advantages of not having a business plan

Home » Pros and Cons » 14 Pros and Cons of a Business Plan

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.

25 Best Ways to Overcome the Fear of Failure
30 Best Student Action Plan Examples
100 Most Profitable Food Business Ideas
10 Amazon Pricing Strategies with Examples

The Consequences of Not Having a Business Plan

advantages of not having a business plan

brian.zabala
November 28, 2022
Business plans

Failing to have a business plan could lead to huge consequences for your business. Read this blog to find out the disadvantages of not having a business plan.

What Is a Business Plan?

A business plan is the big-picture idea for your business. It’s usually recorded on an official document and covers your business goals and how you plan to reach them. There’s a wide range of types of business plans, some of which include:

Opportunity
Municipality or Non-Profit

While these business plans tackle different objectives, there are two elements that should exist in all of them: goals and strategy. Every business plan should have goals and overarching strategies that can help you reach them.

While business plans are most helpful for start-up businesses, they’re a valuable tool for every business owner interested in organizing their objectives.

There are some serious consequences to not having a business plan. Some of them include:

A Lack of Direction

A business plan ensures that everyone is on the same page and working towards a common, well-established goal. Without a detailed business plan, your business could become lacking in direction, wasting time and money on things that don’t matter as much to the success and longevity of your business. Goals can exist without a business plan, sure, but they’re probably not clearly quantified. A business plan helps you create specific, actionable goals that help you succeed.

A business plan will also encourage you to form a strategic plan for how to reach your goals. Strategy is as important as the goals themselves—and that’s why many businesses fail to execute. For example, you may have a goal to reach $5,000,000 in sales, but how exactly do you plan on reaching that? Many businesses set specific goals but never reach them due to poor planning. A business plan avoids this issue by establishing goals and a plan for implementing the strategies you need to reach them.

Missed Growth Opportunities

Another consequence of not having a business plan includes missed opportunities for growth. An effective business plan will identify the opportunities your business can use to succeed. This gives you an idea of what a successful trajectory looks like for your business and how you can get there. Failing to plan ahead means that every business process will have to be handled in the moment. This can lead to poor decision making (and an enormous amount of stress), and it also means that energy is focused on putting out fires instead of pursuing novel business ideas.

In today’s business environment, it can often feel like you need to innovate or fail. Businesses need to be constantly looking for new opportunities to survive. A business plan could give you the time to make sure that your business is conducting marketing analysis and identifying growth opportunities you can take advantage of.

Wasted Resources

Business plans are designed to maximize your organizational efficiency. Not planning ahead of time will lead to your business making inefficient budgeting, inventory, and operational decisions. This leads to:

Inaccurate Budgets and Financial Projections
Disrupted Project Timelines
Inventory Strain
Operational Disruptions

The above failures could compromise your business’s overall financial security and turn away potential investors. Failing to secure investments could seriously compromise your business’s stability, especially if you’re dependent on maintaining consistent working capital.

Unclear Organizational Structure

A business plan also defines clear roles for staff. Organizational hierarchy is key to making sure that your business has an effective line of communication and a level of accountability that keeps everyone honest. Without a business plan in place, there can be confusion and important tasks that fall through the cracks.

Having clear structures in place also makes it easier for employees to get answers to critical questions. Have you ever worked in a business where you weren’t sure who to contact when you had work-stopping issues? If so, you know that these kinds of problems can lead to colossal wastes of time and efficiency. The average employee takes 23 minutes to recover from an interruption to their work . A business plan could keep these interruptions from happening.

Don’t Know Where To Start With a Business Plan?

Learn more about business plan options today.

Failing to Prepare is Preparing to Fail: A Case Study

To illustrate the consequences of not having a business plan, let’s examine what happened when a real-world business failed to prepare.

Borders is a name you may remember. Established in 1971, it was a national bookstore chain that found high levels of success for decades. Borders got comfortable coasting on their tried-and-true business model and weren’t innovating when new technologies began to change the retail landscape in the 2000s. Borders was forced to make a fast decision—or shut down.

They thought the answer to their struggling business was more volume. They tried opening up more stores across the country, thinking that they weren’t targeting the right locations. Unfortunately, this ended up being the wrong decision. They declared bankruptcy in 2011, being forced to close 399 stores and lay off 10,700 employees. Borders could have avoided this by planning ahead. Instead of being prepared for changes to the business environment, they were addressing issues as they came, and they ended up paying the consequences.

Partner With GreenGate for the Plan Your Business Needs

Still not sure where to start with creating your next business plan? GreenGate can help! We’ve helped found over 400 businesses in the United States, and we want you to be our next success. Contact us today to take your business to the next level.

Welcome to Greengate Consulting, it’s great to see you here.

Atlanta, USA

[email protected]
404-602-0012

Brighton, UK

Madrid, spain.

2021 • All rights reserved • Greengate Trading

Advantages and Disadvantages of Business Plan

Every business starts with a business plan because starting a business without a plan is like going on a chilled winter night without warm clothes and since starting a business involves money and where there is money one cannot take chances of going ahead without a plan. In order to understand it better let’s look at some of the advantages and disadvantages of business plan –

Advantages of Business Plan

The first and foremost advantage of business plans is that once the company has business plan ready then only it can take it forward and present it to prospective investors who in turn if they like the plan will finance the business plan and we all know how important capital is for starting a business because without capital no business can start.
Another benefit of business plans is that it helps the promoter in getting things right because if plans are in mind only then it can lead to confusion as mind has dozen of ideas but once the plan in mind is put into paper in the form of business plan than it gets more clarity and the owner can concentrate on one plan only rather than thinking about dozen of plans.
Another advantage of the business plans is that it helps in prioritizing the work and also putting the right people for right job which in turn increases the possibility of the business plan being a success as the owner can keep track of milestones of business as envisaged in the business plan.

Disadvantages of Business Plan

The biggest disadvantage of the business plans is that it involves time and expenses and as far as small businesses are concerned they neither have money and expertise to make a proper business plan which in turn can lead to business suffering more rather than gaining from the business plan.
Another drawback of it is that due to the presence of business plans the owners may lose flexibility and become rigid also they will keep sticking to the business plan even if it detrimental to the interests of the business. So for example, if business plan has envisaged 10000 units of production but due to change in consumer taste sales of only 5000 units can be done and if the owner sticks to the business plan then it will be a loss making the decision. Hence a good business plan is one which has the scope of flexibility in it.
Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other problems and it is next to impossible that plans are carried out in exact fashion as set out by the top management or the owner of the company.
Company Profiles and Job Related
Finance Abbreviations and Management
Finance Questions and Answers
Finance Words and Examples
Financial Markets
Financial Products and Marketing
Multiple Choice Questions and Offbeat

Lets Learn Finance

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.

Get more articles just like this straight into your mailbox.

The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

A market analysis : gathering information about factors and conditions that affect your industry
Competitive analysis : evaluating the strengths and weaknesses of your competitors
Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
Marketing: using your research to advertise your business
Logistics and operations plans : planning and executing the most efficient production process
Cash flow projection : being prepared for how much money is going into and out of your business
An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

Send invoices, estimates, and other docs:

via links or PDFs
automatically, via Wave

*While subscribed to Wave’s Pro Plan, get 2.9% + $0 (Visa, Mastercard, Discover) and 3.4% + $0 (Amex) per transaction for the first 10 transactions of each month of your subscription, then 2.9% + $0.60 (Visa, Mastercard, Discover) and 3.4% + $0.60 (Amex) per transaction. Discover processing is only available to US customers. See full terms and conditions for the US and Canada . See Wave’s Terms of Service for more information.

Send invoices, get paid, track expenses, pay your team, and balance your books with our financial management software.

2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

No market need : No one wants what you’re selling.
Lack of capital : Cash flow issues or businesses simply run out of money.
Inadequate team : This underscores the importance of hiring the right people to help you run your business.
Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

How to Start a Business: A Comprehensive Guide and Essential Steps
How to Do Market Research, Types, and Example
Marketing Strategy: What It Is, How It Works, How To Create One
Marketing in Business: Strategies and Types Explained
What Is a Marketing Plan? Types and How to Write One
Business Development: Definition, Strategies, Steps & Skills
Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
Small Business Development Center (SBDC): Meaning, Types, Impact
How to Write a Business Plan for a Loan
Business Startup Costs: It’s in the Details
Startup Capital Definition, Types, and Risks
Bootstrapping Definition, Strategies, and Pros/Cons
Crowdfunding: What It Is, How It Works, and Popular Websites
Starting a Business with No Money: How to Begin
A Comprehensive Guide to Establishing Business Credit
Equity Financing: What It Is, How It Works, Pros and Cons
Best Startup Business Loans
Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
Partnership: Definition, How It Works, Taxation, and Types
What is an LLC? Limited Liability Company Structure and Benefits Defined
Corporation: What It Is and How to Form One
Starting a Small Business: Your Complete How-to Guide
Starting an Online Business: A Step-by-Step Guide
How to Start Your Own Bookkeeping Business: Essential Tips
How to Start a Successful Dropshipping Business: A Comprehensive Guide

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

A business plan is a document describing a company's business activities and how it plans to achieve its goals.
Startup companies use business plans to get off the ground and attract outside investors.
For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

Terms of Service
Editorial Policy
Privacy Policy

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the World Bank's Entrepreneurship Survey and database shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several other statistics expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all.

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%) don't have a formal business plan in place.

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained.

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes.

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals.
Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest.

Now let's look at the various types involved in business planning.

Become a Business and Leadership Professional

Top 10 skills in demand Business Analysis As A Skill In 2020
14% Growth in Jobs Of Business Analysis Profile By 2028

Business Analyst

Industry-recognized certifications from IBM and Simplilearn
Masterclasses from IBM experts

Post Graduate Program in Business Analysis

Certificate from Simplilearn in collaboration with Purdue University
Become eligible to be part of the Purdue University Alumni Association

Here's what learners are saying regarding our programs:

Assistant Consultant at Tata Consultancy Services , Tata Consultancy Services

My experience with Simplilearn has been great till now. They have good materials to start with, and a wide range of courses. I have signed up for two courses with Simplilearn over the past 6 months, Data Scientist and Agile and Scrum. My experience with both is good. One unique feature I liked about Simplilearn is that they give pre-requisites that you should complete, before a live class, so that you go there fully prepared. Secondly, there support staff is superb. I believe there are two teams, to cater to the Indian and US time zones. Simplilearn gives you the most methodical and easy way to up-skill yourself. Also, when you compare the data analytics courses across the market that offer web-based tutorials, Simplilearn, scores over the rest in my opinion. Great job, Simplilearn!

I was keenly looking for a change in my domain from business consultancy to IT(Business Analytics). This Post Graduate Program in Business Analysis course helped me achieve the same. I am proficient in business analysis now and am looking for job profiles that suit my skill set.

Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.

Here’s an overview of a few fundamental types of business plans.

Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments.
Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them.

Here are the key elements of a good business plan:

Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.
Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time.
Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

Create a business plan to determine your company's direction, obtain financing, and attract investors.
Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success.

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

Our Business And Leadership Courses Duration And Fees

Business And Leadership Courses typically range from a few weeks to several months, with fees varying based on program and institution.

