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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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Write Your Business Plan | Part 1 Overview Video
The Basics of Writing a Business Plan
How to Use Your Business Plan Most Effectively

12 Reasons You Need a Business Plan

The Main Objectives of a Business Plan
What to Include and Not Include in a Successful Business Plan
The Top 4 Types of Business Plans
A Step-by-Step Guide to Presenting Your Business Plan in 10 Slides
6 Tips for Making a Winning Business Presentation
3 Key Things You Need to Know About Financing Your Business
12 Ways to Set Realistic Business Goals and Objectives
How to Perfectly Pitch Your Business Plan in 10 Minutes
Write Your Business Plan | Part 2 Overview Video
How to Fund Your Business Through Friends and Family Loans and Crowdsourcing
How to Fund Your Business Using Banks and Credit Unions
How to Fund Your Business With an SBA Loan
How to Fund Your Business With Bonds and Indirect Funding Sources
How to Fund Your Business With Venture Capital
How to Fund Your Business With Angel Investors
How to Use Your Business Plan to Track Performance
How to Make Your Business Plan Attractive to Prospective Partners
Is This Idea Going to Work? How to Assess the Potential of Your Business.
When to Update Your Business Plan
Write Your Business Plan | Part 3 Overview Video
How to Write the Management Team Section to Your Business Plan
How to Create a Strategic Hiring Plan
How to Write a Business Plan Executive Summary That Sells Your Idea
How to Build a Team of Outside Experts for Your Business
Use This Worksheet to Write a Product Description That Sells
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Write Your Business Plan | Part 4 Overview Video
5 Essential Elements of Your Industry Trends Plan
How to Identify and Research Your Competition
Who Is Your Ideal Customer? 4 Questions to Ask Yourself.
How to Identify Market Trends in Your Business Plan
How to Define Your Product and Set Your Prices
How to Determine the Barriers to Entry for Your Business
How to Get Customers in Your Store and Drive Traffic to Your Website
How to Effectively Promote Your Business to Customers and Investors
Write Your Business Plan | Part 5 Overview Video
What Equipment and Facilities to Include in Your Business Plan
How to Write an Income Statement for Your Business Plan
How to Make a Balance Sheet
How to Make a Cash Flow Statement
How to Use Financial Ratios to Understand the Health of Your Business
How to Write an Operations Plan for Retail and Sales Businesses
How to Make Realistic Financial Forecasts
How to Write an Operations Plan for Manufacturers
What Technology Needs to Include In Your Business Plan
How to List Personnel and Materials in Your Business Plan
The Role of Franchising
The Best Ways to Follow Up on a Buisiness Plan
The Best Books, Sites, Trade Associations and Resources to Get Your Business Funded and Running
How to Hire the Right Business Plan Consultant
Business Plan Lingo and Resources All Entrepreneurs Should Know
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6 Steps to Getting Your Business Plan In Front of Investors

12 Reasons You Need a Business Plan Writing a business plan gives you a much better chance for success. But it does open you up to some risks.

By Eric Butow Edited by Dan Bova Oct 27, 2023

Opinions expressed by Entrepreneur contributors are their own.

This is part 4 / 12 of Write Your Business Plan: Section 1: The Foundation of a Business Plan series.

The only person who doesn't need a business plan is the one who's not going into business. You don't need a plan to start a hobby or something you do on the side for fun. But anybody beginning or extending a venture that will consume significant resources of money , energy, or time and that is expected to return a profit should take the time to draft some kind of plan.

Who Needs a Business Plan?

The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many great companies had their starts in the form of a plan that was used to convince investors to put up the capital necessary to get them underway.

However, it's a mistake to think that only startups need business plans. Companies and managers find plans useful at all stages of their existence, whether they're seeking financing or trying to figure out how to invest a surplus.

Established Firms Seeking Help

Many business plans are written by and for companies that are long past the startup stage but also well short of large-corporation status. These middle-stage enterprises may draft plans to help them find funding for growth just as the startups do, although the amounts they seek may be larger and the investors more willing because the company already has a track record. They may feel the need for a written plan to help manage an already rapidly growing business. A business plan may be seen as a valuable tool to convey the mission and prospects of the business to customers, suppliers, or other interested parties.

Just as the initial plan maps how to get from one leg of the journey to the next, an updated plan for additional funding adds another leg of your journey. It's not unlike traveling from the United States to Paris and then deciding to visit London or Barcelona or both along the way. You would then need to add to, or update, your plans. A business plan can, therefore, address the next stage in the life process of a business.

Related: How To Write A Business Plan

Business plans could be considered cheap insurance. Just as many people don't buy fire insurance on their homes and rely on good fortune to protect their investments, many successful business owners do not rely on written business plans but trust their own instincts. However, your business plan is more than insurance. It reflects your ideas , intuitions, instincts, and insights about your business and its future—and provides the cheap insurance of testing them out before you are committed to a course of action. There are so many reasons to create a business plan, and chances are that more than one of the following will apply to your business.

1. A plan helps you set specific objectives for managers.

Good management requires setting specific objectives and then tracking and following up. As your business grows, you want to organize, plan, and communicate your business priorities better to your team and to you. Writing a plan gets everything clear in your head before you talk about it with your team.

2. You can share your strategy, priorities, and plans with your spouse or partner.

People in your personal life intersect with your business life, so shouldn't they know what's supposed to be happening?

3. Use the plan to explain your displacement.

A short definition of displacement is, "Whatever you do is something else you don't do." Your plan will explain why you're doing what you've decided to do in your business.

4. A plan helps you figure out whether or not to rent or buy new space.

Do your growth prospects and plans justify taking on an increased fixed cost of new space?

Related: Do You Need To Write A Business Plan

5. You can explain your strategy for hiring new people.

How will new people help your business grow and prosper? What exactly are they going to do?

6. A plan helps you decide whether or not to bring on new assets.

How many new assets do you need, and will you buy or lease them? Use your business plan to help decide what's going to happen in the long term and how long important purchases, such as computer equipment, will last in your plan.

7. Share your plan with your team.

Explain the business objectives in your plan with your leadership team, employees, and new hires. What's more, make selected portions of your plan part of your new employee training.

8. Share parts of your plan with new allies to bring them aboard.

Use your plan to set targets for new alliances with complementary businesses and also disclose selected portions of your plan with those businesses as you negotiate an alliance.

9. Use your plan when you deal with professionals.

Share selected parts of your plan with your attorneys and accountants, as well as consultants if necessary.

10. Have all the information in your plan when you're ready to sell.

Sell your business when it's time to put it on the market so you can help buyers understand what you have, what it's worth, and why they want it.

Related: How To Build A Business Plan

11. A plan helps you set the valuation of the business.

Valuation means how much your business is worth, and it applies to formal transactions related to divorce, inheritance, estate planning, and tax issues. Usually, that takes a business plan as well as a professional with experience. The plan tells the valuation expert what your business is doing, when it's doing (or will do) certain things, why those things are being done, how much that work will cost, and the benefits that work will produce.

12. You can use information in the plan when you need cash.

Seek investment for a business no matter what stage of growth the business finds itself in. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

Bonus: The Benefits for You

If you and/or someone on your team are still skeptical about the benefits of a business plan and how it will benefit you personally, consider some advantages that can help in your day-to-day management:

Your educated guesses will be better. Use your plan to refine your educated guesses about things like potential markets, sales drivers, lead processing, and business processes. Priorities will make more sense. Aside from the strategy, there are also priorities for other factors of your business including growth, management, and financial health. Use your plan to set a foundation for these, then you can revise them as the business evolves.

You'll understand interdependencies. Use a plan to keep track of what needs to happen and in what order. For example, if you have to time a product release to dovetail with your marketing efforts, your business plan can be invaluable in keeping you organized and on track.

