank, you may be better off establishing a corporation. Corporations have an easier time obtaining outside funding than sole proprietorships.

Corporations can sell shares of stock and secure additional funding for growth, while sole proprietors can obtain funds only through their personal accounts, using their personal credit or taking on partners. An LLC can face similar struggles, although, as its own entity, it’s not always necessary for the owner to use their personal credit or assets.

Licenses, permits and regulations

In addition to legally registering your business entity, you may need specific licenses and permits to operate. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels.

“States have different requirements for different business structures,” Friedman said. “Depending on where you set up, there could be different requirements at the municipal level as well. As you choose your structure, understand the state and industry you’re in. It’s not ‘one size fits all,’ and businesses may not be aware of what’s applicable to them.”

The structures discussed here apply only to for-profit businesses. If you’ve done your research and you’re still unsure which business structure is right for you, Friedman advises speaking with a specialist in business law.

Max Freedman and Matt D’Angelo contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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What is PBX? How this phone solution might be right for your business, and how it differs from VoIP

Close up on hand holding phone at office desk,Office phone and computer and keyboard.

As a business grows, so does the need to ensure a reliable internal and external communication system. Private branch exchange (PBX) is just one option, but a growing number of companies are coming to rely on it as a communications solution. As of now, most setups are on-premise. However, it’s projected that cloud-based PBX will continue to gain traction in the coming years.

For some businesses, a PBX setup is second nature. For others, there might be better solutions for some companies. In this article, we walk you through what PBX is, how PBX compares to voice-over-internet-protocol (VoIP) , and the pros and cons of choosing it as a communications solution.

What is PBX?

A PBX is designed to handle an organization’s internal and external calling. In the past, PBX setups required manually managed physical switches and cables, but, today, many companies use software or entirely cloud-based solutions.

Types of PBX

There are different PBX systems to use, each with advantages and disadvantages:

Traditional PBX: This is a typical setup that involves an on-premises physical setup of switches and cables, which enable an organization to route incoming and outgoing calls. While some may prefer these traditional setups, it is intensive as the wiring must connect each user to the PBX system. The potential time and expense required may make this a better fit for an enterprise-level company with a flexible budget.
Cloud (hosted) PBX: This type of PBX is a system hosted by a third-party provider located off-site. Because the business’s communication setup is strictly digital, eliminating the need for physical on-site equipment. This solution is more cost-effective, which makes it ideal for smaller businesses.
Virtual PBX: Instead of physical wires, virtual PBX relies on digital servers that run on software. It is a hardware-free solution that can be operated on-site or in the cloud. Its setup is similar to traditional PBX and yet is conveniently modern.
Hybrid PBX: As the name suggests, this type of PBX setup combines traditional and digital elements. It is an excellent choice for organizations planning to move from an entirely physical, on-premise system to a virtual phone , bridging the gap and giving the organization time to adjust.

As communication evolves alongside digital technology, PBX systems based in the cloud and using the Internet are preferred increasingly, not just for their convenience but also for their relative cost.

How does PBX work?

PBXs are ultimately responsible for routing calls, both internal and external. In-house communication, for example, may involve dialing an extension to reach a specific department or team member. Outbound calling, meanwhile, could require pressing a specific button before being allowed to dial a client or vendor.

In a traditional PBX system, these communications required cables and switches, and organization members needed a physical setup directly connected to the company’s system. However, using virtual connections, businesses can simulate traditional PBX without relying on a complex, in-person setup. Systems can add team members or shift between in-house and third-party communications without potentially costly or time-consuming hardware installations.

PBX vs. VoIP

VoIP is a cloud-based communication tool that has also enjoyed rising popularity. VoIP lets you make and receive calls or texts through broadband Internet instead of phone lines. The best VoIP services for small businesses offer competitive pricing, various features including toll-free numbers and video conferencing, and high customer satisfaction ratings. While some may think of PBX and VoIP as two entirely unconnected and therefore competitive communication technologies, this isn’t precisely accurate.

For example, IP PBX is sometimes called “VoIP PBX” because it uses an IP to send voice calls or data. In addition to calling, IP PBX is used for video conferencing, voicemail-to-email, or other cloud-based communication methods.