Program Name	Duration	Fees
Cohort Starts:	6 Months	€ 1,990
Cohort Starts:	5 Months	€ 4,500
Cohort Starts:	8 Months	€ 2,499
	11 Months	€ 1,299

Get Free Certifications with free video courses

Business and Leadership

Business Analysis Basics

Data Science & Business Analytics

Business Intelligence Fundamentals

Learn from Industry Experts with free Masterclasses

Discover How AI Will Help Good Managers Become Great

Career Information Session: Find Out How to Become a Business Analyst with IIT Roorkee

The Modern Day Business Analyst Role: AI Tools and Techniques for Success

Get Affiliated Certifications with Live Class programs

PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

Hot Summer Savings ☀️ 60% Off for 4 Months. BUY NOW & SAVE

60% Off for 4 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

Freelancers
Self-Employed Professionals
Businesses With Employees
Businesses With Contractors
Marketing & Agencies
Construction & Trades
IT & Technology
Business & Prof. Services
Accounting Partner Program
Collaborative Accounting™
Accountant Hub
Reports Library
FreshBooks vs QuickBooks
FreshBooks vs HoneyBook
FreshBooks vs Harvest
FreshBooks vs Wave
FreshBooks vs Xero
Free Invoice Generator
Invoice Templates
Accounting Templates
Business Name Generator
Estimate Templates
Help Center
Business Loan Calculator
Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

All Articles
Productivity
Project Management
Bookkeeping

Resources for Your Growing Business

The importance of business plan: 5 key reasons.

A key part of any business is its business plan. They can help define the goals of your business and help it reach success. A good business plan can also help you develop an adequate marketing strategy. There are a number of reasons all business owners need business plans, keep reading to learn more!

Here’s What We’ll Cover:

What Is a Business Plan?

5 reasons you need a well-written business plan, how do i make a business plan, key takeaways.

A business plan contains detailed information that can help determine its success. Some of this information can include the following:

Market analysis
Cash flow projection
Competitive analysis
Financial statements and financial projections
An operating plan

A solid business plan is a good way to attract potential investors. It can also help you display to business partners that you have a successful business growing. In a competitive landscape, a formal business plan is your key to success.

Check out all of the biggest reasons you need a good business plan below.

1. To Secure Funding

Whether you’re seeking funding from a venture capitalist or a bank, you’ll need a business plan. Business plans are the foundation of a business. They tell the parties that you’re seeking funding from whether or not you’re worth investing in. If you need any sort of outside financing, you’ll need a good business plan to secure it.

2. Set and Communicate Goals

A business plan gives you a tangible way of reviewing your business goals. Business plans revolve around the present and the future. When you establish your goals and put them in writing, you’re more likely to reach them. A strong business plan includes these goals, and allows you to communicate them to investors and employees alike.

3. Prove Viability in the Market

While many businesses are born from passion, not many will last without an effective business plan. While a business concept may seem sound, things may change once the specifics are written down. Often, people who attempt to start a business without a plan will fail. This is because they don’t take into account all of the planning and funds needed to get a business off of the ground.

Market research is a large part of the business planning process. It lets you review your potential customers, as well as the competition, in your field. By understanding both you can set price points for products or services. Sometimes, it may not make sense to start a business based on the existing competition. Other times, market research can guide you to effective marketing strategies that others lack. To have a successful business, it has to be viable. A business plan will help you determine that.

4. They Help Owners Avoid Failure

Far too often, small businesses fail. Many times, this is due to the lack of a strong business plan. There are many reasons that small businesses fail, most of which can be avoided by developing a business plan. Some of them are listed below, which can be avoided by having a business plan:

The market doesn’t need the business’s product or service
The business didn’t take into account the amount of capital needed
The market is oversaturated
The prices set by the business are too high, pushing potential customers away

Any good business plan includes information to help business owners avoid these issues.

5. Business Plans Reduce Risk

Related to the last reason, business plans help reduce risk. A well-thought-out business plan helps reduce risky decisions. They help business owners make informed decisions based on the research they conduct. Any business owner can tell you that the most important part of their job is making critical decisions. A business plan that factors in all possible situations helps make those decisions.

Luckily, there are plenty of tools available to help you create a business plan. A simple search can lead you to helpful tools, like a business plan template . These are helpful, as they let you fill in the information as you go. Many of them provide basic instructions on how to create the business plan, as well.

If you plan on starting a business, you’ll need a business plan. They’re good for a vast number of things. Business plans help owners make informed decisions, as well as set goals and secure funding. Don’t put off putting together your business plan!

If you’re in the planning stages of your business, be sure to check out our resource hub . We have plenty of valuable resources and articles for you when you’re just getting started. Check it out today!

Comp Time Vs Overtime: What's the Difference?

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

Limited Time Offer:

Save Up to 25% on LivePlan today

0 results have been found for “”

Return to blog home

15 Reasons Why You Need a Business Plan in 2024

Posted january 21, 2022 by noah parsons.

As a small business owner or aspiring entrepreneur, a business plan can seem more like a hurdle you have to overcome than a useful tool. It’s a barrier that’s keeping you from moving forward with your business. Maybe the bank won’t review your loan application without a business plan or a potential investor has asked to see your business plan before they will meet with you.

But, writing a business plan doesn’t have to feel like a homework assignment. Instead, think of writing a business plan as an investment in your business. It’s a tool to figure out a strong and financially viable strategy for growth. And, it’s even been scientifically proven that planning will increase your chances of success and help you grow faster.

Still not convinced? Read on for our definitive list of reasons why you should write a plan for your business.

What is the key purpose of a business plan?

Imagine you’re setting out on a journey. You know what your final destination is, but you haven’t figured out how to get there. While it might be fun to just start driving and figure things out as you go, your trip will most likely take longer than you anticipated and cost you more. If you instead take a look at a map and chart the best way to get to your destination, you’ll arrive on time and on budget. Planning for your business isn’t that much different.

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you’re going to get there. It helps you set your direction and determine a winning strategy. A solid business plan will set your business up for success and help you build an unbeatable company.

If you start off without a plan, you may go down some interesting detours, but you’re unlikely to grow quickly or stick to your budget.

Why do you need to write a business plan?

Establishing a strategic roadmap for your business is the primary benefit of writing a business plan. But what does that really look like for you and your business? Here are our top 15 reasons why you should write a business plan.

1. Reduce your risk

Writing a business plan takes some of the risk out of starting a business. It ensures that you’re thinking through every facet of your business to determine if it can truly be viable.

Does your solution fit the market? Are your startup or operational costs manageable? Will your proposed business model actually generate sales? What sort of milestones would you need to hit to achieve profitability? These are all questions associated with business risk that you can answer with your plan.

For those already running a business, writing a plan can help you better manage ongoing risk. Should you bring on a new employee? What does cash flow look like for your next month, quarter, or even year? Are you on track to meet your milestones or do you need to change your focus? Keep your plan up to date, review it regularly and you can easily answer these questions and mitigate risk.

2. Uncover your business’s potential

Writing a business plan helps you think about the customers you are serving and what their needs are. Exploring those customer needs will help you uncover new opportunities for your business to serve them and potentially expose new products and services that you could offer. When you use your business plan to manage your business, you’ll be able to see the parts of your strategy that are working and those that aren’t. For example, you may have invested in new marketing efforts to sell one of your products, but that strategy just isn’t working out. With a business plan in hand, you’ll be able to see what’s going to plan and where you need to make adjustments to your strategy, pivoting to new opportunities that will drive profitability.

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

3. Test a new business idea

When you have a new business idea, it really helps to spend a little time thinking through all the details. A business plan will help you think about your target market, your budget, how much money you’ll need to launch, and how your idea will actually work before you spend any real money. A business plan will also help you easily share your idea with other people to get input and feedback before you get started.

We recommend using a one-page business plan to test ideas quickly and easily.

4. Attract investors and get funding to start and grow your business

Sharing your business idea with investors requires a business plan. Now, you probably won’t share a long, detailed business plan to get investors interested, but you probably will share your executive summary — which is an overview of your business plan. Investors may never actually ask for your full business plan, but they will certainly ask you questions that you’ll only be able to answer if you’ve taken the time to write a plan.

At the very least, they’ll want to see your financial forecasts , so you should be prepared for this. If you end up pitching your business to investors, whether in-person or remotely , having a business plan written makes it much easier to translate the right information into a pitch deck. In short, you’ll have all of the right information ready and available to show why your business is worth investing in.

5. Plan for different scenarios

Even if you have a plan in place, things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive on the scene. Having a plan allows you to experiment with different scenarios to see how changes to your business will impact your forecasts, budgets, profitability, and cash flow.

6. Research shows that business plans definitely work

A Journal of Management Studies study found that businesses that take the time to plan grow 30% faster than those that don’t. Our own 2021 small business research study found that 58% of small business owners that have or are working on a plan feel confident in their business, even amidst a crisis. And a study in Small Business Economics found that entrepreneurs that write business plans for their ideas are 152% more likely to actually start their businesses. There’s plenty of additional research that links planning with success, so it’s a proven fact that you won’t be wasting your time when you write your plan.

7. Build a better budget and a financial forecast

A core component of any business plan is a financial forecast. When you take the time to plan, you’ll have to think through your expense budget, your sales goals, and the cash that it’s going to take to keep your doors open, purchase inventory, and more.

The beauty of incorporating forecasts into your business plan is that you don’t need to have the exact numbers to start. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business. As you operate and collect financial data you can then begin to update your forecasts to generate a more accurate view of how your business will operate.

8. Determine your financial needs

Without a business plan, it’s impossible to really know how much money it’s going to take to start and run your business. You don’t just need money for your initial purchases. You need to have enough cash in the bank to keep your business afloat while you get fully up and running. A plan will help you determine exactly how much money you’ll need and help you keep track of your cash flow and runway .

9. Attract employees

Especially if you’re a young startup company, attracting employees can be hard. Without a proven track record, why should someone take a risk to work for you? Having a business plan can help solve that problem. Your plan can help a prospective employee understand your business strategy and plans for growth so that they can feel confident joining your team. It’s also incredibly useful in determining when and if it’s feasible for you to bring on more employees .

10. Get your team all on the same page

A great strategy for your business can only be successful if your team understands it. By documenting your strategy with a business plan, you can easily get everyone on the same page, working towards the same goals. It’s even better if you regularly review your plan with members of your team. This ensures that everyone is consistently going back to the core strategy documentation, analyzing it, and exploring how it impacts individual and team goals .

11. Manage your business better

A business plan is all about setting goals for your company — both financial goals and milestones you hope to accomplish. When you use your plan to regularly check in on your business to see how you’re doing and what your progress is, you’re managing your business. Regular review , ideally monthly, will help you build a strong, resilient business.

12. Understand your market and build a marketing plan

No matter how good your idea is, you have to figure out who your ideal customers are and how you’re going to get the word out to them. That’s where a marketing plan comes in. It can be an indispensable tool for figuring out how you get your first customers as well as your thousandth customer.

13. It’s easier than you think

You may be procrastinating in writing a business plan because it sounds like a lot of work. The truth is that planning is much less complicated than you think. Start small with a one-page business plan that you complete in half an hour . From there, refine your plan until your idea is solid. At that point, you can invest a little more time in a more detailed business plan. Just start with the basics and expand from there.

14. You’ll sleep better at night

When you have a plan for your business, you have peace of mind. You know that you’ve invested the time to figure out a business model that actually works and you’ve considered different financial scenarios so you can handle the unexpected. And, you’ve got a management tool to run your business better than your competitors.

15. Effectively navigate a crisis

Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up. But, you can be prepared to face each crisis head-on by leveraging your business plan.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and begin to explore what it will take to recover. With a little planning, you can even prepare your business for future downturns with this same process. It’ll make crisis planning easier and ideally recession-proof your business by having the right plan and processes in place.