You'll be better at delegating . The business plan must make clear who is responsible for what. Every important task should have one person in charge.

Managing team members and tracking results will be easy. The plan is a great format for putting responsibilities and expectations in writing. Then during team member reviews, you can look to your plan to spot the differences between expectations and results so that you can make course corrections.

You can better plan and manage cash flow. A cash flow plan within your overall business plan helps you and your leadership team make better-educated guesses about sales, costs, expenses, assets you need to buy, and debts you have to pay.

Related: How To Craft A Business Plan That Will Turn Investors' Heads

Business Planning Risks

There are risks associated with writing a business plan. That's right: While one of the main purposes of a business plan is to help you avoid risk, the act of creating one does create a few risks as well. These risks include:

The possible disclosure of confidential material. Although most of the people who see your plan will respect its confidentiality, a few may (either deliberately or by mistake) disclose proprietary information. For this reason, you may want to have a nondisclosure agreement, or NDA, signed before sending it to others.

Leading yourself astray. You may believe too strongly in the many forecasts and projects in your business plan.

Related: The Basics Of Writing A Business Plan

Ruining your reputation . . . or worse. If you purposely fill the plan with overly optimistic prognostication, exaggeration, or even falsehoods, you will do yourself a disservice. Some plans prepared for the purpose of seeking funds may run afoul of securities laws if they appear to be serving as prospectuses unblessed by the regulators.

Spending too much effort planning. You then may not have enough energy or time to actually run your business. Some call it "analysis paralysis." It's a syndrome that occurs when you spend so much time planning that you never do anything. For a lot of business people, this is a nonissue—they detest planning so much that there's no chance at all they'd forgo actually doing business and merely plan it.

Business planning can take on a life of its own. It's possible to spend so much time planning a startup that you miss your window of opportunity or to schedule such frequent updates of a plan for an established business that it becomes difficult to administer its other details. Big corporations have large staffs, which can be devoted to year-round planning. As a small business owner, you have to be more selective.

Your planning may be approaching the paralysis stage if you find yourself soothing your nerves about starting a business by delaying the startup date so you can plan more. If you notice yourself putting off crucial meetings so you can dig up more information for a plan update, suspect that planning has become overly important.

Related: What To Include And Not Include In A Business Plan

Diluting the effectiveness of your plan . If you put too much detail into your plan, you run the risk of overburdening anybody who reads it with irrelevant, obscuring details. A plan isn't supposed to be a potboiler, but it should tell a story—the story of your business.

Therefore, it should be as easy as possible to read. That means keeping technical jargon under control and making it readable in one sitting.

Explain any terms that may be unfamiliar to a reader who's not an expert on your industry. And never make the mistake of trying to overawe a reader with your expertise. There's a good chance someone reading your plan will know more than you do. If you come across as an overblown pretender, you can bet your plan will get short shrift.

It's easy to believe that a longer, more detailed plan is always better than a short, concise one. But financiers and others to whom you may send your plan are busy people. They do not have time to plow through an inches-thick plan and may be put off by its imposing appearance. Better to keep it to a couple of dozen pages and stick to the truly important material.

Expediting your plan . While some insist on endless planning, others try to speed up the process. In an effort to get a plan written quickly to show a potential investor, you may find yourself cutting corners or leaving out vital information. You don't want to take forever to prepare a business plan but using some of the business plan software programs can make it so easy that you find yourself letting the programs do more of the work. Remember, the tools are there to guide you and not the other way around. Give yourself enough time to make sure that:

Each section says what you want it to say.
All of your numbers add up and make sense.
You have answers to anything readers could possibly ask you.

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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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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5 Types of Constraints That May Affect a Business Plan

In everyday language, “constraint” might simply mean any inconvenience, limitation, setback, restriction or fluctuation in capacity. Sometimes it seems like constraints are lurking everywhere. But in Dr. George’s Theory of Constraints, the word “constraint” refers to something very specific.

What is a Business Constraint?

According to Dr George Friedman, a business constraint is anything that interferes with the profitability of a company or business endeavour. Improving profitability requires the removal or reduction of business constraints. Common business constraints include time, financial concerns, management and regulations.

Indeed, every businessperson with a vision of where they are going, and specific strategies and goals to get there, will face challenges or barriers that limit them from achieving success. Most times, when confronted with solving problems or making improvements, business owners or managers feel overwhelmed. They lack the time, money, or resources to correct the problems they are experiencing. They often feel like their hands are tied, and they don’t know where to begin.

In other words, every business operation has something limiting it from reaching its full potential. Note that some of these conditions exist to limit sales or production output. This limit or constraint determines the maximum capacity of the system. Have it in mind that by removing or improving the single constraint, the system is elevated to a higher level of performance.

A business plan needs to be realistic so it is important to set out in detail the constraints that are likely to act as limitations to business activity. Business plans , according to Investopedia, are important documents used to attract investment before a company has established a proven track record. They are also a good way for companies to keep themselves on target going forward.

Even though they are very useful for new businesses, every company is expected to have a business plan . Normally, the plan is reviewed and updated periodically to see if goals have been met or have changed and evolved. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.

There are several constraints that can affect how well a business plan is implemented. The constraints that may affect the implantation of a successful business plan include;

What are the Types of Constraints That May Affect a Business Plan?

Legal constraint.

Have it in mind that when a business is setting up a business plan, it is expected to abide by the laws to ensure that the business will not face any legal action against it. Legal changes tend to happen all the time over the course of a business’ running.

Legal changes can force the business to change the way it operates and also have an impact on how employees have to set up rules to ensure the safety of its employees. Also note that changes to tax laws and minimum wage can have a massive effect on the finance of a business.

The categories that legislation changes fall into are Health and safety. Health and safety can look at how the business is protected against fire and precautions that are taken for various dangers. Examples of laws that may affect these rules are food hygiene, environmental health – weights and measures. Employment laws also changes the way that businesses are allowed to handle employees and regulations that they are expected to follow to ensure that employees are chosen fairly.

Financial Constraint

Note that to implement a business plan with success, having enough money to back up the business plan is imperative. Ideally, there are many things that can be considered as collateral, assets such as your house and car can be used as the backup strength behind your loan.

Banks are more likely to offer loan services to someone who has a good credit history. Funding may not just come from external sources, funding could also come from your own savings and inheritance, this type of finance providing may be a lot safer than taking out a loan as you do not stand to lose personal assets , as you are not in debt to a bank.

Additionally, as part of a successful business plan, considering financial implications is very crucial. Looking at finance required for the startup cost will allow you to analyze how much money you are going to need for start up and running costs.

Technological Constraint

Many customers now opt to use the internet to buy products as it is an easier and more convenient way to shop, in many cases the internet is also cheaper. Businesses have adapted to this change by creating websites to visit and purchase items from. The younger generation prefers to use digital technology to shop online. Older people will perhaps stick to their traditional methods. You must also understand that these changing factors take a toll on businesses too.

Environmental Constraint

The implementation of a business plan can be constrained by a host of factors in the business environment. For instance, legal constraints determine how they produce (e.g. Health and Safety and Product Safety laws). Social constraints determine the tastes and buying patterns of consumers.

For instance, in recent years consumers have turned increasingly to healthy foods as an alternative to ones that are heavily saturated in fats and contain high levels of sugar. During the process of putting together a business plan, you will need to be constantly aware of these environmental constraints and how they alter over time.

You may need to take what is termed an anticipatory approach i.e. to anticipate changes that are likely to take place in the future in the business environment. By anticipating change, businesses are able to adjust the way they operate to be ahead of competitors.

