Pros and Cons of Business Plan

A business plan is a document that sets out the objectives of a business and how to achieve them. The main purpose of having a business plan is to maintain business focus, secure outside financing and enlightening executive talents in the business.

A business plan should include an executive summary, company’s description, market and competitive analysis, management and operations and financial summary.

Pros and Cons of Business Plan

Pros of Business Plan

  1. Strategic focus

When someone has a business plan he or she is able to focus on the business activities that will contribute to the making of the profit in the business.

  1. Develop accountability

There is a possibility of the owner developing accountability to the business when there is a business plan. The owner will be accountable in case there is a profit and will also be accountable when there is a loss in the business hence able to balance the running of the business.

  1. Set priorities

The owner of the business will be able to set priorities in the business as he or she will mostly focus on the activities that will contribute to the earning of a profit in the business.

  1. See picture of the whole business

When there is a business plan, the owner will be able to see the picture of the whole business whereby he or she may know the stock in the business and how fast it runs out and the number of customers that come to the business on an average basis.

  1. Easy to manage change

In case the number of customers has reduced due to one reason or another then the owner of the business can be able to manage the change. Or when the prices of the products go up or down the owner can still manage the change when he or she has a business plan.

Cons of Business Plan

  1. Not involving the right people

When making a business plan, the owner may involve other people who are not right and this will result in the loss in business.

  1. Spending too much time on non-essential goods

There is a possibility that the owner of the business may spend much time and money on non-essential goods that will not really be bought by the consumers often which will result in the stock moving slowly hence not making the intended profit within the required time.

  1. Poor accountability

The owner may not have good accountability of the income and the expenditure which will, in turn, make the business not to bring the profit as intended.

  1. The plan does not guarantee success

Someone may have the business plan but it does not necessarily guarantee success to the owner as there is something that is supposed to be met on the ground for the business to be successful.

  1. Rigid plan

When the plan is too rigid then there is a possibility that the owner may not be willing to change as per the demands in the market and this may result in a business not making a profit.

Summary

A business plan is good as it allows the owner to focus on the business but it should not be too rigid as the market may be different according to the plan.

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