The business plan is an important document in entrepreneurship. Just like virtually anything in this world, it does have its pros and cons. In this article, we shall be exploring that in detail. Knowing the pros and cons will equip you with details that will enrich your understanding of business plans.
Pros
Increases Prospects Of Getting Funded
Most prospective investors or financiers require business plans to consider requests for funding. This means once you have a business plan you can easily apply for funding or approach anyone. This is because a business plan shows seriousness which gets your audience with potential investors or financiers.
Projects You Forward
Most of the details of a business plan are projective. This primes you to project into the future. Not many people are visionary and can look into or plan for the future. Writing a business plan will force you to project forward whether you like it or not. The incentive of possibly getting funding will condition one to ensure their business plan is in order. Financials are arguably the most important component of a business plan. Most of those financials are projected or forecasted numbers – so you end up projecting into the future which is a good thing.
Gives Structure To Your Business
A business plan is a structured document. Thus when you write it you end up ascribing structure and order to your business. The business plan will dictate how a business will operate. This essentially makes a business plan a reference document. The process of adhering to the business plan definitely gives your business the much-needed structure.
Communicates Your Business Vision Clearly And Easily
Verbally articulating your business idea is not an easy thing. The business plan simplifies this by communicating your business vision effortlessly. The business plan is so potent that it can simply take one reading it in your absence and fully get what it is all about. If you were to articulate your business idea verbally to numerous people each delivery would be unique. However, a business plan is reproducible and easily shareable.
Instils Discipline
Working towards a well-written business plan is not child’s play. It requires honesty, diligence, work ethic, and a wide range of virtues. By the time you roll out the business plan in practice, you would have assumed invaluable values and principles in a business discipline.
Cons
Can Be Costly
The cost factor is relative and that is why we are saying they can be costly. Most people do not have what it takes to draft a business plan. This would mean that they have to outsource from those who can. Bearing in mind that someone might be in need of a business plan to try to secure funds, this would obviously be costly.
Can Be Time-Consuming
We always underscore the importance of diligent research in drafting business documents. If ever your business plan takes a very short time to complete it is highly likely that you will be taking shortcuts. The time-consuming element comes in when you are being diligent. On average, it is possible for a well-written business plan to take weeks or even months to complete. This can be a big inconvenience, especially for business ideas that have to take off immediately. Remember that business plans are usually meant for approaching prospective investors or financiers. Waiting to finish the business plan and then working towards securing funds can actually be costly if the commencement of the business is urgent.
Things Change
It is not surprising that by the time you complete a business plan it will be invalid in one way or the other. This is due to the fact that things are constantly changing. Just a simple political or economic development, for instance, can render some sections of the business plan invalid. It is actually for this reason that it is encouraged that business plans should be regularly reviewed and updated. Thus you could say that a business plan has a very short life span.
Can Be Misleading
The writing of a business plan is premised on so many assumptions which can turn out to be false. Business plans also make one feel that everything is guaranteed and shall go as planned. Often time people hold onto the echoed sentiment that writing a business plan is a huge key to success. Most people end up thinking that writing one is all there is to it. All in all, a business plan can mislead one into thinking they have arrived just by completing a business plan.
Subject To Abuse
There are so many business plan templates and even pre-written business plans online. Most people resort to using these in a copy and paste manner. This leads to people completing business plans without any concrete idea of what they are really doing. This produces insincere and make-shift entrepreneurs because of their laziness to conduct diligent research in coming up with a business plan.
Can Stifle Innovation and Creative Thinking
This is not always the case but it does happen quite a lot. Business plans can be rigid in what they layout such that creativity and innovation will not have free courses. This is actually a big problem in many businesses which are found wanting on those fronts. It is because they came up with a business plan – that probably stipulated what is to be done in the next 3 years in an inflexible manner. In this fourth industrial revolution, this can be a serious impediment to progress.
Some of you might wonder why exploring the pros and cons of a business plan matters. Well, primarily it helps you to get more insights into what business plans are. The other reason is that there are several other business plan alternatives to consider. Thus, in the event that you have the leeway to consider other alternatives you will know the best way forward. Interestingly, it seems the business plan is actually losing its fizzle in some circles but it is still commonly used in many circles.