The ultimate difference between PBX and VoIP will come down to whether a company opts for a traditional, physical type of PBX that gets set up entirely on-premise. Rather than being entirely different from VoIP, Cloud-based PBX could be viewed as related to VoIP, especially if it involves an exclusively cloud-based phone system.

Advantages of PBX

PBX remains a popular communications solution for businesses due to a few unique advantages that come with its use. These positive attributes are broken down in the chart below.

Disadvantages of PBX

While PBX has many positive attributes, a few issues could cause a business to reconsider using it as the foundation for its phone system. Below are a few examples.

The takeaway

PBX will likely continue to grow in use. Thanks in large part to the rise in Internet-based communication, companies may seek out hosted PBX as an alternative to traditional landline or on-premise setups.

For smaller businesses, a virtual PBX system is ideal for both cost and convenience. Choose the best solution according to budget and aim for services that favor scalability. Also, consider digital PBX providers that offer additional communication options, such as video conferencing and internet faxing, as well as useful integrations.

EDITORIAL DISCLOSURE : The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends ™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.

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Advantages and Disadvantages of Online Chat

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person holding a phone open to a live chat to show the advantages and disadvantages of online chat

Around-the-clock support. No wait time. Letting AI do the hard work. What’s not to love about live chat on websites? It may seem like an easy solution for an overwhelmed customer service team, but is it really beneficial to your business? We’re going to break down the advantages and disadvantages of online chat so you can decide for yourself!

What Is Live Chat?

Live chat on websites is a way for customers to communicate with a company representative via real-time online messaging. This can be easily installed on your site, typically as a pop-up window where users can start a chat.

Most live chat features rely on AI to answer frequently asked questions and only give you a real person if requested. Online chat can support sales, customer service, and many other departments.

Customer service online chat began in the late 1990s and early 2000s, but it was slow to gain popularity. Now with the rise of AI, chatbots have become much more complex. As the industry evolves, so do the advantages and disadvantages of online chat.

Pros & Cons: The Advantages and Disadvantages of Online Chat

While there are many benefits of having live chat on your website, it’s not all sunshine and roses. There are also significant disadvantages of live chat that need to be considered before deciding if it’s right for you.

Live Chat Pros

#1. Real-Time Support

One of the biggest pros of online chat is that people can find answers to their questions quickly. With the boom in AI, this is even more prevalent. The instant gratification of getting an immediate response leaves your customers feeling more satisfied. According to one survey, 63% of users choose live chat as their preferred method of contacting a business.

#2. Easier For Your Customer Service Reps

Installing a website chat software on your site lets your customer service representatives (CSRs) field more questions and juggle multiple chats at once. They also get a live preview of what the user is typing, even before they hit send. Lastly, angry complaints are much easier to handle. It is less taxing to deal with a frustrated customer over chat than it is over the phone.

#3. Increases Conversions

If implemented and staffed correctly, live chat functions have the potential to increase conversion rates and sales for your business. When a real person walks someone through a purchase, it’s more likely they will spend money or come back a second time.

#4. Not Disruptive

Online chat allows customers to get support without it disrupting their entire day. They don’t have to stay on the line for hours, waiting to talk to someone. They can get easy help while at work, home, or out and about. Agents can even send links, files, and other documents without needing to change communication channels.

#5. Builds Relationships

Live chat on websites is inherently more casual than other forms of communication. This opens the door for more personalization in agent’s responses, making it easier to build a relationship with customers. If they have a positive experience, they are more likely to come back again, increasing user engagement .

#6. Everything Is In Writing

Another pro of online chat is that it leaves a digital paper trail. Your conversation is all documented, so you can refer back and keep the receipts if needed. With everything in writing, it is easier to understand the customer’s issue and pass it on to another member of your team without them having to repeat themselves over the phone.

#7. Customer Feedback

Another major benefit of having live chat on your website is that most software allows the user to rate the experience as soon as it ends. This gives your team more insights into the effectiveness of your chat program.

Live Chat Cons

#1. Not Good For Every Demographic

Gen X and Baby Boomers prefer more traditional methods of communication , such as phone or email. To them, online chat may feel impersonal. Depending on your target audience, live chat may not be the right choice for your business.

#2. Bothersome Pop-Ups

A lot of people find the chat box pop-up window to be bothersome. Sometimes it even blocks content on a page! If the pop-up window distracts from the website or negatively impacts the user experience , it may turn people away from your site. They can often come across as intrusive and gimmicky, so be careful when installing them.