Don’t wait, start writing your business plan today

There are plenty of reasons to write a business plan, but the real reason is about finding success for you and your business. Taking the time to plan is an investment in yourself and your business that will pay dividends, whether you’re starting a new business or taking your existing business to the next level.

You can jump-start your business plan writing process with our article covering how to write a business plan in as little as 30-minutes .

If you’re looking for a tool to help you get more from your business plan, we recommend trying out LivePlan . Our business planning and management tool will guide you through the entire process, including all of your financial forecasts, without ever requiring that you open a spreadsheet.

Like this post? Share with a friend!

Noah Parsons

Posted in business plan writing, join over 1 million entrepreneurs who found success with liveplan, like this content sign up to receive more.

Subscribe for tips and guidance to help you grow a better, smarter business.

You're all set!

Exciting business insights and growth strategies will be coming your way each month.

We care about your privacy. See our privacy policy .

Please turn on JavaScript in your browser

It appears your web browser is not using JavaScript. Without it, some pages won't work properly. Please adjust the settings in your browser to make sure JavaScript is turned on.

Nine reasons why you need a business plan

Building a great business plan helps you plan, strategize and succeed. Presented by Chase for Business .

Making the decision to create a new business is an exciting yet stressful experience. Starting a business involves many tasks and obstacles, so it’s important to focus before you take action. A solid business plan can provide direction, help you attract investors and ensure you maintain momentum.

No matter what industry you plan on going into, a business plan is the first step for any successful enterprise. Building your business plan helps you figure out where you want your business to go and identify the necessary steps to get you there. This is a key document for your company to both guide your actions and track your progress.

What is the purpose of a business plan?

Think of a business plan like a roadmap. It enables you to solve problems and make key business decisions, such as marketing and competitive analysis, customer and market analysis and logistics and operations plans.

It can also help you organize your thoughts and goals, as well as give you a better idea of how your company will work. Good planning is often the difference between success and failure.

Here are nine reasons your company needs a business plan.

1. Prove your idea is viable

Through the process of writing a business plan, you can assess whether your company will be successful. Understanding market dynamics, as well as competitors, will help determine if your idea is viable.

This is also the time to develop financial projections for your business plan, like estimated startup costs, a profit and loss forecast, a break-even analysis and a cash flow statement . By taking time to investigate the viability of your idea, you can build goals and strategies to support your path to success.

A proper business plan proves to all interested parties—including potential investors, customers, employees, partners and most importantly yourself — that you are serious about your business.

2. Set important goals

As a business owner, the bulk of your time will mostly likely be spent managing day-to-day tasks. As a result, it might be hard to find time after you launch your business to set goals and milestones. Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals.

3. Reduce potential risks

Prevent your business from falling victim to unexpected dangers by researching before you break ground. A business plan opens your eyes to potential risks that your business could face. Don’t be afraid to ask yourself the hard questions that may need research and analysis to answer. This is also good practice in how your business would actually manage issues when they arise. Incorporate a contingency plan that identifies risks and how you would respond to them effectively.

The most common reasons businesses fail include:

Lack of capital
Lack of market impact or need
Unresearched pricing (too high or low)
Explosive growth that drains all your capital
Stiff competition

Lack of capital is the most prevalent reason why businesses fail. To best alleviate this problem, take time to determine how your business will generate revenue. Build a comprehensive model to help mitigate future risks and long-term pain points. This can be turned into a tool to manage growth and expansion.

4. Secure investments

Whether you’re planning to apply for an SBA loan , build a relationship with angel investors or seek venture capital funding, you need more than just an elevator pitch to get funding. All credible investors will want to review your business plan. Although investors will focus on the financial aspects of the plan, they will also want to see if you’ve spent time researching your industry, developed a viable product or service and created a strong marketing strategy.

While building your business plan, think about how much raised capital you need to get your idea off the ground. Determine exactly how much funding you’ll need and what you will use it for. This is essential for raising and employing capital.

5. Allot resources and plan purchases

You will have many investments to make at the launch of your business, such as product and services development, new technology, hiring, operations, sales and marketing. Resource planning is an important part of your business plan. It gives you an idea of how much you’ll need to spend on resources and it ensures your business will manage those resources effectively.

A business plan provides clarity about necessary assets and investment for each item. A good business plan can also determine when it is feasible to expand to a larger store or workspace.

In your plan, include research on new products and services, where you can buy reliable equipment and what technologies you may need. Allocate capital and plan how you’ll fund major purchases, such as with a Chase small business checking account or business credit card .

6. Build your team

From seasoned executives to skilled labor, a compelling business plan can help you attract top-tier talent, ideally inspiring management and employees long after hiring. Business plans include an overview of your executive team as well as the different roles you need filled immediately and further down the line.

Small businesses often employ specialized consultants, contractors and freelancers for individual tasks such as marketing, accounting and legal assistance. Sharing a business plan helps the larger team work collectively in the same direction.

This will also come into play when you begin working with any new partners. As a new business, a potential partner may ask to see your business plan. Building partnerships takes time and money, and with a solid business plan you have the opportunity to attract and work with the type of partners your new business needs.

7. Share your vision

When you start a business, it's easy to assume you'll be available to guide your team. A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or take action on your behalf. Share your business plan with employees to align your full staff toward a collective goal or objective for the company. Consider employee and stakeholder ownership as a compelling and motivating force.

8. Develop a marketing strategy

A marketing strategy details how you will reach your customers and build brand awareness. The clearer your brand positioning is to investors, customers, partners and employees, the more successful your business will be.

Important questions to consider as you build your marketing strategy include:

What industry segments are we pursuing?
What is the value proposition of the products or services we plan to offer?
Who are our customers?
How will we retain our customers and keep them engaged with our products or services and marketing?
What is our advertising budget?
What price will we charge?
What is the overall look and feel of our brand? What are our brand guidelines?
Will we need to hire marketing experts to help us create our brand?
Who are our competitors? What marketing strategies have worked (or not worked) for them?

With a thoughtful marketing strategy integrated into your business plan, your company goals are significantly more in reach.

9. Focus your energy

Your business plan determines which areas of your business to focus on while also avoiding possible distractions. It provides a roadmap for critical tradeoffs and resource allocation.

As a business owner, you will feel the urge to solve all of your internal and customers’ problems, but it is important to maintain focus. Keep your priorities at the top of your mind as you set off to build your company.

As a small business owner, writing a business plan should be one of your first priorities. Read our checklist for starting a business, and learn how to take your business from a plan to reality. When you’re ready to get started, talk with a Chase business banker to open a Chase business checking or savings account today.

For Informational/Educational Purposes Only: The views expressed in this article may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

What to read next

Manage your business how to help protect your business from check fraud.

Think writing checks is a safe way to pay vendors? Think again. Learn about five common scams and how to help prevent them.

START YOUR BUSINESS 10 tips before starting your new businesses

Thinking about starting a business? Check these 10 items off your list.

MANAGE YOUR BUSINESS Inventory management can help maintain cash flow

Inventory can eat up a lot of cash. Here are a few ways to manage inventory with cash flow in mind.

MANAGE YOUR BUSINESS Banking tips for cash businesses

Learn how to keep your cash business safe, secure and compliant.

Starting a Business
Growing a Business
Small Business Guide
Business News
Science & Technology
Money & Finance
For Subscribers
Write for Entrepreneur
Tips White Papers
Entrepreneur Store
United States
Asia Pacific
Middle East
South Africa

10 Business Plan Benefits You Might Be Forgetting If you think creating a business plan is not for you, think again. Here are ten ways your business plan can help you be a better entrepreneur.

By Tim Berry Edited by Dan Bova Sep 6, 2013

Opinions expressed by Entrepreneur contributors are their own.

Too many people don't bother to write a business plan because they think it's too hard or unnecessary unless you're looking for funding . That's a shame. These myths keep a lot of people from the benefits of planning.

If you're still skeptical, here are 10 benefits to business planning you shouldn't be overlooking:

You'll stay on strategy. It's hard to stick to strategy through the daily routine and interruptions. Use a business plan to summarize the main points of your strategy and as a reminder of what it both includes and rules out.
Business objectives will be clear. Use your plan to define and manage specific measurable objectives like web visitors, sales, margins or new product launches. Define success in objective terms.
Your educated guesses will be better. Use your plan to refine your educated guesses about things like potential market, sales, costs of sales, 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 like growth, management and financial health. Use your plan to set a foundation for these, then to revise 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 match a testing schedule or marketing to match a release, your business plan can be invaluable in keeping you organized and on track.
Milestones will keep you on track. Use a business plan to keep track of dates and deadlines in one place. This is valuable even for the one-person business and vital for teams.
You'll be better at delegating. The business plan is an ideal place to clarify who is responsible for what. Every important task should have one person in charge. Your plan keeps track.
Managing team members and tracking results will be easy. So many people acknowledge the need for regular team member reviews and just as many admit they hate the reviews. The plan is a great format for getting things in writing and following up on the difference between expectations and results with course corrections.
You can better plan and manage cash flow. No business can afford to mismanage cash. And simple profits are rarely the same as cash. A cash flow plan is a great way to tie together educated guesses on sales, costs, expenses, assets you need to buy and debts you have to pay.
Course corrections will keep your business from flopping. Having a business plan gives you a way to be proactive -- not reactive -- about business. Don't wait for things to happen. Plan them. Follow up by tracking the results and making course corrections. It's a myth that a business plan is supposed to predict the future. Instead, it sets expectations and establishes assumptions so you can manage the future with course corrections.

You don't need a big formal business plan to reap these benefits. Instead, think of your business plan as a collection of lists, bullet points and tables. Think of it as something that lives on the computer, not on paper. It's just big enough to do its job.

Entrepreneur, Business Planner and Angel Investor

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Most Popular Red Arrow

I left the corporate world to start a chicken coop business — here are 3 valuable lessons i learned along the way.

Board meetings were traded for barnyards as a thriving new venture hatched.

'Passing By Wide Margins': Elon Musk Celebrates His 'Guaranteed Win' of the Highest Pay Package in U.S. Corporate History

Musk's Tesla pay package is almost 140 times higher than the annual pay of other high-performing CEOs.

Joey Chestnut Is Going From Nathan's to Netflix for a Competition 15 Years in the Making

Chestnut was banned from this year's Nathan's Hot Dog Eating Contest due to a "rival" contract. Now, he'll compete in a Netflix special instead.

Are Your Business's Local Listings Accurate and Up-to-Date? Here Are the Consequences You Could Face If Not.

Why accurate local listings are crucial for business success — and how to avoid the pitfalls of outdated information.

Day Traders Often Ignore This One Topic At Their Peril

Boring things — like taxes — can sometimes be highly profitable.

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.

Successfully copied link

Advantages of a Business Plan: Definition and What It Entails

by Folakemi Adegbaju
August 15, 2023
No comments
6 minute read

advantages of a Business Plan disadvantages writing

Table of Contents Hide

#1. planning further develops asset use, #2. plans give inspiration and responsibility, #3. to position your brand, #4. planning gives a manual for activity, #5. to assess the feasibility of your business, #6. to force you to research and really know your market, #7. provides structure, #8. support for funding, #9. increased clarity, #10. helps to secure talent, #1. a business plan can hamper you from looking forward, #2. analyzing performance can become time-consuming, #4. constant change makes a business plan outdated as soon as it’s written, #5. it prevents the freedom you once possessed., final thoughts, what are advantages of planning, what is the importance of a business plan, what is the disadvantages of a business plan.