Competitive Constraint

When building a business, it is very much unlikely that you are going to have a product or service that does not already exist. Note that when there are existing similar products to your own this is called competition. Competitors will always have an effect on how much profit your business makes.

Therefore, when marketing your product you must ensure that you are showing how it is better than competitors in the sense of value for money and quality. The strength of the competition is a key constraint on business plan success. Businesses need to position themselves in such a way as to limit the effect of the competition.

Studying business constraints are important to businesses that want to plan ahead. Businesses that take a reactive approach i.e. which only change when or after the environment alters, will be left behind. By anticipating change, businesses are able to adjust the way they operate to be ahead of competitors.

How to Identify Strengths & Weaknesses in a Business Plan

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Writing a strong business plan is easier than you might think because most business plans follow the same basic format. If you are reviewing a plan you've already written or taking a look at one for a friend, knowing how to spot the strengths and weaknesses in the business plan helps you create the most accurate plan.

Look for a Comparative Analysis

When you analyze your competition in a business plan, you should include a comparative analysis, not just a competitive analysis. A competitive analysis looks at your direct competition, while a comparative analysis looks at the indirect competition.

This means a fitness center business plan should include a competitive analysis of other gyms and fitness centers. The plan should also include a comparative analysis of other fitness options people choose instead of going to the gym.

For example, some people don't go to gyms because they jog or play tennis for fitness. A gym business plan should address why people prefer to jog or play tennis (one is solitary, and one is social) and see if they can use those factors to get people to the gym.

Check for a Broad Marketing Approach

Marketing consists of product development, pricing strategies, places of sale and the promotion of a product or service. If a business plan focuses only on the Fourth P of the Four Ps—the marketing mix—it will be weak.

The plan mustn't confine marketing to social media campaigns, advertising, public relations and other promotions. A good business plan should contain separate sections on product development, pricing strategies, distribution channels and promotions.

Anticipate Marketplace Disruption

In addition to analyzing your marketplace as it stands today, your business plan should consider what might happen in the future. You must address new technologies, economic conditions, environmental factors, consumer-buying trends and other factors that might change.

For example, a business plan for a company that makes hard hats for coal miners should address the fact that more and more coal mining is done using machines, not miners, and that environmental laws are making it more difficult for utilities and factories to burn coal. What will that do to the demand for coal miner hard hats in five years?

Reflect Staffing Details

Investors and lenders look at a business plan to see who will be managing the business, according to the U.S. Small Business Administration . If you don't know who will be handling your marketing, IT, sales and other functions, you should at least know what positions your business will have.

A business plan should include an organizational chart that shows the chain of command, who will do what work and who will report to whom. If you can, include job descriptions for the positions you plan to fill.

Analyze Financial Projections

The more you can determine the costs to launch and run your business, the stronger your business plan will be. Budget projections should include not only the cost to make a product but also the expense to run the business and sell the product.

You need to anticipate the overhead you must apply to each unit you sell if you want to know how to price your products to reach specific profits at different sales levels. As sales increase, the overhead cost for each unit decreases, increasing your profit margin. Investors and lenders want to see profit projections using conservative and optimistic forecasts.

Don't forget to include your pre-launch expenses, which have to be paid off during the first year or several, advises Smarty Cents .

U.S. Small Business Administration: Write Your Business Plan
Smarty Cents: How to Write a Business Plan the Right Way

Steve Milano is a journalist and business executive/consultant. He has helped dozens of for-profit companies and nonprofits with their marketing and operations. Steve has written more than 8,000 articles during his career, focusing on small business, careers, personal finance and health and fitness. Steve also turned his tennis hobby into a career, coaching, writing, running nonprofits and conducting workshops around the globe.

Effects a sales volume increase or decrease will have on unit fixed cost, startup costs for a dog biscuit business, how to develop a marketing plan budget, how to start a cake & candy supply store, do all businesses need a production plan, how to determine overhead and labor rate, what does a beauty supply business plan consist of, how to start a fried dough business, five-year goals for businesses, most popular.

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3 How to Develop a Marketing Plan Budget
4 How to Start a Cake & Candy Supply Store

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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Disadvantages Of A Business Plan

by Nmesoma Emmanuel
August 3, 2023

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#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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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

The name and location of your company
Products and services offered by your company
Mission and vision statements
Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

Business location
The legal structure of your business
Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

The geographical location of your target market
Needs of your target market and how your products and services can meet those needs
Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

Industry description and statistics
Demographics and profile of target customers
Marketing data for your products and services
Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

Your competitors' identified advantages in the market
How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
The standout qualities that distinguish you from other companies
Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

Information about how your company plans to carry out its operations.
The base location from which your company intends to operate.
The number of employees to be utilized and other information about your company's operations.
Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

Projected income statements
Cash flow statements
Balance sheets
Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

Legal documents
Licenses and permits
Credit histories
Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

The management team and other stakeholders resume
Marketing research
Permits and relevant legal documents
Financial documents

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Module 3: Planning and Mission

Pros and cons of planning, learning outcomes.

Explain benefits of planning.
Explain the drawbacks of planning.

Achieving business goals starts with planning.

Planning is the process of setting goals and defining the actions required to achieve the goals.

Planning begins with goals. Goals are derived from the vision and mission statements, but these statements describe what the organization wants to achieve, not necessarily what it can achieve. The organization is affected both by conditions in its external environment—competitors, laws, availability of resources, etc.—and its internal conditions—the skills and experience of its workforce, its equipment and resources, and the abilities of its management. These conditions are examined through a process called a SWOT analysis. (SWOT will be discussed in greater detail in another module.) Together, the vision and mission statements and the results of the situation analysis determine the goals of the organization. This idea is illustrated by the figure that follows.

The words “Values,” “Vision,” and “Mission” are in a box. The words “Situation Analysis” are in another box. Both these boxes have arrows pointing from them to a third box, which has the word “Goals” in it.

Using the mission, vision, and values of a company, along with situation analysis, can help the company set goals.

The rest of the planning process outlines how the goals are to be met. This includes determining what resources will be needed and how they can be obtained, defining tasks that need to be done, creating a schedule for completing the tasks, and providing milestones to indicate progress toward meeting goals. The planning process will be discussed in more detail in the following section.

Benefits of Planning

In today’s chaotic environment, planning more than a few months in advance may seem futile. Progress, however, is rarely made through random activity. Planning does provide benefits that facilitate progress even when faced with uncertainty and a constantly changing environment. Some of the benefits include the following:

Planning provides a guide for action. Plans can direct everyone’s actions toward desired outcomes. When actions are coordinated and focused on specific outcomes they are much more effective.
Planning improves resource utilization. Resources are always scarce in organizations, and managers need to make sure the resources they have are used effectively. Planning helps managers determine where resources are most needed so they can be allocated where they will provide the most benefit.
Plans provide motivation and commitment. People are not motivated when they do not have clear goals and do not know what is expected of them. Planning reduces uncertainty and indicates what everyone is expected to accomplish. People are more likely to work toward a goal they know and understand.
Plans set performance standards. Planning defines desired outcomes as well as mileposts to define progress. These provide a standard for assessing when things are progressing and when they need correction.
Planning allows flexibility. Through the goal-setting process, managers identify key resources in the organization as well as critical factors outside the organization that need to be monitored. When changes occur, managers are more likely to detect them and know how to deploy resources to respond.

Practice Question

Drawbacks to planning.

Planning provides clear benefits to organizations, but planning can also harm organizations if is not implemented properly. The following are some drawbacks to planning that can occur:

Planning prevents action. Managers can become so focused on planning and trying to plan for every eventuality that they never get around to implementing the plans. This is called “death by planning.” Planning does little good if it does not lead to the other functions.
Planning leads to complacency. Having a good plan can lead managers to believe they know where the organization is going and how it will get there. This may cause them to fail to monitor the progress of the plan or to detect changes in the environment. As we discussed earlier, planning is not a one-time process. Plans must be continually adjusted as they are implemented.
Plans prevent flexibility. Although good plans can lead to flexibility, the opposite can also occur. Mid- and lower-level managers may feel that they must follow a plan even when their experience shows it is not working. Instead of reporting problems to upper managers so changes can be made, they will continue to devote time and resources to ineffective actions.
Plans inhibit creativity. Related to what was said earlier, people in the organization may feel they must carry out the activities defined in the plan. If they feel they will be judged by how well they complete planned tasks, then creativity, initiative, and experimentation will be inhibited. Success often comes from innovation as well as planning, and plans must not prevent creativity in the organization.

Goals and plans do not have to be formal documents. In small organizations, they may exist only in the minds of the manager. But research and experience have shown that planning brings clear advantages to an organization, whether through formal procedures or informal intuition. However, when plans become the object instead of a means to an objective, they can have negative consequences for the organization. For example, General Motors missed the opportunity to become the first American automaker to produce an electric car because it was committed to its plan rather than its goals. GM had EV-1 prototypes designed and produced in the 1990s and literally destroyed the cars rather than sell them.

Pros and Cons of Planning. Authored by : John/Lynn Bruton and Lumen Learning. License : CC BY: Attribution
Image: Planner. Authored by : NikolayFrolochkin. Located at : https://pixabay.com/en/diary-weekly-planning-notebook-2134248/ . License : CC0: No Rights Reserved

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Business Model vs Business Plan What’s the Difference?

Free Business Model Canvas Template

January 2, 2024

Business plan, business model, strategies, financial forecasts, and whatnot!

Starting a business means encountering new terms every day, but not exactly knowing when to use what!

Two such terms are business plan and business model. People often use them interchangeably, and it’s okay if you do too. Today we’ll change that so you know which to use when.

In this article, we’ll conduct a thorough business plan vs. business model comparison to understand their meanings and know their purpose.

So, let’s kick-start this journey now.

What is a business model?

A business model is a mechanism that directs how you create, deliver, and attain value in the market; it’s the profit-generating plan of your company.

This involves identifying your value proposition, targeting specific customer segments, defining revenue streams, leveraging key resources, and forming strategic partnerships.

Simply put, it’s how you sell your product to make money.

Components of a business model

The essential elements of a business model are:

Customer segments
Value proposition
Revenue streams
Customer relationships
Key activities
Key resources
Key partners
Cost structure

What is a business plan?

A business plan is a comprehensive document that outlines your entire business operations. It covers everything from launching products and setting milestones to planning an exit strategy, detailing every step of your business journey. A business plan describes what a company does, its vision & goals, and its strategies.

Essentially, a business plan serves as a roadmap for how your business will operate, grow, and achieve success.

Components of a business plan

Here are the core components of a business plan:

Executive summary
Company description
Products and services
Market analysis
Customers analysis
Competitors analysis
Marketing and sales plan
Operations plan
Financial plan

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Four key differences: business model vs. business plan

Now that you know the exact meaning of a business model and business plan, it’s time to understand the difference.

Your business model focuses on optimizing the internal and external company operations to earn maximum profits. It explains your relationship with dealers, distributors, service partners, customers, and target audience.

Conversely, your business plan focuses on how you set business goals, create strategies, make predictions, and manage labor to sustain and scale your business. It also outlines your relationship with your customers, competitors, industry, and the market.

2. Benefits

Adopting the right business model(s) help you:.

Gain a competitive edge

Incorporating a unique business model amazes your audience and attracts them to be your first-time customers. It also provides you with a competitive edge over other businesses in your industry.

Ensure sustainability and scalability

A business model pushes an entrepreneur to have monthly update meetings and plan what the next month should exactly look like. Many businesses shut down due to poor financial management, which is why a business model is required.

From economic storms to unexpected difficulties, a business model ensures both sustainability and scalability.

Inspires trust in investors

Investors know the failure rate of small businesses, which is why incorporating a clear business model provides a sense of security. They will also know that you have a strategy and what your profitability expectations are for the upcoming years.

Writing a good business plan helps you:

Test the viability of your business idea

A business plan defines the target customers and their willingness to pay for your product or service. This way, your business idea will be validated, helping you decide whether to move forward with it or not.

Acquire funding

If you want funds from banks, investors, or other parties, then you’ll require proper financial details like goals, plans, and projections. A good business plan will help you impress investors.

Plan for exit

A business plan includes strategies and a timeline to accomplish any task, which helps in planning your business’s exit too. While handing over your business or closing it directly, meeting the financial goals is also important—which are very specific in the business plan.

Other advantages of writing an ideal business plan include:

Identifying market gaps and threats
Organizing and planning business processes
Forecasting financial estimates and market trends
Creating strategies to achieve objectives

While adopting a business model

First, consider the scalability of your business, then measure the value you offer. List down your competitors, segment your customers, see the market potential, and then choose a business model.

Here are other points to consider:

Aim to receive validation from prospective customers
Modify assumptions to match customer preferences
Focus on the current financial position

While creating a business plan

Answer a few questions first, like where you think your business will be in 10–15 years, what’s your expected income, or what are your projections.

Aim to find factual information through research
Support assumptions through data from customer analysis
Focus on the current and future financial position

Business models

A business model outlines how a company creates, delivers, and captures value. Understanding different types of business models can help identify the best approach for their businesses, ensuring growth. Some of the types of business models are:

Subscription model
Freemium model
E-commerce model
Advertising model
Franchise model

Business plans

Each type of business plan serves a unique role, whether it’s for a startup looking to enter the market, an existing business planning for growth, or a company looking to improve its operational efficiency. Here is an overview of the most common types of business plans:

Startup business plan
Lean business plan
Traditional business plan
Internal business plan

The bottom line

There’s no standard answer for business plan vs. business model; the choice entirely depends on your business’s specific needs and objectives.

Additionally, planning is an ongoing process. You can’t create a business plan or a business model and rely on that for years to come!

So, to keep your business model and business plan updated, explore a business plan app like Upmetrics . It has a business model canvas template, sample business plans, and an AI assistant to help you plan as many times as you need.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Can i write a business plan without a business model.

No, a business plan is like a roadmap for your business—but it also needs direction. This direction comes from a business model. A business model explains how you’ll make money by defining its target market, value proposition, revenue streams, cost structure, and distribution channels. So, writing a business plan after making a business model is advisable.

Is my business model enough to secure funding?

Well, no! For funding an investor would want to know everything about your business like the management team, competitive landscape, industry analysis, financial projections, and more. So, having a business plan for funding is necessary.

When should I create a business model and business plan?

Create a business model and a business plan when you’re starting a new business or launching a new product or service. However, you need to create or alter both documents if there are any shifts in the current business operations.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

Limitations of Planning

Inflexibility, limitation of forecasts, unsuitability, time-consuming.

The management cannot prepare any plan simply. It has to collect various information and hold discussions with others. So, planning is a time-consuming process.

Mental Ability

False sense of security, delay during emergency period.

Planning does not give any benefits to an organisation during the emergency period. Spot decision dominates the planning. If planning is followed during the emergency period, there will be a possibility of delay in performing the work.

Capital Investment

Political climate.

Government can change its attitudes according to the changes in the political climate. Taxation policy and regulation of business and finances through financial institutions are generating constraints on the organisational planning process.

Trade Unions

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Limitations of Business Plan

Project report or business plan is a written statement of what an entrepreneur proposes to take up. It is one kind of course of action about what the entrepreneur hopes to achieve in his business and how is he going to achieve it.

The business plan is only a plan and does not assurance achievement. For example, sales may be lower than predicted as they can be affected by a range of issues. There are some limitations to the business plan. This is why those plans can’t be successful. These limitations or pitfalls are as follows:

Lack of realistic goals: Some entrepreneurs set such goals that are not attainable;
A problem in determining time-period; if the plan is too rigid some problems may arise, it must be flexible to adapt to market changed.
Failure to anticipate a future problem;
Lack of sufficient information;
Lack of commitment: Starting is good but the spirit of an initiative declines;
Lack of practical experience;
Lack of alternative plan;
Insufficient knowledge about the market;
No consideration of SWOT: SWOT means strength, weakness, opportunities, and threats;
Unnecessary delay in project report formulation and implementation;
A problem in priority consideration;
Lack of efficient manpower;
Lack of flexibility;
A wrong assessment of the market.

Understanding this and how to avoid or correct is key in determining the overall success of any plan.

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Why A Thoughtful Business Plan Is Essential For Success

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Starting a business is an exciting journey, full of opportunities and challenges. For women entrepreneurs, particularly those transitioning from corporate life to entrepreneurship, the path can feel daunting. But with the right roadmap (a well-thought-out business plan), you can navigate the uncertainties and set your business up for success.

A business plan is more than just a document; it's your blueprint for building and growing your business. It outlines your goals, strategies, and the steps you need to take to achieve them. A strong business plan not only guides your decisions but also communicates your vision to potential investors, partners, and employees.

Here’s why a business plan is crucial and how you can create one that will steer your business toward success.

The Importance of a Well-Thought-Out Business Plan

1. clarifies your vision and objectives.

As you build out your business plan it forces you to think deeply about your business idea and if it’s a viable idea. What exactly are you trying to achieve? What are your short-term and long-term goals? By putting these thoughts on paper, you create a clear vision that will guide every decision you make.

2. Helps You Understand Your Market

Researching and writing a business plan requires you to analyze your market. Who are your competitors? Who is your target audience? What are the market trends? This understanding helps you position your business strategically and identify opportunities for growth.

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Today’s nyt mini crossword clues and answers for tuesday, september 3, hoka labor day sale: 14 deals you don’t want to miss, 3. defines your strategy.

A business plan includes your marketing strategy, sales approach, and operational plan and outlines how you will achieve objectives. This strategic framework ensures that your efforts are aligned and focused on achieving your goals.

4. Secures Funding

If you need financial support to start or grow your business, a well-prepared business plan is essential. Investors and lenders want to see a clear plan for how you will generate revenue and repay any loans. A business plan that demonstrates a thorough understanding of your industry and a solid strategy is more likely to attract funding.

5. Guides Your Decision-Making

A business plan serves as a reference point, helping you make informed decisions that align with your long-term goals. By consistently referring to your business plan, you ensure that every decision contributes to the overarching vision and objectives of your business, ultimately driving growth and success.

6. Tracks Your Progress

A business plan includes milestones and key performance indicators (KPIs) that allow you to track your progress. Regularly reviewing your business plan helps you stay on course, adjust your strategies as needed, and celebrate your successes.

The bottom line is that creating a business plan is a crucial step in turning your entrepreneurial dreams into reality. It’s your roadmap, guiding you through the complexities of starting and growing a business. For women entrepreneurs, especially those transitioning from a corporate career, a well-thought-out business plan can provide the clarity, confidence, and direction needed to succeed. Take the time to craft a business plan that reflects your vision and sets the foundation for a thriving, profitable business.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business and the founder of She Means Profit . As a Business Strategist for small business owners, Melissa helps women making mid-career shifts, to launch their dream businesses, and also guides established business owners to grow their businesses to more profitably.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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Your Article Library

7 major limitations to effective planning | business management.

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Seven Limitations to Effective Planning are: 1. Planning is costly, 2. Planning is a time consuming process, 3. Planning reduces initiative of employees, 4. Reluctance to change, 5. Capital invested in fixed assets limits planning, 6. Inaccuracy in planning, 7. Planning is effected by external limitations!

These Limitations are as follows:

1. Planning is costly:

On account of heavy costs involved in planning, small and medium concerns find it difficult to make comprehensive plans. Since these concerns are already short of capital, it is difficult for them to spare money for collection of information, forecasting, developing alternatives and appointing experts.

One of the essentials of a good plan is that it must give more contribution than the cost involved in it, i.e., it should justify its existence. So, planning may be uneconomical in case of small concerns. The more detailed is a plan, the more expensive it is.

2. Planning is a time consuming process:

Planning requires too much of time and the decision-making process may get delayed especially where immediate decisions are to be taken. Time is a serious limitation where prompt actions are required. In such cases, it is not possible to follow the detailed process of planning.

3. Planning reduces initiative of employees:

Planning tends to bring rigidity in the methods of work as employees are required to work according to predetermined policies, “it is believed that planning provides a strait (i.e., narrow or difficult) jacket for the subordinate and makes his managerial work more difficult.” (Theo Haimann).

4. Reluctance to change:

The employees become accustomed to a set method of doing work and resist the change wherever it is suggested to them. The unwillingness of the employees results in the failure of the new plans.

Since planning implies changes, most of the employees resist it as they think that the new plans will not be successful. The employees of the concern think that present plan is better than the proposed plan.

5. Capital invested in fixed assets limits planning:

The decision regarding purchase of fixed assets puts a limit on the future action as huge amount is invested in the fixed assets. The manager cannot do anything about this investment in future. It is, therefore, very essential that investment in fixed assets is made very carefully.

6. Inaccuracy in planning:

It is not possible to free planning from human bias. Planning is based on forecasts which cannot be accurate. Forecasts relate to future which is very difficult to predict. There can only be a guess-work about what will happen in future.

Similarly, statistical data on which plans are based may be wrong. Future is very uncertain and there are many factors which are uncontrollable.

Similarly, a wrong assumption by the planner, on account of his incompetency or error in judgment etc., can result in inaccurate planning and its value may be lost altogether. No perfect assurance can be given by planning for future risks and uncertainties.

7. Planning is effected by external limitations:

Planning is also effected by certain factors which are not within the control of the planners. These factors are political, social, economical and technological. Political situations at the national and international level put a limitation to planning. The various policies of the Govt, (i.e., trade policy, tax policy, import policy, state trading) may make plans of a business concern worthless.

Strong trade unions also tend to restrict planning. Similarly, technological developments are taking place very rapidly making the existing machines obsolete. All these factors are external and management has least control over them.

8 Key Elements of Strategic Planning Process | Business Management
3 Major Relationships between Planning and Controlling Functions of Management

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How Long Should a Business Plan Be?

Female entrepreneur standing in the front of her bakery reviewing her business planning documents.

3 min. read

Updated May 10, 2024

Download Now: Free Business Plan Template →

Don’t make your business plan longer than necessary, and think about the reason you’re writing the plan in the first place .

You’re probably going to want to revise your plan regularly, and the shorter your plan is, the more manageable that process will be. Using a business plan template to help you keep each section organized can help you as you start writing .

Page count is not a good way to measure length.

A 20-page business plan with dense text and no graphics is much longer than a 35-page plan broken up into readable bullet points, useful illustrations of locations or products, and business charts to illustrate important projections.

Your business plan shouldn’t take longer than 15 minutes to skim

Measure a plan by readability and summarization. A good business plan should leave a reader a good general idea of its main contents even after only a quick skimming, browsing the main points, in 15 minutes. Format, headings , white space, and illustrations make a big difference. Summaries are very important. Main points should show up in a business plan as quickly as they do in a business presentation.

Your plan’s length should mirror its audience

Unfortunately, many people still use page count as measurement. And in that context, some of the more practical, internal-use-only business plans can be only 5 or 10 pages long. Corporate business plans for large companies can run into hundreds of pages.

The more standard start-up and expansion plans developed for showing outsiders normally run 20-40 pages of text – easy to read, well-spaced text, formatted in bullets, illustrated by business charts and short financial tables – plus financial details in appendices.

The right length of the plan depends on the nature and purpose of the plan .

Will it include descriptions of the company and management team for outsiders to read?
Does it need an executive summary good enough to stand alone?
Does it include detailed research, plans, drawings, and blueprints? Is it worded to withstand legal scrutiny as part of an investment proposal?
Does it have everything bank would look for in your business loan application?
The right length for a business plan competition

Venture contests often limit a plan to 30 pages, sometimes 40, rarely 50 – and that includes detailed financials in the appendices. Unfortunately the page limitation leads some contestants to very bad choices, as they cram content into dense typefaces and thick texts, making their plans worse, not better.

Palo Alto Software’s business plan contest ran four years. Several hundred plans entered that competition. Finalists never had less than 20 pages or more than 50 pages. Most run 30-40 pages.

These are all 20-30 pages of text, not counting useful graphic additions to show locations, designs, menus, etc., and not counting the appendices pages containing monthly financial projections, resumes of team leaders, etc.

You’ll want to add some pages for the standard financials; usually that means appendices with monthly tables for sales, personnel, income statement, cash flow, and balance sheet. You also want to include the main annual numbers of those tables in the body of the plan.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

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Use graphics wisely

Don’t ever shorten a plan by taking out useful graphics. Page count matters far less than readability. Use business charts to illustrate numbers so your projections are easier to absorb.

Use photographs and drawings to show locations, products, sample menus, product pictures, and other illustrations as much as possible.

However, don’t ever add extra graphics, like clip art, not directly relevant to the matter at hand, as if that would make a plan better.

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.

Table of Contents

Your business plan shouldn’t take longer than 15 minutes to skim
Your plan’s length should mirror its audience

Male entrepreneur sitting in an office in front of computer. Reviewing a research study covering the impact of small business success due to planning.

12 Min. Read

Do You Need a Business Plan? Scientific Research Says Yes

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

14 Reasons Why You Need a Business Plan

Illustration of various business documents and star icons on a yellow background, representing the essential components of a well-structured business plan.

3 Min. Read

11 Key Components of a Business Plan

7 Min. Read

5 Consequences of Skipping a Business Plan

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Money blog: Liam Gallagher's 2017 tweet comes back to haunt him

The Money blog is your place for consumer and personal finance news and tips. Today's posts include Expedia data showing the cheapest dates to go on holiday and an old Liam Gallagher tweet about ticket pricing. Leave a comment on any of the stories we're covering in the box below.

Tuesday 3 September 2024 09:56, UK

Cheapest holidays dates before Christmas
Pay-per-mile tax scheme proposed for electric vehicles
Liam Gallagher's 2017 tweet about £350 tickets comes back to haunt him
Millions to get cost of living payments this winter as scheme extended

Essential reads

Basically... Free school meals
'This job has saved lives': What's it like selling the Big Issue?
Best of the Money blog

Tips and advice

How else to eat Greggs on cheap as O2 Priority scraps freebies
Money Problem : 'My dog died but my insurance is still demanding whole year's policy payment'
Holiday money golden rules

Ask a question or make a comment

By James Sillars , business reporter

It's a fairly muted start to the day's trading, again, on financial markets.

The FTSE 100 has opened 10 points higher at 8,373.

Rolls-Royce, the civil aerospace-to-defence firm (not to be confused with the luxury motor car manufacturer), is leading the gainers.

Its shares rallied by 4% early this morning after a 6.5% decline the previous day.

That tumbled was in reaction to the apparent mid-air failure of one of its engines on a Cathay Pacific flight .

Analysts said that the share price recovery was down to an update from the airline that the fleet affected should be back to full operation by the weekend.

A tweet Liam Gallagher wrote seven years ago criticising the eye-watering price of gig tickets has come back to haunt him.

His message, written in September 2017 about his older brother Noel, who was touring America with his band High Flying Birds at the time, read: "350 dollars to go and see rkid in USA what a c*** when will it all stop as you were LG x"

The tweet has resurfaced after dynamic pricing for Oasis's much-hyped reunion next year left fans - many of whom had spent hours queueing online - stunned after some standard tickets more than doubled in price from £148 to £355 on Ticketmaster due to demand.

X users pointed out the irony upon seeing the 2017 tweet, posting comments including, "Well this is evergreen", "What's your excuse for charging over 368 quid then?" and "Not ageing well, Liam".

Tap here to follow the Daily podcast - 20 minutes on the biggest stories every day

Using a phrase Liam adopts in his own social media comments, another fan wrote simply "BIBLICAL".

Hundreds of people have complained to the Advertising Standards Authority (ASA) over "misleading claims about availability and pricing".

In response, Sir Keir Starmer has said the government will get a "grip" on the issue of surge pricing, with Culture Secretary Lisa Nandy promising a consultation over the transparency and use of dynamic pricing, and the technology around queuing systems, to ensure fans don't get ripped off.

Yesterday we revealed that official reseller Twickets had lowered its fees after criticism from Oasis fans.

Scroll through today's Money blog for: Cheapest dates to go on holiday this year (6.42 post); how do you get free school meals (7.58 post); pay-per-mile tax proposed (7.38 post)

Basically, free school meals are aimed at making sure the country's more vulnerable youngsters don't go hungry while they're learning in their earlier years.

Children of certain ages automatically qualify without having to apply, but the rules differ across the four nations.

Children whose parents claim certain benefits or asylum support may also be eligible - though an application may be needed.

Free school meals without having to apply

In England, outside of London , all state school children in reception to year two automatically qualify for infant free school meals, while in the capital , all state primary school children up to age 11 qualify for the benefit in the 2024-25 academic year.

In Scotland , all state school children up to primary five (around four to nine years old) get the meals automatically. There are plans for this to be extended to pupils in receipt of the Scottish child payment in primary six and seven from February.

In Wales all primary school children in state schools can get free meals from September.

Families who claim benefits

If your child falls outside the eligibility criteria for automatic free school meals, they'll still be able to benefit in certain circumstances.

Wherever you are in the UK, your child may be able to get free school meals if you get one or more of the following:

Income support
Universal credit
Income-based jobseeker's allowance
Income-related employment and support allowance
Support under part six of the Immigration and Asylum Act 1999
The guaranteed element of pension credit
Child tax credit
Working tax credit (Scotland and Northern Ireland)
Working tax credit run-on England and Wales) – paid for four weeks after you stop qualifying for working tax credit

There's some specific criteria for families by devolved nation, which we'll break down below...

England and Wales

If you're claiming universal credit, your net household income must be less than £7,400 after tax, and not including any benefits.

Those receiving child tax credit must not also be entitled to working tax credit and must have an annual income of less than £16,190.

If you're classed as having no recourse to public funds - a type of condition placed on temporary visas in the UK - and the parents are able to work, they must have a household income of no more than:

£22,700 for families outside of London with one child
£26,300 for families outside of London with two or more children
£31,200 for families within London with one child
£34,800 for families within London with two or more children

People claiming universal credit in Scotland must have a household monthly income of no more than £796 (£9,552 per year) to qualify for free school meals.

Families on child tax credit, but not working tax credit, can get the meals if they earn less than £19,995. For those on both benefits, their income must be no more than £9,552.

Northern Ireland

You may be able to claim free school meals in Northern Ireland if you receive universal credit and your post-tax earnings are £15,000 or less per year.

If you get child tax credit or working tax credit, you can still get free school meals on an annual income of up to £16,190.

How can I claim the meals?

In England, Wales and Scotland, you apply to your local council.

The UK government website has a local authority postcode checker here , which directs you to the council running services in your area. There are similar tools on the Scottish and Welsh government websites.

In Northern Ireland, you can use this form to apply directly to the government.

How many children are eligible - and how much does it cost?

According to the latest data from the Department for Education, 2.1 million pupils were eligible for free school meals in the 2023-24 academic year - 24.6% of pupils. This was a rise from 23.8% the year before.

According to the London mayor's office, it's estimated that school meals cost £13.25 per week - or £2.65 meal - on average.

It says its free school meals offer for all state-educated primary school children in the capital saves parents around £500 per year.

According to a 2023 report from the IFS, the current system of free school meals in England – both means-tested and universal provision – costs the government around £1.4bn a year.

But separate research from the Food Foundation found that expanding free school meal eligibility to all primary school students could generate around £41bn in direct benefits to students and a further £58bn to the wider economy over 20 years.

Read other entries in our Basically series.. .

Tax receipts from petrol and diesel duty bring in £25bn for the Treasury each year - and questions have been raised about what happens as more drivers go electric.

Today, the public transport charity Campaign for Better Transport (CBT) is proposing that drivers of zero-emission vehicles (ZEVs), such as electric cars, should be charged based on how far they travel.

They are asking Chancellor Rachel Reeves to impose the pay-per-mile scheme, saying it's the solution to a "black hole" that will be created by the loss of fuel duty.

The scheme would not apply to drivers of traditionally fuelled cars.

Under the plan, drivers with a ZEV before the implementation date would be exempt, incentivising the switch to electric vehicles.

Previous governments have found the prospect of introducing per-mile charges - known as road pricing - to be too politically toxic.

But CBT claims it would have public support.

Let us know your thoughts in the comments box - and read more on this story here ...

Summer may be edging towards the rear-view mirror, but that doesn't mean Britons are turning their back on sunshine.

With many looking to sort an autumn holiday, Expedia has taken a look at the best times to fly and book hotels - with savings of up to £120 if you are savvy.

Its data is based on average daily rates for lodging and flight prices between 22 September and 21 December this year.

When to book flights for

Cheapest : 22, 23 or 24 September
Least busy : 10 or 17 December
Most expensive : 19, 20 or 21 December
Busiest : 20 and 21 October

"For the best deals, travellers should look to book their flights 14 to 20 days before travel, saving them on average £120 compared to booking 91 days or more out, or saving £60 compared to booking 60-90 days out," Expedia says.

"Target the 22-29 September for travel, when average ticket prices (ATPs) for flights are shaping up to be nearly £100 cheaper than the autumn average, and £50 cheaper than summer ATPs."

When to book a hotel

Cheapest : 20 November or 11 December
Most expensive : 14 or 21 October
Busiest : 23 October or 25 September

"For hotel stays, target the 3-9 November, when average daily rates are £15 cheaper per night than the seasonal average and summer stays," Expedia says.

The holiday booking site says the most popular autumn destinations have remained largely the same as last year based on the largest number of hotel searches...

New York, USA
Paris, France
Edinburgh, Scotland
Amsterdam, Netherlands
Manchester, UK
Tenerife, Spain
Birmingham, UK
Rome, Italy

Despite this, Expedia says savvy Britons are searching out "under the radar" getaway spots.

"Flight searches have surged for Brits looking to discover new, under-the-radar European cities this autumn, such as Tirana (+95%) in Albania and Bucharest (+70%) in Romania, as Brits look to stretch their budgets further by looking outside the popular city break hotspots."

The top 10 destinations with the biggest search increases are:

Saint Malo, France
Didim, Turkey
Syracuse, Italy
Beijing, China
Palermo, Italy
Tromso, Norway
Brescia, Italy
Poznan, Poland
Tangier, Morocco
Ischia, Italy

The Money blog will return shortly - meantime, why not scroll through some of our best and most popular features below...

Despite traditionally being an affordable staple of British cuisine, the average price for a portion of fish and chips has risen by more than 50% in the past five years to nearly £10, according to the Office for National Statistics.

Sonny and Shane "the codfather" Lee told Sky News of the challenges that owning J-Henry's Fish and Chip Shop brings and why prices have skyrocketed.

"Potatoes, fish, utilities, cooking oil - so many things [are going up]," he said.

Shane also said that he is used to one thing at a time increasing in price, but the outlook today sees multiple costs going up all at once.

"Potatoes [were] priced right up to about £25 a bag - the previous year it was about £10 a bag," Sonny said, noting a bad harvest last year.

He said the business had tried hake as a cheaper fish option, but that consumers continued to prefer the more traditional, but expensive, cod and haddock.

"It's hard and we can we can absorb the cost to a certain extent, but some of it has to be passed on," Shane added.

After a long Saturday for millions of Oasis fans in online queues, the culture secretary says surge pricing - which pushed the price of some tickets up by three times their original advertised value to nearly £400 - will be part of the government's review of the ticket market.

On today's episode of the Daily podcast, host Niall Paterson speaks to secondary ticketing site Viagogo. While it wasn’t part of dynamic pricing, it has offered resale tickets for thousands of pounds since Saturday.

Matt Drew from the company accepts the industry needs a full review, while Adam Webb, from the campaign group FanFair Alliance, explains the changes it would like to see.

We've covered the fallout of the Oasis sale extensively in the Money blog today - see the culture secretary's comments on the "utterly depressing" inflated pricing in our post at 6.37am, and Twickets, the official Oasis resale site, slammed by angry fans for its "ridiculous" added fees at 10.10am.

The growing backlash culminated in action from Twickets - the company said it would lower its charges after some fans had to pay more than £100 in extra fees for resale tickets (see post at 15.47).

Last week we reported that employers will have to offer flexible working hours - including a four-day week - to all workers under new government plans.

To receive their full pay, employees would still have to work their full hours but compressed into a shorter working week - something some workplaces already do.

Currently, employees can request flexible hours as soon as they start at a company but employers are not legally obliged to agree.

The Labour government now wants to make it so employers have to offer flexible hours from day one, except where it is "not reasonably feasible".

You can read more of the details in this report by our politics team:

But what does the public think about this? We asked our followers on LinkedIn to give their thoughts in an unofficial poll.

It revealed that the overwhelming majority of people support the idea to compress the normal week's hours into fewer days - some 83% of followers said they'd choose this option over a standard five-day week.

But despite the poll showing a clear preference for a compressed week, our followers appeared divided in the comments.

"There's going to be a huge brain-drain as people move away from companies who refuse to adapt with the times and implement a 4 working week. This will be a HUGE carrot for many orgs," said Paul Burrows, principal software solutions manager at Reality Capture.

Louise McCudden, head of external affairs at MSI Reproductive Choices, said she wasn't surprised at the amount of people choosing longer hours over fewer days as "a lot of people" are working extra hours on a regular basis anyway.

But illustrator and administrative professional Leslie McGregor noted the plan wouldn't be possible in "quite a few industries and quite a few roles, especially jobs that are customer centric and require 'round the clock service' and are heavily reliant upon people in trades, maintenance, supply and transport".

"Very wishful thinking," she said.

Paul Williamson had a similar view. He said: "I'd love to know how any customer first service business is going to manage this."

Twickets has announced it is lowering its charges after some Oasis fans had to pay more than £100 in extra fees to buy official resale tickets.

The site is where the band themselves is directing people to buy second-hand tickets for face value - having warned people against unofficial third party sellers like StubHub and Viagogo.

One person branded the extra fees "ridiculous" (see more in 10.10 post), after many people had already been left disappointed at the weekend when Ticketmaster's dynamic pricing pushed tickets up by three times the original advertised fee.