#3. Limits to AI

Another disadvantage of live chat is the limitations of AI. For simple FAQs, chatbots can be beneficial, but any complex questions require a real person. In fact, many people immediately skip the chatbot and request a live agent from the start. It can be frustrating and a waste of time to work with an AI that you know can’t help you.

#4. Requires Someone to Monitor

While the idea of passing on simple questions to an AI seems great, it’s not that easy. For online chat to be effective, someone always needs to be monitoring it so they can handle issues too involved for the bot. Users have high expectations for response time, and you don’t want to disappoint them.

#5. Timely Set Up

A common misconception about live chat is that it’s quick and easy to set up. Unfortunately, that’s not true. To set up software that will be beneficial, you need to write automated responses for every potential question. This content should be customized to your business goals, and it can take a lot of time and effort to set those pathways up.

#6. Can Be Costly

With the price of the software, plus the cost of having someone monitoring, online chat can become quite expensive. If it’s not driving sales for your business, it may not be worth it in the long run.

#7. Privacy Concerns

CSRs are able to see a user’s location, what pages they’ve visited, what’s in their shopping cart, and even what they are typing in real time before they hit send. Plus if you’re sharing confidential information over chat, all this can lead to privacy concerns.

#8. More Channels to Monitor

With the addition of live chat, your customer service team is now responsible for monitoring multiple channels. During peak hours, this can be a lot to handle, especially if they are getting many requests at once.

Implementing Live Chat Functions

When it’s time to implement website chat software, you first need to set it up. This process involves developing a chatbot decision tree .

A decision tree maps out conversations in a logical way. Each interaction will have many “branches” and every topic the chatbot covers will need its own flow. As you can imagine, all this content really adds up! The more complex your chatbot, the more branches you’ll need—and the more helpful it will be to your customers.

Remember: your chatbot is only as good as your decision tree.

Some common chatbot mistakes we see:

They only provide general information that cannot answer people’s specific queries.
They take users on too long of a journey to get the answer they need.
They don’t recognize certain keywords, so they are unable to provide customers with useful responses.

Now let’s get to the set-up.

#1. Choose and Install Your Software

There are many website chat softwares available at varying price points. The more you pay, the more options you have for customization. Our dev team will provide you with a few software options to pick from, depending on your business goals.

Once it’s installed, be aware that it is going to affect your core web vitals . Since the script has to run on almost every page of your site, that will lead to longer page loads and an overall dip in vitals.

#2. Customize It To Your Brand

The customization options will depend on the software you choose. In our experience, these options tend to be limited and often don’t work well. They can be finicky to implement.

#3. Develop The Decision Tree

Creating your automated responses will take the most time. First, you need to decide what queries it must be able to answer—the most common FAQs you receive about your product or service. If you’re not sure, ask your customer service or sales team. You’ll also need to decide on a personality for the bot to match your overall brand voice.

Next, create the flow. Guide your customers through a smooth journey from start to finish. Begin by grouping potential queries into categories and then branching out from there. Every possible response needs a branch, but remember to make it natural and conversational, not robotic.

Newer live chat features are keyword based. Make sure your system can recognize relevant keywords and answer accordingly. At the point your chatbot doesn’t know the answer (which will happen), always have the option for someone to contact a live agent.

How to Decide If It’s Right For You

Now that you understand the advantages and disadvantages of online chat, it’s time to decide if it’s right for you. Just like any of our customized web solutions , live chat is not for everyone. Before installing any software, ask yourself:

What problem am I trying to solve with online chat, and do I have the resources to monitor it?

You need to have a specific reason for wanting a chatbot, besides just jumping on the bandwagon. Be intentional and ask: What problems will it be addressing? Do you think your client base will really use it? And why do you think a chatbot is the best answer?

Sometimes, your desire for a live chat feature points to another problem—maybe you need better site content or an updated FAQ page instead. At the end of the day, it all comes down to cost. Is it going to save you money or generate sales? Is the investment worth it? If not, it’s just going to cost you.

Live Chat Best Practices

With the advantages and disadvantages of online chat fresh in your mind, let’s dive into some best practices.