A business plan is an important tool to guide you if you want to become a successful business owner. A great business starts with a good business plan. Basically, the better your business plan, the more successful your business will be. It also provides insight into the steps you should take. The success of your business depends on how effective your business plan is. But then you might be worried and confused, asking yourself questions like, “What are the advantages of writing a business plan?” What are the disadvantages of a business plan? Getting answers to these questions will help you develop your business and make it grow.

This is a guide to the advantages and disadvantages of a business plan and everything you need to know.

Let’s kick off.

What Are the Advantages of a Business Plan?

Every business begins with a business plan, since beginning a business without one is like going out on a chilly winter night without a coat. The following are the advantages of writing a business plan:

Assets are always scarce in organizations, and management must guarantee that they will be properly utilized. Planning aids administrators in determining where assets are most commonly required so that they can be assigned where they will provide the most benefit.

People are not motivated when they lack defined aims and have no notion of what is expected of them in general. Planning reduces susceptibility and demonstrates what everyone is expected to accomplish. Individuals feel compelled to pursue a goal that they are familiar with.

Defining your company’s position within the market is one of the advantages of writing a business plan. Such a definition enables you to explain the company and its brand to consumers, investors, and partners in a concise manner. You can best identify how to position your brand using the industry, consumer, and competitor knowledge you acquire during the business planning phase.

Plans can help organize everyone’s activities in order to achieve the desired outcomes. Activities that are composed of and centered around certain outcomes are usually more effective.

What is the significance of this option? The business plan procedure includes analyzing your target market as well as the competitive landscape, and it also serves as a feasibility analysis for your venture’s success. In some situations, your planning will put the business on hold. It could also be to move forward with a different project that has a better probability of succeeding.

What are some of the significant developments in your field? What are the most serious threats to your business? Is the market expanding or contracting? What is the size of your product/target service’s market? Creating a business plan will assist you in gaining a more comprehensive, in-depth, and nuanced grasp of your market. It will also enable you to use this information to make decisions that will help your business thrive.

A business plan gives your business a structure and defines your management goals. It becomes a go-to resource for keeping the business going with sales goals and operational milestones. It can help you measure and manage your primary areas of attention if you use it correctly and on a frequent basis.

You need a business plan that answers questions about profitability and income generation if you’re aiming for loans from a bank or capital from investors. One of the advantages of writing a business plan is getting funding easily and without stress.

A business plan helps you make decisions about important aspects of your business, including capital investments, leasing, and resourcing. A strong business plan helps you determine the most important business priorities and goals to concentrate on.

Attracting competent employees and partners is important to a company’s success. A business plan’s goal is to assist in attracting the right talent at the right moment. Employees want to know what the business vision is, how it plans to achieve its objectives, and how they may help in their individual jobs.

What Are the Disadvantages of a Business Plan?

In the current chaotic environment, planning more than a few months ahead of time may appear pointless. In most cases, progress is rarely achieved through random movement. Planning aids development in every situation, even when you are confronted with fragility and a constantly changing atmosphere. The biggest disadvantage of a business plan is that it takes time and money to create, and small firms often lack the resources and experience needed to create a solid business plan, which can cause the business to suffer more than benefit from it.

And we’ve got good news for you! We have a team here at BusinessYield Consult to provide you with the necessary information you’d need to start out.

Meanwhile, here are some disadvantages you need to consider in writing a business plan:

It means that you may be relying too much on your plan without taking into account other external elements such as market circumstances, trends, and so on. Such reliance can force you to make bad decisions and miss out on potentially lucrative possibilities simply because they weren’t part of the plan.

For example, if you want to start a car detailing business and you feel there might be a disruption or crisis, in the long run, a good business plan can help you fix any issues. However, you can also hire a consultant to come in and help if you feel a plan has run off the rails.

By focusing on the aims and objectives that you were unable to attain, a business plan can cause you to reflect on your past failures. Such a review of past performance may waste time and resources rather than focusing on how to move forward with confidence.

#3. No Guarantees Are Made

Even with the best research, best employees, and most comprehensive business plan on your side, failure is more likely than success. Many of those that start today will fail within five years, and many of them will have developed comprehensive business plans.

We all know how quickly the world changes, so it’s extremely probable that your business plan will become obsolete by the time you’re ready to begin. A strong project roadmap is an excellent alternative to a business plan. This is because a business plan contains many critical details, such as the mission statement, that are unlikely to change in either direction. Furthermore, a strategy can assist in laying out the most adaptive and actionable path forward.

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.

However, you need to speak to a professional like BusinessYield Consult to help out with any of the disadvantages of the business plan that you might be facing.

Writing a business plan has both advantages and disadvantages, and anyone writing a business plan should keep the above factors in mind.

Planning helps to reduce future uncertainty. Although the future cannot be predicted with 100% precision, planning aids management in anticipating and preparing for risks by incorporating required provisions to meet unexpected events.

A business plan helps you clarify and focus your business ideas and strategies as an entrepreneur. You focus not only on financial difficulties, but also on management, human resource planning, technology, and adding value to your customers.

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

BENEFITS OF A BUSINESS PLAN: Benefits and Drawbacks
BUSINESS ACTION PLAN: 7 Steps to Create an Action Plan For Your Business Strategy
HALAL MORTGAGES: All You Need to Know
Sole Trader Advantages and Disadvantages(Opens in a new browser tab)
Disadvantages Of A Business Plan

Folakemi Adegbaju

She is a passionate copywriter and a good listener

How Long Does It Take To Move A House UK: Timeline And Steps

Working abroad travel insurance: guide to get travel insurance.

We noticed you're visiting from Netherlands. We've updated our prices to Euro for your shopping convenience. Use Pound sterling instead. Dismiss

Your Internet Explorer version is not supported

Why am i seeing this message.

We support most browsers but yours is now more than 5 years old and we don't support it. We recommend using a faster and more secure browser .

How can I upgrade?

For a faster, more secure internet follow these quick upgrade steps .

I can't upgrade

Speak to your IT team about upgrading. A faster more secure internet experience could benefit your whole organisation.

If your organisation still requires Internet Explorer 8 or earlier to support certain applications you can still get the benefits of upgrading. Ask your IT team to consider managing their policy using chrome with legacy browser support .

Got a smartphone or tablet?

We support all major smartphones and tablets so you can get quotes and bind on the go, or whilst your IT team upgrades your browser.

Need help? 0800 640 6600

Mon - Fri 08:30 - 17:30 (local rate & mobile friendly)

What are the advantages and disadvantages of a business plan?

The hands of a businessman in front of a spiral notebook containing business plan ideas.

Almost every business starts with a business plan. These documents are used to map out the steps you want to take to get your business off the ground. However, do these strategy documents work for all businesses?

Whether you’re an entrepreneur or an investor, business plans are considered an essential part of starting a new business . For business owners and other stakeholders, it acts as a manual that can be used to chart a business’ success. Similarly, business plans can generate confidence, helping to convince potential lenders that investment is a risk worth taking.

However, business plans can also be expensive and time-consuming to create. Additionally, there is also no guarantee that a business will succeed just because a sound plan has been put in place.

To help you decide if a business plan would benefit your new venture, this guide runs through the main advantages and disadvantages.

The advantages of a business plan

Although a business plan takes time and money to create, it can help save both in the future if done properly. Below we take a look at some of the key advantages of creating a business plan:

1. It helps you forecast future steps The primary purpose of a business plan is to give you (and investors) an idea of whether your business has the potential to be successful. By mapping out your next steps and setting milestones, you can spot strengths and weaknesses in your ideas and set targets. This is helpful as it may prevent you from proceeding with a business idea that may end up costing you money.

On the other hand, these initial forecasts may provide the positive projections you need to actually get started and even attract outside investment. Even if your business plan produces an uncertain forecast, it still provides a small glimpse of the direction your business wants to head in and how it may perform on the way. This is valuable information, both for business owners and third-party stakeholders.

2. It is required if you want to apply for credit In order to secure a business loan from an official lender, a business plan is essential. Most banks will not even meet with you to discuss financing unless you have a business plan to present. This is because financial institutions like banks and credit unions need a way to accurately gauge their lending risks.

A well-thought-out business plan gives you the opportunity to show lenders how organised and prepared you are. It should explain how your business will use any capital you are lent and how you intend to make repayments. This level of detail can help to instil confidence in your business by persuading lenders you are a good risk.

3. It helps you to identify future cash flow issues A business plan should contain detailed cash flow forecasts and analysis. This shows potential lenders how money is expected to travel in and out of your business. It can also be useful for owners to determine if/when the business is expected to have cash flow problems under certain strategies. Having this information at hand can make it easier to financially plan, ensuring the business is always properly funded.

4. It helps you to allocate resources One of the biggest challenges for new business owners is resource management. From how much inventory you should buy to setting initial budgets, these decisions can be difficult. A business plan encourages you to create a workable budget and allocate resources before you start spending. This ensures you can afford everything you need and you don’t overspend before your business can start making money.

5. It helps you better understand your competition Creating a business plan requires a great deal of industry research. While you may think you have a strong handle on what you want your business to achieve, only by analysing your competition will you be able to see the full picture. A business plan can help you produce highly valuable insights into competitor demographics. This includes existing consumer trends and preferences, as well as costing insights. These findings are not always viable without conducting business plan competitor analysis.

6. It can help to secure talent In order for a business to be successful, attracting talented workers is crucial. A business plan can help to secure this talent by setting out a clear vision for the business. From management to skilled entry level staff, by showing individuals the direction and potential of the business, you can start to build a strong and coherent team.

The disadvantages of a business plan

Business plans can be time-consuming and expensive to produce. On top of this, there is also no guarantee that they will be accurate or help you to achieve the investment you are looking for. With this in mind, below we outline a number of disadvantages when it comes to creating a business plan:

1. It may not be accurate Putting together credible business plans is a highly skilled process. For this reason, many businesses seek the help of experienced business advisors when creating one. However, even with the help of a broad range of expert opinions, there is no guarantee that what is produced will be accurate. Industries and even wider business climates can change very quickly. This means that even taking the time and money to create an in-depth business plan can be risky.

2. It can make you become ‘tunnel-visioned’ In a world where nothing is 100% certain, treating your business plan as an uncompromising manual is a bad idea. The fact is, they are nothing more than a set of forecasts. If followed religiously, these strategy documents can ultimately do more harm than good. This is especially true if you become tunnel-visioned by your business plan and fail to adapt when market forces and changing economic environments demand it.

3. It can waste precious time and money Creating a business plan can take a lot of time and money to produce. It may require the help of third-party experts, such as business advisors, lawyers and accountants, all of which will charge for their services. Additionally, it can also take you and other employees away from the day-to-day tasks involved with launching a new business. This can lead to precious resources being wasted on a task whose cost may exceed its benefits.

The above points show that although business plans represent an essential component for most new businesses, comprehensive plans may not be 100% necessary in all circumstances. Luckily, if you are looking to put one together but are struggling to know where to start, the Markel Law Hub can help. We have a simple, easy-to-follow business plan template for you to download. To learn how you can access the Markel Law Hub, click here .

Insurance FAQs

Insurance guides

COVID-19 help and guidance

Cyber & IT security guides

Marketing tips

Risk tips and how to prevent claims

Productivity FAQs

Start up hub

Need some help?

0800 640 6600

Mon - Fri 08:30 - 17:30

Local rate and mobile friendly

Frequently asked questions

Business insurance from £5 a month

What is professional indemnity insurance?

What is public liability insurance?

How to handle late paying customers

How to keep clients' data safe and secure

Get Revising

Join get revising, already a member.

Advantages and disadvantages of business planning

Created by: 14kumari4079
Created on: 13-03-18 21:30

Business Studies
Business Planning

Report Thu 20th May, 2021 @ 14:55

These notes are very useful as they summarise all basic information. To my mind, business planning is important as it helps to predict almost all possible risks and results. I've used some of these grids along with https://assignmentbro.com/uk/mba-assignment-help while I've prepared for my exams. I'd like to get MBA degree so I study and read a lot of materials now.

Report Fri 5th August, 2022 @ 09:22

Hello everyone! Growing a business is not the easiest task. I would like to recommend you this wonderful company https://www.myvirtudesk.com/ . They provide virtual professionals at an affordable price. who help you grow your business. Use their invaluable skills to ensure tasks are completed while you free your schedule to focus on income-generating activities

Similar Business Studies resources:

Starting a business 0.0 / 5

Starting a business 5.0 / 5 based on 1 rating Teacher recommended

Business Unit 1 Question Worksheet 0.0 / 5

Business Studies 0.0 / 5

OCR Business Paper 1 4.0 / 5 based on 4 ratings

Unit 1.1 0.0 / 5

Business Studies -Starting a Business 0.0 / 5

Business Revision (year 10 October/November 2016) 0.0 / 5

Business Studies: Starting a Business 0.0 / 5

Starting A Business 0.0 / 5

Related discussions on The Student Room

Do you need double language degree to be a translator »
Sixth Form - A level Business with no GCSE »
4th a level with FM »
Questions relating to PG studies at Kingston University. »
GCSE revision »
Gcse edexcel business paper 2 - monday 12th june 2023 »
Adv higher Maths Physics, crash adv business OR adv maths physics and crash H busines »
Business Enterprise Component 3 »
Uncertainty about going to university »
How to get a A* in a level business »

START YOUR ECOMMERCE BUSINESS FOR JUST $1

Skip to primary navigation
Skip to main content

A magazine for young entrepreneurs

The best advice in entrepreneurship

Subscribe for exclusive access, how to write a business plan (tips, templates, examples).

Written by Jesse Sumrak | May 14, 2023

Comments -->

Get real-time frameworks, tools, and inspiration to start and build your business. Subscribe here

Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

Who your business is, what it does, and who it serves
Where your business is now
Where you want it to go
How you’re going to make it happen
What might stop you from taking your business from Point A to Point B
How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

Simply writing a business plan can boost your average annual growth by 30%
Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
A study looking at 65 fast-growth companies found that 71% had small business plans
The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

Detailed information about your customers
Numbers and solid math to back up your financial claims and estimates
Deep insights about your competitors and potential threats
Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

Button to visit the free training for starting a side hustle

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

Executive Summary
Business Overview
Products and Services
Market Analysis
Competitive Analysis
Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

What’s your business structure? Sole proprietorship, LLC, corporation, etc.
Where is it located?
Who owns the business? Does it have employees?
What problem does it solve, and how?
What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
Tesla: To accelerate the world’s transition to sustainable energy.
InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
TED : Spread ideas.
Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

What services you sell: Describe the services you provide and how these will help your target audience.
What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

Balance sheet: This includes your assets, liabilities, and equity.
Profit & Loss (P&L) statement: This details your income and expenses over a given period.
Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

What’s the Best Business Plan to Succeed as a Consultant?

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

SBA Wooden Grain Toy Company
SBA We Can Do It Consulting
OrcaSmart Business Plan Sample
Plum Business Plan Template
PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

Amazon FBA Fees: How to Calculate What FBA Will Cost You

The Complete Guide to Getting Clients for Your Consulting Business

What’s the Most Profitable Business to Start in 2024?

9 Best Businesses You Can Start with No Money

Is Selling On Amazon Worth it? Get Your Questions Answered

8 Businesses That Make Money Right Away (In 1-3 Months or Less)

How Much To Unapologetically Charge For Public Speaking

Write the Perfect Consulting Proposal: Tools, Examples, and a Template

How to Create an Online Course That Sells in 2024

I Used this Product Launch Checklist to Start 5 Ecom Brands

How to Get Sponsored: From 0 to $50,000 in 4 Weeks

How Shay Mitchell Is Disrupting a $17B Industry

MaryRuth Ghiyam: From $700K in Debt to $100M in Revenue

His Ecommerce Funnel Generated $70M Last Year

How Do You Launch a Product?

FREE TRAINING FROM LEGIT FOUNDERS

Actionable Strategies for Starting & Growing Any Business.

Don't Miss Out! Get Instant Access to foundr+ for Just $1!

1000+ lessons. customized learning. 30,000+ strong community..

The Advantages of Having a Business Plan: A Blueprint for Success

Success in the business world is not a matter of chance or luck; it is the result of careful planning, strategic thinking, and a clear vision. This is where a well-crafted business plan becomes essential, acting as a vital roadmap to success. Here follows a discussion about the advantages of having a business plan.

A business plan goes beyond a mere collection of numbers and projections; it is a comprehensive guide that outlines your goals, strategies, and tactics. It equips you with the confidence and purpose needed to navigate the ever-changing market landscape successfully. By thoroughly examining various aspects of your venture, from market analysis and target audience identification to financial projections and competitive analysis, you gain a competitive edge that propels you towards sustainable success.

One of the greatest advantages of having a business plan is the clarity it provides. Acting as a compass, it keeps you focused on your long-term objectives while enabling you to make well-informed decisions along the way. With a solid plan in place, you can anticipate challenges, adapt to market shifts, and seize opportunities that align with your vision.

Moreover, a well-crafted business plan instills confidence and credibility. It showcases your commitment, professionalism, and understanding of your business’s potential for growth. This, in turn, makes it easier to attract potential investors, partners, and lenders who are vital in providing the necessary resources and support to fuel your ambitions.

As you embark on your entrepreneurial journey, remember that a business plan is more than just a document. It is a powerful tool that empowers you to turn your dreams into tangible realities. Embrace the advantages of having a business plan and let it serve as your blueprint for success, guiding you towards a prosperous and fulfilling future in the dynamic world of business.

People Are Usually Motivated by Internal Drives and External Forces to Start a Business

Advantages of Having a Business Plan

Provides a roadmap.

A well-crafted business plan serves as a trusted roadmap on your entrepreneurial journey. It provides a clear and structured path to follow, guiding you towards your business goals with confidence and purpose.

By outlining your objectives, strategies, and action steps, a business plan ensures that you stay focused on your long-term vision. It acts as a compass, constantly reminding you of your destination and helping you make informed decisions along the way.

The roadmap provided by a business plan not only keeps you on track but also helps you anticipate potential obstacles and challenges. It enables you to identify potential risks and develop contingency plans to mitigate them. With a well-defined roadmap in place, you can adapt to unexpected changes and seize new opportunities that align with your business objectives.

Moreover, a business plan acts as a communication tool, aligning your team and stakeholders. It allows you to articulate your vision and objectives clearly, ensuring that everyone involved understands the direction of the business. This alignment fosters a sense of unity and empowers your team to work towards a common goal, driving productivity and collaboration.

Having a roadmap also enhances your credibility and attracts potential investors, partners, and lenders. It demonstrates your strategic thinking, professionalism, and commitment to success. With a well-thought-out plan, you can effectively communicate the market potential and growth opportunities to stakeholders, instilling confidence, and inspiring support.

Ultimately, a business plan provides a roadmap that not only guides your actions but also fuels your entrepreneurial spirit. It serves as a reminder of your purpose, inspiring you to overcome challenges and persevere in the pursuit of your goals. With a clear direction and a well-defined roadmap, you can confidently navigate the business landscape, bringing your vision to life and achieving the success you envision.

Attracts Investors and Secures Funding

A well-crafted business plan holds immense power in attracting investors and securing funding for your venture. It serves as a compelling tool that showcases the potential of your business, instilling confidence in potential stakeholders.

Investors are naturally drawn to businesses with a clear and comprehensive plan. A business plan demonstrates your understanding of the market, industry trends, and customer needs, establishing you as a knowledgeable and strategic entrepreneur.

When presenting your business plan to investors, highlight the unique value proposition of your product or service. Clearly articulate how your offering meets a significant market demand and differentiates itself from competitors. This level of clarity and conviction captivates investors, increasing the likelihood of securing their financial support.

Moreover, a business plan provides a thorough financial analysis, including revenue projections, expense forecasts, and return on investment potential. These financial insights not only help you gauge the profitability of your venture but also provide investors with a realistic outlook on their potential returns.

A well-structured business plan also addresses potential risks and mitigation strategies. By showcasing your ability to anticipate and navigate challenges, you instill a sense of confidence in investors that their investment is in capable hands.

Furthermore, a business plan serves as a roadmap to execute your growth strategies and achieve milestones. Demonstrating a clear vision for scaling your business and outlining the marketing, sales, and operational strategies to achieve it further enhances investor confidence.

Remember, investors are seeking entrepreneurs who are passionate, strategic, and driven. A well-crafted business plan showcases these qualities, convincing investors of your commitment to success. It demonstrates that you have thought through every aspect of your business and have a solid plan to capitalize on market opportunities.

Identifies Strengths and Weaknesses

A well-crafted business plan is a powerful tool for identifying the strengths and weaknesses of your venture. It provides a comprehensive assessment of your business, enabling you to capitalize on your strengths and address any areas of weakness.

By conducting a thorough analysis of your business, market, and competition, a business plan uncovers your unique selling points and competitive advantages. It highlights what sets you apart from competitors, allowing you to position your business strategically in the market.

Identifying your strengths allows you to leverage them effectively. You can focus on showcasing your expertise, unique offerings, or exceptional customer service to attract and retain customers. Understanding your strengths also helps you allocate resources efficiently, emphasizing the areas where you have a competitive edge.

Additionally, a business plan sheds light on potential weaknesses or challenges that may hinder your success. It prompts you to critically assess factors such as operational inefficiencies, lack of resources, or gaps in skills and expertise. Recognizing these weaknesses early on empowers you to devise strategies to mitigate or overcome them.

Moreover, by identifying weaknesses, you can proactively seek opportunities for improvement. Whether through additional training, hiring key personnel, or implementing process improvements, addressing weaknesses strengthens your business’s foundation and enhances its overall performance.

Furthermore, a business plan allows you to anticipate potential risks and develop contingency plans. By considering various scenarios and conducting risk assessments, you can prepare for unexpected challenges, safeguarding the continuity of your business.

By comprehensively assessing your strengths and weaknesses, a business plan provides a roadmap for growth and success. It enables you to build on your strengths, mitigate weaknesses, and position your business for long-term sustainability.

Embrace the power of a well-crafted business plan as a tool to identify your strengths and weaknesses and unlock the full potential of your venture.

Facilitates Decision-Making

A well-crafted business plan plays a pivotal role in facilitating effective decision-making. It provides a solid foundation of information and insights that empower you to make informed choices with confidence and clarity.

With a business plan in hand, you have a comprehensive overview of your business goals, strategies, and market analysis. This wealth of information allows you to evaluate potential decisions against your long-term vision and objectives.

When faced with critical choices, a business plan acts as a reliable reference point. It guides you in aligning your decisions with your overall business strategy, ensuring that every choice you make contributes to the advancement of your goals.

