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Advantages and disadvantages of making a business case

While these advantages are all valuable, there also are some disadvantages to a business plan.

  1. Business plans dictate what you should do and how you should do it.
  2. Instead the average plan tends to create an environment where the executives of the company dictate the goals and the mission of everyone.
  3. Business plans include budgets that help you manage cashflow -- critical to keeping your business running.
  4. A business plan helps you to forecast an idea to see if it has the potential to be successful.

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.

The Disadvantages of a Business Plan

Discouragement 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.

Cutting Corners 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.

  1. For businesses operating on a shoestring budget, one short-term loss may be enough to cause that business to shut their doors.
  2. Solid numbers that tell you the business is untenable will help you make the decision to shut down a failing business easier and will prevent you from losing more of your or your investors' money than necessary. 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.
  3. No business plan, no money.
  4. There is a marketing element included with a good business plan. This action-oriented attitude is exactly what it takes to make it in this field, but it can interfere with the process of starting a new business which requires a careful planning.

Shortcuts are often taken, according to Belmont University. An incomplete business plan could lead you to invest resources unwisely and cause a financial collapse.

  • Depending on the size of your business, it could be a time investment that takes away from your initial profits;
  • Moreover, if your business plan is flexible, you can easily adjust and fine-tune it to address all the unexpected circumstances along the way.

Video of the Day Brought to you by Techwalla Brought to you by Techwalla Time 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.

14 Pros and Cons of a Business Plan

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.

Is Having a Business Plan an Advantage or Disadvantage for Startups?

Tunnel Vision 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.

What Are the Benefits of a Business Plan?

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.

  • 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;
  • Therefore, many may consider the time it takes to develop a business plan as a big disadvantage, and it could be;
  • Provides Exit Strategy In addition to providing benchmarks for success, a good business plan sets realistic criteria for shutting down the business to prevent your throwing good money after bad.

Having a plan that is too narrow in scope could be a big disadvantage. Expense Some service companies specialize in helping you write a business plan.

Business plans

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.

  • How much inventory should you be holding right now?
  • Playing by ear A knack for business is one thing, while wild guessing is something completely different;
  • Tunnel Vision 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;
  • The easiest way of doing this is by finding key performance indicators and presenting them monthly through a KPI dashboard.

Solution 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.