Twickets said earlier that it typically charged a fee of 10-15% of the face value of the tickets.

But it has since said it will lower the charge due to "exceptional demand" from Oasis fans - taking ownership of an issue in a way fans will hope others follow.

Richard Davies, Twickets founder, told the Money blog: "Due to the exceptional demand for the Oasis tour in 2025, Twickets have taken the decision to lower our booking fee to 10% and a 1% transactional fee (to cover bank charges) for all buyers of their tickets on our platform. In addition we have introduced a fee cap of £25 per ticket for these shows. Sellers of tickets already sell free of any Twickets charge.

"This ensures that Twickets remains hugely competitive against the secondary market, including sites such as Viagogo, Gigsberg and StubHub.

"Not only do these platforms inflate ticket prices way beyond their original face value but they also charge excessive booking fees, usually in the region of 30-40%. Twickets by comparison charges an average fee of around 12.5%"

The fee cap, which the Money blog understands is being implemented today, will apply to anyone who has already bought resale tickets through the site.

Mr Davies said Twickets was a "fan first" resale site and a "safe and affordable place" for people to trade unwanted tickets.

"The face value of a ticket is the total amount it was first purchased for, including any booking fee. Twickets does not set the face value price, that is determined by the event and the original ticketing company. The price listed on our platform is set by the seller, however no one is permitted to sell above the face-value on Twickets, and every ticket is checked before listing that it complies with this policy," he said.

Meanwhile, hundreds of people have complained to the regulator about how Oasis tickets were advertised ahead of going on sale.

The Advertising Standards Authority said it had received 450 complaints about Ticketmaster adverts for the gigs.

Some expressed their anger on social media , as tickets worth £148 were being sold for £355 on the site within hours of release, due to the "dynamic pricing" systems.

A spokesperson from ASA said the complainants argue that the adverts made "misleading claims about availability and pricing".

They added: "We're carefully assessing these complaints and, as such, can't comment any further at this time.

"To emphasise, we are not currently investigating these ads."

Ticketmaster said it does not set prices and its website says this is down to the "event organiser" who "has priced these tickets according to their market value".

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COMMENTS

14 Pros and Cons of a Business Plan
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 ...
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Political unrest, strikes and natural calamities are other such factors. But if you confine this exercise to internal factors alone, the disadvantages of planning still add up quickly. Management ...
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Good management requires setting specific objectives and then tracking and following up. As your business grows, you want to organize, plan, and communicate your business priorities better to your ...
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Plans that show sales forecast, operating margin and revenues that are poorly reasoned, internally inconsistent or simply unrealistic significantly damage the credibility of the entire business plan. In opposite, sober, well-supported financial assumptions and projections communicate operational maturity and credibility.
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Potential limitations or challenges of creating and implementing a business plan include changing market conditions, unforeseen obstacles, inaccurate assumptions, lack of flexibility, and the need for regular updates and revisions. Previous. Next. BUSINESS STUDIES. Notes.
What is a Business Plan? Definition, Pros & Cons & Anatomy
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 ...
11 Common Business Plan Mistakes to Avoid in 2024
When your plan is done, your company is done. Do a lean plan and keep it fresh. 3. Losing focus on cash. Most people think in terms of profits instead of cash. When you imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be.
5 Types of Constraints That May Affect a Business Plan
A business plan needs to be realistic so it is important to set out in detail the constraints that are likely to act as limitations to business activity. Business plans , according to Investopedia, are important documents used to attract investment before a company has established a proven track record.
How to Identify Strengths & Weaknesses in a Business Plan
If a business plan focuses only on the Fourth P of the Four Ps—the marketing mix—it will be weak. The plan mustn't confine marketing to social media campaigns, advertising, public relations ...
11 Important Business Plan Benefits & Purposes
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 ...
3.10: Pros and Cons of Planning
Achieving business goals starts with planning. Planning is the process of setting goals and defining the actions required to achieve the goals. Planning begins with goals. Goals are derived from the vision and mission statements, but these statements describe what the organization wants to achieve, not necessarily what it can achieve.
Disadvantages Of A Business Plan
However, business planning is not a panacea and can occasionally result in the emergence of new problems such as: #1. False Confidence. Creating a detailed plan for business operations has the potential to instill an unwarranted sense of security.
12 Key Elements of a Business Plan (Top Components Explained)
Here are some of the components of an effective business plan. 1. Executive Summary. One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.
14 Critical Reasons Why You Need a Business Plan
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 ...
Business plan
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, ... privacy concerns, and the protection of one's trade secrets may severely limit the audience to which one might show the business plan. Alternatively, they may require each party to receive the business plan to sign a ...
Pros and Cons of Planning
Having a good plan can lead managers to believe they know where the organization is going and how it will get there. This may cause them to fail to monitor the progress of the plan or to detect changes in the environment. As we discussed earlier, planning is not a one-time process. Plans must be continually adjusted as they are implemented.
Business Model vs Business Plan What's the Difference?
1. Focus. Your business model focuses on optimizing the internal and external company operations to earn maximum profits. It explains your relationship with dealers, distributors, service partners, customers, and target audience. Conversely, your business plan focuses on how you set business goals, create strategies, make predictions, and ...
Business Planning: Introduction, Importance and Limitations ...
Limitations of Planning. While business planning is important and a requisite for every organization, it does have some limitations. Let us take a look at some limitations of business planning. 1] Rigidity. Once the planning function is complete and the action plan is set, then the manager tends to only follow the plan.
What are the Limitations of Planning? 12 Limitations
Technological Changes. Tags: Limitations of Planning. Save my name, email, and website in this browser for the next time I comment. 12 Limitations of Planning: 1. Inflexibility 2. Limitation of Forecasts 3. Unsuitability 4. Time-Consuming 5. Costly 6.
The benefits and limitations of business plans
The benefits and limitations of business plans. 1. Business plans provide a clear roadmap for achieving business goals and objectives. 2. They help to identify potential risks and challenges that may arise in the business. 3. Business plans can be used to secure funding from investors or financial institutions. 4.
Limitations of Business Plan
There are some limitations to the business plan. This is why those plans can't be successful. These limitations or pitfalls are as follows: Lack of realistic goals: Some entrepreneurs set such goals that are not attainable; A problem in determining time-period; if the plan is too rigid some problems may arise, it must be flexible to adapt to ...
Why A Thoughtful Business Plan Is Essential For Success
4. Secures Funding. If you need financial support to start or grow your business, a well-prepared business plan is essential. Investors and lenders want to see a clear plan for how you will ...
7 Major Limitations to Effective Planning
ADVERTISEMENTS: Seven Limitations to Effective Planning are: 1. Planning is costly, 2. Planning is a time consuming process, 3. Planning reduces initiative of employees, 4. Reluctance to change, 5. Capital invested in fixed assets limits planning, 6. Inaccuracy in planning, 7. Planning is effected by external limitations!
How Long Should Your Business Plan Be? It Depends
The right length for a business plan competition. Venture contests often limit a plan to 30 pages, sometimes 40, rarely 50 - and that includes detailed financials in the appendices. Unfortunately the page limitation leads some contestants to very bad choices, as they cram content into dense typefaces and thick texts, making their plans worse ...
Karnataka launches online building plan approval process in BBMP limits
Karnataka Deputy Chief Minister D K Shivakumar on Monday announced the launch of the revolutionary online building plan approval process for construction of buildings in sites up to 4000 square feet in city civic body Bruhat Bengaluru Mahanagara Palike (BBMP) limits.
Money blog: Major bank to let first-time buyers borrow up to 5.5 times
The Big Issue operates as a business and vendors buy their magazines for £2 and sell them for £4, making £2 a copy. ... host Liz Bates heard from one of the plan's critics, Labour backbencher ...