A business plan also helps you assess different scenarios and their potential outcomes. By analyzing market trends, competitor activities, and customer needs outlined in your plan, you can evaluate the potential risks and rewards associated with each decision.

Furthermore, a well-crafted business plan promotes a disciplined approach to decision-making. It prompts you to consider various factors, such as financial implications, resource allocation, and operational feasibility, enabling you to make sound choices based on evidence and analysis.

In addition, a business plan provides a framework for evaluating opportunities and weighing them against your strategic priorities. It helps you prioritize initiatives that align with your vision and have the greatest potential for success, ensuring efficient use of your resources.

By utilizing the information and structure provided by your business plan, you can make decisions confidently, knowing they are rooted in a well-thought-out strategy. This not only enhances your decision-making process but also inspires trust and confidence in stakeholders, including employees, investors, and partners.

Embrace the power of a well-crafted business plan as a facilitator of effective decision-making.

Promotes Accountability and Measurement

A well-crafted business plan promotes accountability and measurement, key elements for driving success and growth within your venture.

With a clear plan in place, you establish defined targets and milestones that serve as benchmarks for progress. These measurable objectives create a sense of accountability, both for yourself and your team, as you work towards achieving them.

A business plan enables you to monitor and track your performance against predetermined metrics. By regularly reviewing your progress, you can identify areas of improvement, celebrate successes, and make informed adjustments to your strategies when necessary.

Furthermore, a business plan facilitates a culture of accountability within your organization. By aligning your team with the goals and strategies outlined in the plan, everyone becomes accountable for their respective roles and responsibilities. This promotes a sense of ownership and ensures that everyone understands their contribution to the overall success of the business.

Measurement is a fundamental aspect of any successful business. A well-crafted plan includes key performance indicators (KPIs) that allow you to measure and evaluate your business’s performance. These KPIs may encompass financial metrics, customer satisfaction scores, sales targets, or operational efficiency indicators.

By regularly measuring your performance against these KPIs, you gain valuable insights into what is working well and areas that may require improvement. This data-driven approach enables you to make informed decisions to optimize your operations, enhance customer experiences, and drive profitability.

Promoting accountability and measurement through your business plan also facilitates a culture of continuous improvement. It encourages regular reflection and learning, ensuring that you adapt and evolve as market dynamics change. This iterative process allows you to stay ahead of the competition and capitalize on emerging opportunities.

Embrace the power of a well-crafted business plan as a driver of accountability and measurement.

In conclusion, the advantages of having a well-crafted business plan are undeniable. It serves as a powerful blueprint that guides you on your path to success, enabling you to navigate the complexities of the business world with confidence and purpose.

A business plan provides clarity, giving you a clear sense of direction and keeping you focused on your long-term objectives. It helps you anticipate challenges, adapt to market shifts, and seize opportunities that align with your vision.

Moreover, a business plan enhances your credibility and attracts potential investors, partners, and lenders. It showcases your professionalism, strategic thinking, and commitment to success, instilling confidence in those who have the resources and support you need to thrive.

A business plan also acts as a valuable tool for identifying strengths, weaknesses, and potential risks. By conducting a comprehensive assessment, you can leverage your advantages, address weaknesses, and proactively mitigate risks, ensuring a solid foundation for growth.

Furthermore, a business plan facilitates effective decision-making, providing you with the information and insights needed to make informed choices. It promotes accountability and measurement, ensuring that you stay on track and continually strive for improvement.

Embrace the advantages of having a business plan as you embark on your entrepreneurial journey. Let it serve as your guiding light, helping you overcome challenges, capitalize on opportunities, and transform your dreams into tangible realities.

Remember, success in business is not a matter of chance; it is a result of careful planning, strategic thinking, and a clear vision. With a well-crafted business plan as your blueprint for success, you are equipped to achieve remarkable things and create a thriving, prosperous future for your business.

The Top 5 Benefits of Having a Business Plan

Whether you’re starting a small business or exploring ways to expand an existing business, a Business Plan is an important tool to help guide your decisions. An effective Business Plan is a roadmap to success, providing clarity on all aspects of your business, from marketing and finance, through to operations, products, services, people and how you will be better than your competitors.

The purpose of a business plan is to help articulate a strategy for starting or changing your business. It defines how you will achieve your most important business objectives. A good Business Plan should help you to sleep at night if you are a business owner.

For existing businesses, a business plan should be updated annually as a way to guide growth and navigate expansion into new markets. Your plan should include explicit objectives for hiring new employees, what structure you will have, what products and services your business will provide, how you will promote them and how you will finance business operations.

If you are considering starting a business, a Business Plan can help you to check the viability of a business before investing too much time or money in it. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

The Benefits of Having a Business Plan:

1. Increased Clarity

A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on.

2. Creation of a Marketing Roadmap

Marketing is an important aspect of a business plan. It helps to define your target market(s), target customers and how you will promote and place your product / service to these markets / customers.

3. Support for Funding

Whether you’re seeking credit from a bank or capital from investors, a business plan that answers questions about profitability and revenue generation is often required.

4. Helps to Secure Talent

For a business to succeed, attracting talented workers and partners is vital. Part of a business plan’s purpose is to help bring in the right talent, at the right time. Staff want to understand the vision, how the business will achieve its goals, and how they can contribute to this in their own roles.

5. Provides Structure

A business plan provides structure and defines business management objectives. It becomes a reference tool to keep the business on track with sales targets and operational milestones. When used properly and consulted regularly, it can help measure and manage your priority areas of focus.

Download your Business Plan template for $49.99 + GST here.

Many people engage us as business coaches to take a weekly / fortnightly step-by-step approach to the development of their own Business Plans, with the added benefit of our expertise and guidance throughout the process. In this way, you learn the essential aspects of running a successful business, while crafting your very own business plan over 8-12 weeks.

If you would like more information about how to create an effective Business Plan for your business, with our guidance, then please don't hesitate to contact Business Agility. We are business coaches who are former CEOs and MDs. We know what it takes to be successful in business.

How to Write a Competitive Analysis for Your Business Plan

Charts and graphs being viewed through a magnifying glass. Represents conducting a competitive analysis to understand your competition.

11 min. read

Updated January 3, 2024

Do you know who your competitors are? If you do, have you taken the time to conduct a thorough competitor analysis?

Knowing your competitors, how they operate, and the necessary benchmarks you need to hit are crucial to positioning your business for success. Investors will also want to see an analysis of the competition in your business plan.

In this guide, we’ll explore the significance of competitive analysis and guide you through the essential steps to conduct and write your own.

You’ll learn how to identify and evaluate competitors to better understand the opportunities and threats to your business. And you’ll be given a four-step process to describe and visualize how your business fits within the competitive landscape.

What is a competitive analysis?

A competitive analysis is the process of gathering information about your competitors and using it to identify their strengths and weaknesses. This information can then be used to develop strategies to improve your own business and gain a competitive advantage.

How to conduct a competitive analysis

Before you start writing about the competition, you need to conduct your analysis. Here are the steps you need to take:

1. Identify your competitors

The first step in conducting a comprehensive competitive analysis is to identify your competitors.

Start by creating a list of both direct and indirect competitors within your industry or market segment. Direct competitors offer similar products or services, while indirect competitors solve the same problems your company does, but with different products or services.

Keep in mind that this list may change over time. It’s crucial to revisit it regularly to keep track of any new entrants or changes to your current competitors. For instance, a new competitor may enter the market, or an existing competitor may change their product offerings.

2. Analyze the market

Once you’ve identified your competitors, you need to study the overall market.

This includes the market size , growth rate, trends, and customer preferences. Be sure that you understand the key drivers of demand, demographic and psychographic profiles of your target audience , and any potential market gaps or opportunities.

Conducting a market analysis can require a significant amount of research and data collection. Luckily, if you’re writing a business plan you’ll follow this process to complete the market analysis section . So, doing this research has value for multiple parts of your plan.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

3. Create a competitive framework

You’ll need to establish criteria for comparing your business with competitors. You want the metrics and information you choose to provide answers to specific questions. (“Do we have the same customers?” “What features are offered?” “How many customers are being served?”)

Here are some common factors to consider including:

Market share
Product/service offerings or features
Distribution channels
Target markets
Marketing strategies
Customer service

4. Research your competitors

You can now begin gathering information about your competitors. Because you spent the time to explore the market and set up a comparison framework—your research will be far more focused and easier to complete.

There’s no perfect research process, so start by exploring sources such as competitor websites, social media, customer reviews, industry reports, press releases, and public financial statements. You may also want to conduct primary research by interviewing customers, suppliers, or industry experts.

You can check out our full guide on conducting market research for more specific steps.

5. Assess their strengths and weaknesses

Evaluate each competitor based on the criteria you’ve established in the competitive framework. Identify their key strengths (competitive advantages) and weaknesses (areas where they underperform).

6. Identify opportunities and threats

Based on the strengths and weaknesses of your competitors, identify opportunities (areas where you can outperform them) and threats (areas where they may outperform you) for your business.

You can check out our full guide to conducting a SWOT analysis for more specific questions that you should ask as part of each step.

How to write your competitive analysis

Once you’ve done your research, it’s time to present your findings in your business plan. Here are the steps you need to take:

1. Determine who your audience is

Who you are writing a business plan for (investors, partners, employees, etc.) may require you to format your competitive analysis differently.

For an internal business plan you’ll use with your team, the competition section should help them better understand the competition. You and your team will use it to look at comparative strengths and weaknesses to help you develop strategies to gain a competitive advantage.

For fundraising, your plan will be shared with potential investors or as part of a bank loan. In this case, you’re describing the competition to reassure your target reader. You are showing awareness and a firm understanding of the competition, and are positioned to take advantage of opportunities while avoiding the pitfalls.

2. Describe your competitive position

You need to know how your business stacks up, based on the values it offers to your chosen target market. To run this comparison, you’ll be using the same criteria from the competitive framework you completed earlier. You need to identify your competitive advantages and weaknesses, and any areas where you can improve.

The goal is positioning (setting your business up against the background of other offerings), and making that position clear to the target market. Here are a few questions to ask yourself in order to define your competitive position:

How are you going to take advantage of your distinctive differences, in your customers’ eyes?
What are you doing better?
How do you work toward strengths and away from weaknesses?
What do you want the world to think and say about you and how you compare to others?

3. Visualize your competitive position

There are a few different ways to present your competitive framework in your business plan. The first is a “positioning map” and the second is a “competitive matrix”. Depending on your needs, you can use one or both of these to communicate the information that you gathered during your competitive analysis:

Positioning map

The positioning map plots two product or business benefits across a horizontal and vertical axis. The furthest points of each represent opposite extremes (Hot and cold for example) that intersect in the middle. With this simple chart, you can drop your own business and the competition into the zone that best represents the combination of both factors.

I often refer to marketing expert Philip Kohler’s simple strategic positioning map of breakfast, shown here. You can easily draw your own map with any two factors of competition to see how a market stacks up.

Competitive positioning map comparing the price and speed of breakfast options. Price sits along the y-axis and speed along the x-axis.

It’s quite common to see the price on one axis and some important qualitative factor on the other, with the assumption that there should be a rough relationship between price and quality.

Competitive matrix

It’s pretty common for most business plans to also include a competitive matrix. It shows how different competitors stack up according to the factors identified in your competitive framework.