Always have a clear purpose for installing it.
Put the necessary resources behind it . This includes the time to set it up correctly and the manpower to monitor it.
Respond quickly—don’t make people wait . When your response time lags, people get frustrated.
Make sure the placement is not intrusive . Most people put the chat box in the bottom right corner so it won’t cover any site content.
Content loads first. Your chat software should be the last thing to load on a page, giving the website content priority.
Keep it human . Even if you’re using AI, always incorporate a human touch.
Have an offline plan . Figure out a system for after hours when you don’t have an agent online.

Not sure if live chat is right for you? Get expert advice from our dev team to find a customized solution for all your website needs!

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The Benefits of Having a Business Plan: . 1. Increased Clarity. A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on. 2.
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GCSE; Edexcel; Business plans - Edexcel The role and importance of a business plan. A business plan is an essential part of starting any business. Entrepreneurs create business plans to help them ...
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The Disadvantages of Business Planning. When executed thoughtfully and effectively, business planning is an invaluable tool that enables you to chart overall direction and anticipate changes. However, business planning is not a panacea and can sometimes lead to an entirely new set of troubles. Effective business planning is thorough yet ...
Advantages and disadvantages of business planning
Advantages. Enables owners of new or existing business to review their ideas and see if it will provide a profitable future; Reduces risk- guide for business for what to do and when; Allows business to measure success against plan; make changes if need be; help ensure finance is available e.g. bank loans, lenders will see if business is organised
18 Advantages and Disadvantages of Strategic Planning
Advantages of Strategic Planning. Clear Direction: Strategic planning provides a clear sense of direction for an organization, helping leaders and employees understand where the organization is headed and what it aims to achieve. Alignment: It aligns the efforts of employees and departments toward common goals, fostering a shared vision and ...
Advantage and Disadvantage of Planning
Advantages and Disadvantages of planning can be used for all the business development processes and many more. (10) Focuses attention on objectives and results. Plans keep the people who carry them out focused on the anticipated results. In addition, keeping sight of the goal also motivates employees. (11) Establishes a basis for teamwork
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In this article, we will explore the significance of strategic planning for businesses, presenting key tools for its implementation and highlighting the numerous advantages it brings, all ...
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Pros & Cons: The Advantages and Disadvantages of Online Chat . While there are many benefits of having live chat on your website, it's not all sunshine and roses. There are also significant disadvantages of live chat that need to be considered before deciding if it's right for you. Live Chat Pros #1. Real-Time Support
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advantages and disadvantages of designation, including quantitative and qualitative benefits and costs. As part of that additional discretionary analysis, EPA determined that the advantages of designation outweigh the disadvantages. Among other advantages, designation best serves CERCLA's two primary objectives—the timely cleanup of

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What are the advantages and disadvantages of a business plan?

Almost every business starts with a business plan. These documents are used to map out the steps you want to take to get your business off the ground. However, do these strategy documents work for all businesses?

The advantages of a business plan

The disadvantages of a business plan

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Advantages and Disadvantages of Business Plan

Advantages of Business Plan

Disadvantages of Business Plan

What Is a Business Plan?

Key Takeaways

2 Types of Business Plans

Why Do Business Plans Fail?

What Does a Lean Startup Business Plan Include?

14 Reasons Why You Need a Business Plan

Create a professional business plan

6. You’ll make big spending decisions with confidence

7. You’re more likely to catch critical cash flow challenges early

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The quickest way to turn a business idea into a business plan

Business Plan

Roadmapping From A to Z

General FAQ

Build great roadmaps

Experience the new way of doing product management

1. Validate Your Business Idea

2. Set and Track Goals

3. Take Action

4. Manage Resources

5. Make Decisions

6. Manage Risk

7. Communicate Internally

8. Communicate Externally

9. Secure Funding

10. Grow and Change

Related Questions

Business Plan Benefits: What are the benefits of a business plan?

Business Plan Importance: Why is business plan important?

Table of Contents

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What Is Meant by Business Planning?

What Are the 4 Types of Business Plans?

Operational Planning

Strategic Planning

Tactical Planning

Contingency Planning

What Are the 7 Steps of a Business Plan?

Conduct Research

Have a Goal

Create a Company Profile

Describe the Company in Detail

Create a marketing plan ahead of time.

Be Willing to Change Your Plan for the Sake of Your Audience

Incorporate Your Motivation

What Are the Basic Steps in Business Planning?

Summary and Objectives

Services and Products

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Business Planning - Introduction

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The Benefits of Having a Business Plan: