The advantages of a business plan are very clear: it provides direction and strategy for your business, is often necessary to get financing and is a way to keep employees on track. While these advantages are all valuable, there also are some disadvantages to a business plan. Understanding these and how to avoid or correct them is key in determining the overall success of any plan. Doing this takes time and energy, but not doing it can be risky in the long run.
In the world of business, there are so many unknowns that it is comforting to have something on paper that will help determine whether or not your business will be successful. Many people may get so discouraged by what is revealed in the business plan they give up before they even open the doors. If you see opportunities beyond what the business plan reveals, taking a risk may be the only way to find out if you're right.
Many business plans fail because those involved do not spend the time or energy, or have the expertise, necessary to make the plan comprehensive enough to have true value. Shortcuts are often taken, according to Belmont University. An incomplete business plan could lead you to invest resources unwisely and cause a financial collapse.
In business, time is money, and coming up with a business plan does nothing to directly sell a product or service. Therefore, many may consider the time it takes to develop a business plan as a big disadvantage, and it could be. Coming up with a comprehensive business plan could take 400 or 500 hours, according to Cayenne Consulting. If you work 40 hours per week, this process could take 10 straight weeks at a minimum.
In some cases, a business plan may provide employees, or even the owner, with a case of tunnel vision. In this scenario, other avenues of business opportunity may not be explored. For example, if you are starting a chocolate shop in a tourist area, your business plan may focus strictly on the traditional retail side of the equation. You may ignore an entire Internet side business simply because it is not in your business plan. Having a plan that is too narrow in scope could be a big disadvantage.
Some service companies specialize in helping you write a business plan. In fact, a consultant will meet with you, get the details of what you hope to do and where you hope to do it, conduct all the rest of the research necessary and then write a plan. Depending on how comprehensive you want this plan to be, it can be a very expensive option.
In the end, choosing whether or not to write a business plan or have one written is a choice you, as the business owner, can make. While there are some disadvantages to a business plan, you may have no choice but to have one in the long run. If you can self-finance the business, this becomes less of a necessity, but very few people can do it.
- Photo Credit mbowlersr/Flickr.com
Advantages & Disadvantages of Setting Up a Business
Setting up your own business can be tempting, especially in an era of financial turmoil. Be mindful of the advantages and disadvantages...
Business Disadvantages in a Restaurant
Opening a restaurant is difficult work. You must supply diners with food they enjoy eating, and also develop relationships with food suppliers,...
Advantages & Disadvantages of Human Resource Planning
Businesses grow based on the work performed by the employees of the company. Companies rely on their human resource departments to build...
Advantages & Disadvantages of MRP II
MRP II is manufacturing resource planning. MRP II includes software for many areas of manufacturing companies including purchasing, inventory, material requirements planning,...
The Disadvantages of E-Business
Although the Internet has continued to prop up mom-and-pop e-businesses to compete alongside large companies in meeting customer need for variety, online-based...
The Advantages of Corporate Planning
The success of a firm or an organization is typically attributed to effective corporate planning. Successful corporate planning details the scope of...
Disadvantages of 401(k) Plans
Companies offer their employees 401k plans to help them save for retirement. These plans offer the advantage of contributions made with pretax...
Disadvantages of Succession Planning
Businesses use succession planning more commonly today than in the past. This planning allows leaders to identify and coach those who may...
The Advantages of Strategic Business Planning
Strategic planning is a business management practice where managers determine the overarching goals of the company and how the company can achieve...