How do you stack up against the others? Here’s what a typical competitive matrix looks like:

Competitive matrix example where multiple business factors are being compared between your business and two competitors.

For the record, I’ve seen dozens of competitive matrices in plans and pitches. I’ve never seen a single one that didn’t show that this company does more of what the market wants than all others. So maybe that tells you something about credibility and how to increase it. Still, the ones I see are all in the context of seeking investment, so maybe that’s the nature of the game.

4. Explain your strategies for gaining a competitive edge

Your business plan should also explain the strategies your business will use to capitalize on the opportunities you’ve identified while mitigating any threats from competition. This may involve improving your product/service offerings, targeting underserved market segments, offering more attractive price points, focusing on better customer service, or developing innovative marketing strategies.

While you should cover these strategies in the competition section, this information should be expanded on further in other areas of your business plan.

For example, based on your competitive analysis you show that most competitors have the same feature set. As part of your strategy, you see a few obvious ways to better serve your target market with additional product features. This information should be referenced within your products and services section to back up your problem and solution statement.

Why competition is a good thing

Business owners often wish that they had no competition. They think that with no competition, the entire market for their product or service will be theirs. That is simply not the case—especially for new startups that have truly innovative products and services. Here’s why:

Competition validates your idea

You know you have a good idea when other people are coming up with similar products or services. Competition validates the market and the fact that there are most likely customers for your new product. This also means that the costs of marketing and educating your market go down (see my next point).

Competition helps educate your target market

Being first-to-market can be a huge advantage. It also means that you will have to spend way more than the next player to educate customers about your new widget, your new solution to a problem, and your new approach to services.

This is especially true for businesses that are extremely innovative. These first-to-market businesses will be facing customers that didn’t know that there was a solution to their problem . These potential customers might not even know that they have a problem that can be solved in a better way.

If you’re a first-to-market company, you will have an uphill battle to educate consumers—an often expensive and time-consuming process. The 2nd-to-market will enjoy all the benefits of an educated marketplace without the large marketing expense.

Competition pushes you

Businesses that have little or no competition become stagnant. Customers have few alternatives to choose from, so there is no incentive to innovate. Constant competition ensures that your marketplace continues to evolve and that your product offering continues to evolve with it.

Competition forces focus & differentiation

Without competition, it’s easy to lose focus on your core business and your core customers and start expanding into areas that don’t serve your best customers. Competition forces you and your business to figure out how to be different than your competition while focusing on your customers. In the long term, competition will help you build a better business.

What if there is no competition?

One mistake many new businesses make is thinking that just because nobody else is doing exactly what they’re doing, their business is a sure thing. If you’re struggling to find competitors, ask yourself these questions.

Is there a good reason why no one else is doing it?

The smart thing to do is ask yourself, “Why isn’t anyone else doing it?”

It’s possible that nobody’s selling cod-liver frozen yogurt in your area because there’s simply no market for it. Ask around, talk to people, and do your market research. If you determine that you’ve got customers out there, you’re in good shape.

But that still doesn’t mean there’s no competition.

How are customers getting their needs met?

There may not be another cod-liver frozen yogurt shop within 500 miles. But maybe an online distributor sells cod-liver oil to do-it-yourselfers who make their own fro-yo at home. Or maybe your potential customers are eating frozen salmon pops right now.

Are there any businesses that are indirect competitors?

Don’t think of competition as only other businesses that do exactly what you do. Think about what currently exists on the market that your product would displace.

It’s the difference between direct competition and indirect competition. When Henry Ford started successfully mass-producing automobiles in the U.S., he didn’t have other automakers to compete with. His competition was horse-and-buggy makers, bicycles, and railroads.

Do a competitive analysis, but don’t let it derail your planning

While it’s important that you know the competition, don’t get too caught up in the research.

If all you do is track your competition and do endless competitive analyses, you won’t be able to come up with original ideas. You will end up looking and acting just like your competition. Instead, make a habit of NOT visiting your competition’s website, NOT going into their store, and NOT calling their sales office.

Focus instead on how you can provide the best service possible and spend your time talking to your customers. Figure out how you can better serve the next person that walks in the door so that they become a lifetime customer, a reference, or a referral source.

If you focus too much on the competition, you will become a copycat. When that happens, it won’t matter to a customer if they walk into your store or the competition’s because you will both be the same.

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

Don't let competition derail planning

24 Min. Read

The 10 AI Prompts You Need to Write a Business Plan

6 Min. Read

How to Write Your Business Plan Cover Page + Template

3 Min. Read

What to Include in Your Business Plan Appendix

10 Min. Read

How to Write the Company Overview for a Business Plan

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

More From Forbes

The Key Benefits To A Comprehensive Business Plan

Share to Facebook
Share to Twitter
Share to Linkedin

Starting a new business is an exhilarating adventure filled with many possibilities with the thrill of turning a vision into reality. The excitement stems from the opportunity to innovate, create something unique, and make a meaningful impact in the world.

However, with this excitement comes the challenge of juggling numerous tasks. From developing a solid business plan and securing funding to building a brand and assembling a team, the initial phase of launching a business demands attention to detail and effective time management. Navigating these multifaceted responsibilities requires resilience and strategic planning, but the reward of seeing your entrepreneurial dream come to life makes every effort worthwhile.

One of the key elements to ensure your venture's success is a well-constructed business plan. Whether you're a seasoned entrepreneur or a budding startup, having a solid business plan is crucial for several reasons.

Let's explore why a good business plan is indispensable for your business.

1. provides a roadmap for success.

A business plan serves as a roadmap, guiding you through each phase of your business journey. It helps you outline your business goals, identify your target market, and define your unique selling proposition (USP). With a clear plan in place, you can make informed decisions and stay on track, ensuring your business moves in the right direction.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, 2. helps secure funding.

Your business plan can help to secure funding . Investors and lenders need to see a detailed plan that demonstrates your business's potential for success. A comprehensive business plan shows them that you've done your homework, understand your market, and have a clear strategy for growth. It gives them confidence that their investment will yield returns.

3. Clarifies Your Business Idea

Writing a business plan forces you to thoroughly analyze your business idea. It helps you identify potential challenges and opportunities, refine your business model, and ensure your idea is viable. This process of critical thinking and reflection is invaluable, as it can save you time and money in the long run by addressing issues before they become major problems.

4. Facilitates Strategic Planning

A business plan is not just about the present; it's also about the future. It allows you to set long-term goals and develop strategies to achieve them. By regularly reviewing and updating your business plan, you can adapt to changing market conditions, stay ahead of competitors, and seize new opportunities as they arise.

5. Improves Communication

Whether you're pitching to investors, recruiting new team members, or collaborating with partners, a business plan helps you clearly communicate your vision and goals. It ensures everyone involved understands the direction of the business and their role in achieving success. This alignment is crucial for building a cohesive and motivated team.

6. Aids in Risk Management

Every business must manage risk but a good business plan helps you anticipate and mitigate those risks. When potential risks are identified you can create contingency plans to minimize their impact on your business. This proactive approach to risk management can make the difference between thriving and merely surviving in a competitive market.

7. Tracks Progress and Measures Success

A business plan offers benchmarks so that you can measure your progress against your goals. By setting specific, measurable goals, you can track your performance, identify areas for improvement, and celebrate your achievements. This ongoing assessment is essential for maintaining momentum and driving continuous growth.

The bottom line is that in the dynamic world of business, a good business plan is your best ally. It not only lays the foundation for your venture but also guides you through the complexities of entrepreneurship. By following these tips you have a laid out plan to navigate the challenges and opportunities that come your way.

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 I also guide 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.

Editorial Standards
Reprints & Permissions

Join The Conversation

One Community. Many Voices. Create a free account to share your thoughts.

Forbes Community Guidelines

Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space.

In order to do so, please follow the posting rules in our site's Terms of Service. We've summarized some of those key rules below. Simply put, keep it civil.

Your post will be rejected if we notice that it seems to contain:

False or intentionally out-of-context or misleading information
Insults, profanity, incoherent, obscene or inflammatory language or threats of any kind
Attacks on the identity of other commenters or the article's author
Content that otherwise violates our site's terms.

User accounts will be blocked if we notice or believe that users are engaged in:

Continuous attempts to re-post comments that have been previously moderated/rejected
Racist, sexist, homophobic or other discriminatory comments
Attempts or tactics that put the site security at risk
Actions that otherwise violate our site's terms.

So, how can you be a power user?

Stay on topic and share your insights
Feel free to be clear and thoughtful to get your point across
‘Like’ or ‘Dislike’ to show your point of view.
Protect your community.
Use the report tool to alert us when someone breaks the rules.

Thanks for reading our community guidelines. Please read the full list of posting rules found in our site's Terms of Service.

Why Your Business Shouldn’t Be Your Only Retirement Plan

You can’t depend on selling your company for big bucks to fund your dream retirement. Instead, consider these three smart saving, investing and succession tips.

Newsletter sign up Newsletter

A small business owner looks over paperwork while sitting at a table in his restaurant.

For many business owners, their companies are more than just a way to support themselves during their working years — they’re also their retirement plans. After all, years spent pouring energy into an enterprise can yield a profitable business that, when sold, offers ample funds to support the owner through their golden years.

In reality, this strategy comes with risks. Consider Gary, an optometrist in Georgia. For more than two decades, Gary expanded his patient base and grew the practice’s profitability. Last year, he expected to sell his practice for approximately $3 million to $4 million and retire comfortably. Yet when it came time to sell, a corporate optometry chain opened a location in his town, and prospective buyers were no longer willing to pay what he thought the business was worth. Gary could get at most $2.5 million, leaving him with a significant gap in his retirement funds because he was too preoccupied with running his business to diversify his retirement planning strategy.

Business owners who haven’t planned adequately for their retirement may be overly dependent on the sale of their business to fund their next stage of life. But things outside of their control — changes in macroeconomic conditions or shifting consumer demands, for example — can force them to sell for a fraction of what they think the business is worth or even delay the sale (and their retirement) altogether.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Fortunately, there are ways to mitigate these risks and prepare for retirement responsibly. Here’s what business owners should know.

Three ways business owners can diversify their retirement plan

By diversifying investments and saving for retirement , business owners like Gary can seek to ensure that whatever the market is like, they can retire comfortably on their own terms. These three best practices are a good place to start.

1. Maximize your retirement savings (beyond 401(k)s).

Business owners often help their employees prepare for retirement while neglecting themselves in the process. Providing a 401(k) plan to employees, for example, is common practice, but business owners don’t always contribute to their own 401(k)s . Even if they did, it still may not be enough to adequately fund retirement at their preferred lifestyle due to annual limits on tax-deferred contributions to a 401(k).

To take full advantage of financial instruments geared toward retirement, business owners should consider implementing profit-sharing and/or cash balance plans in addition to their 401(k).

Cash balance plans, which incorporate elements of both defined benefit and defined contribution retirement plans, allow business owners to set aside a greater portion of tax-deferred income, enjoying tax deductions and contributions in excess of 401(k) limits. Under 2024 rules, for example, a 50-year-old business owner can contribute as much as $281,500, fully tax deductible, in a properly structured cash balance plan. Similarly, deferred profit-sharing plans enable owners to set aside profits for retirement with substantial tax benefits and flexibility.

2. Develop a strong investment portfolio.

Passionate about their companies, business owners often reinvest profits back into the business. Yet to truly help minimize risk and prepare for retirement, it’s helpful to have investments that are fully separate from the business and capable of leveraging long-term market growth potential.

Working with an investment adviser to craft a portfolio that aligns with your goals can help take pressure off the business now, should there be an emergency, and later when you’re planning to sell it and retire.

3. Build your own buyer.

For business owners worried about what the market will be like when it comes time to sell their business, there is another option: Build your own buyer through effective succession planning .

Nurturing a relationship with a potential buyer, whether that’s someone currently with the company or a trusted party outside of it, can mean that when it comes time to sell the business, the sale goes smoothly and for a fair price. That’s because a buyer like this likely understands the value of the company and has a relationship with the owner.

As an added benefit, careful succession planning can help the business thrive even after its original owner or founder is no longer at the helm. For business owners who have poured their blood, sweat and tears into their businesses, leaving their company in trusted hands can help them confidently begin retirement and the next stage of their lives.

Own your future retirement

Gary and other business owners should always be planning for the future of their business and their retirement.

While these will likely overlap, relying only on the sale of a business to fund your retirement is too risky when your future is on the line. Having a diversified retirement strategy — as well as working with a financial adviser who understands you and your business — can help business owners plan for a secure and fulfilling retirement.

This article, which has been written by an outside source and is provided as a courtesy by Stephen B. Dunbar III, JD, CLU, Executive Vice President of the Georgia Alabama Gulf Coast Branch of Equitable Advisors, LLC, does not offer or constitute, and should not be relied upon, as financial, investment, tax, legal advice. Your unique needs, goals and circumstances require the individualized attention of your own tax, legal, and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its affiliates do not provide tax or legal advice or services Stephen B. Dunbar III offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN), offers investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offers annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. GE-6536878.1(04/24)

Making a plan to pay for long-term care: Insurance and other alternatives

Stacey Hachenberg, left, and her partner, Sharon Fleming, right, review long-term care options with the help of Fleming’s daughter, Alexa Fleming, center.

Almost three-quarters — 70% — of people turning 65 will need long-term care in their lifetime, according to a report by the Urban Institute and the Department of Health and Human Services. How to pay for that care is worrisome for many families.

Stacey Hachenberg, 58, and her partner, Sharon Fleming, 53, have been caring for their parents for several years. Hachenberg’s father died in April after staying at an assisted living facility for two years. While she coordinated his care, the cost was covered by his savings, pension and veterans benefits.

“It took about a year to actually get those benefits,” Hachenberg said, even with the facility’s help navigating the Veterans Affairs application process.

“Had we not had a tiny little bit of money in my father’s savings, we would have been in trouble,” she said.

Finding benefits to pay for care

Understanding what benefits you have or may qualify for is a critical part of planning for long-term care , financial advisors say. Figuring out where you want to receive long-term care, who will be your caregiver and how you’ll pay for the care should all be part of the planning process, said certified financial planner Marguerita Cheng, CEO and founder of Blue Ocean Global Wealth in Gaithersburg, Maryland.

“Long-term care insurance can be helpful because it allows you to transfer some of the risk,” said Cheng, who is a member of the CNBC Financial Advisor Council .

Long-term care insurance typically pays for care if you have a chronic illness, have dementia or a severe cognitive decline, or can’t do at least two out of six “activities of daily living” without assistance: bathing, dealing with incontinence, dressing, eating, getting on or off the toilet or getting in or out of a bed or chair.

Fleming said her mother, Toni Arfa, has Alzheimer’s disease and is now in an assisted living facility that costs about $8,000 a month. “She doesn’t need skilled nursing. She just needs to be safe,” Fleming said.

Arfa is not eligible for veterans benefits and never purchased long-term care insurance, so her savings are covering the cost, Fleming said. She figures her mother can pay for about another two years of care before the money runs out.

“Then my brother and I will have to help, or she’ll have to go to another facility,” she said.

Most Americans wind up paying for long-term care by depleting savings and other assets, experts say. Medicaid will pay for long-term care, but it only kicks in for people with few assets and limited income.

LTC policy costs are like ‘a car payment, without the car’

Fleming and Hachenberg are now considering buying long-term care coverage for themselves. They don’t want to become a burden on their adult children, they said, but affording the high cost of insurance is challenging. “It’s like having a car payment, without the car,” said Fleming.

Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center who also works on long-term care issues for the Urban Institute’s Program on Retirement Policy, said the problem is many companies mispriced these insurance policies years ago and lost money on them — so the long-term care coverage isn’t as generous now and rates are higher.

Insurers are “very afraid of what they call the tail risk, which is people who need care for a very long period of time,” Gleckman said. “It’s really expensive for them.”

It’s costly for consumers too.

Premiums for a healthy 55-year-old woman can range from $1,500 to $7,000 a year, depending on the benefits, according to the American Association for Long-Term Care Insurance . If she’s healthy at that age, the cost averages about $3,700 a year for a benefit that grows at 3% yearly and would yield a benefit of about $400,000 at age 85.

Premiums are generally lower for men, since they don’t live as long and are less likely to use the benefits. For both men and women, as they age, premium costs rise and it gets harder to qualify.

To compare, a 60-year-old woman would pay $4,400 in annual premiums for a benefit that grows at 3% yearly and would yield about $345,500 at age 85, based on AALTCI figures.

“We’re both really aware that long-term care insurance would be a very smart investment right now. Not just for us, but for our kids,” Hachenberg said.

Fleming’s daughter, Alexa, is a financial advisor and is helping them review their options.

“It’s important to be comfortable with the facility that you’re going to be moving in, and feeling safe and feeling accepted and feeling supported,” said Alexa Fleming. “If you don’t have the funds to be able to do that, it’s not going to be a great end-of-life experience for you.”

Cheng said there are two important considerations to make when shopping around for long-term care insurance:

Does the policy cover at-home care?

Is there “inflation protection,” meaning does the daily benefit increase as the cost of living rises?

“You want to make sure that you don’t cut corners on home care, or inflation, even if it means you have to get a lower benefit” to cover the cost of care, Cheng said.

Few people have long-term care insurance

Only an estimated 3% to 4% of Americans have long-term care insurance, according to LIMRA, a life insurance industry research group. Many companies have stopped selling stand-alone long-term care policies as their risk increased and many consumers saw spikes in premium prices on older inflation-adjusted policies.

“It’s a classic market failure,” Gleckman said. “People don’t want to buy it, and insurance companies don’t want to sell it.”

Hybrid policies, such as life insurance or annuities with long-term care benefits, are alternatives to a traditional, standalone long-term care insurance.

You can also boost your savings in a tax-advantaged health savings account or high-yield savings account to pay for care as you go.

“Don’t feel like traditional long-term care policies, if they put a poor taste in your mouth, [are] the only option,” Cheng said. “It’s really important to take a measured, tailored approach, whatever you do.”

More from CNBC:

With a good credit score, ‘doors will open.’ But many face a roadblock
100-year-old still has $1 million saved: ‘I always lived within my means’
Middle-class Americans want to know how the wealthy make money

As CNBC's personal finance correspondent and senior commodities correspondent, Sharon Epperson reports on personal finance for the network and also covers the global energy, metals and commodities markets from the floor of the New York Mercantile Exchange.

In addition to reporting for CNBC and CNBC.com, Epperson is a regular contributor on NBC's Today and Today.comand appears frequently on NBC Nightly News, MSNBC and NBC affiliates nationwide. She also frequently reports for Public Television's "Nightly Business Report," which is now produced by CNBC.

Her book, "The Big Payoff: 8 Steps Couples Can Take to Make the Most of Their Money—and Live Richly Ever After," was a finalist for the Books for a Better Life Awards, honoring works that have "changed the lives of millions." She also was a contributing writer for "The Experts' Guide to Doing Things Faster."

Epperson's personal finance expertise has been featured in numerous publications, including USA Weekend, The Wall Street Journal, The Washington Post, The Boston Globe, Self, Essence, Ebony and Time, where she had covered business, culture, social issues and health as a correspondent prior to joining CNBC.

She is committed to improving financial literacy, particularly in underserved communities. She has been invited to the White House to speak about financial literacy and to moderate a public meeting of the President's Advisory Council on Financial Capability at the U.S. Treasury Department. She also speaks frequently at conferences and events for local and national organizations, colleges and universities about many facets of personal finance.

Epperson has received the Vanguard Award for her distinguished career in business and personal finance reporting from the National Urban League Guild, the All-Star Award from the Association of Women in Communications and the Gracie Allen Award from the American Women in Radio and Television for a series of reports on female CEOs. She also has won awards from the New York Festivals, the New York Association of Black Journalists and the National Association of Black Journalists.

An adjunct professor at Columbia University's School of International Public Affairs for more than a decade, Epperson enjoys teaching the importance of budgeting and building long-term savings as part of her course on professional development for graduate students interested in media careers.

Epperson received her bachelor's in sociology and government from Harvard University, and a master's of international affairs degree from Columbia University. A Pittsburgh native, Epperson lives with her husband and two children in Westchester County, N.Y.

Slack blog illustration - Workforce Index Spring Summer 2024

Despite AI enthusiasm, Workforce Index reveals workers aren’t yet unlocking its benefits

By the team at Slack June 3rd, 2024

Quick take: Using AI tools at work is associated with a host of positive outcomes, from improved productivity to higher employee satisfaction. But executive urgency to incorporate AI is outpacing its use among employees. A new global survey of desk workers from the Workforce Lab at Slack, a Salesforce company, finds that two-thirds of workers have still not tried AI tools and 93% do not consider AI outputs completely trustworthy for work-related tasks.

Read on to learn about the top AI blockers for workers, the surprising AI gender gap emerging among Gen Z, and why we believe the AI hype cycle is just beginning.

Key findings

Executive urgency to incorporate AI tools into business operations has increased 7x over the past six months and is now a top concern, above inflation or the broader economy.
Among desk workers who use AI tools, 81% say it’s improving their productivity. And those who use AI show higher employee engagement and experience scores across the board, including 22% higher overall satisfaction.
And yet more than two-thirds of desk workers have never used AI at work, and nearly 2 in 5 say their company has no AI usage guidelines.
Just 7% of desk workers consider the outputs of AI completely trustworthy for work-related tasks , with 35% of desk workers saying AI results are only slightly or not at all trustworthy.
There’s an AI gender gap emerging, and it’s largest among Gen Z. While young people are most likely to have experimented with AI tools, Gen Z men are 25% more likely to have tried AI tools compared with Gen Z women.
Desk workers report spending a third of their day on average on tasks they consider low-value. But troublingly, instead of allocating the time saved by AI toward strategic or high-value activities like learning and skill building, employees are likely to spend 37% more of their time on routine administrative tasks.
Even so, the AI hype cycle shows no signs of slowing. Seventy-three percent of desk workers say that AI hype is warranted and the technology “will have a big impact,” and those who have used AI tools are even more convinced.

See the data: June 2024 Workforce Index

In its latest survey of more than 10,000 desk workers around the globe, the Workforce Lab from Slack, a Salesforce company, finds that nearly all executives (96%) now feel an urgency to incorporate AI into business operations. The share of leaders aiming to do this “in the next 18 months” has grown 7x since September 2023, rising from 5% to 35% of all executives. And AI innovation now tops the list of executives ’ external concerns, above inflation or the broader economy.

At the same time, AI use among desk workers is up 23% since January and 60% since September. Thirty-two percent of desk workers have now experimented with AI tools and half of that group is using AI at work at least weekly.

Most AI users (81%) report that AI tools are improving their productivity. And notably, those using AI show higher scores across the board on all measures of employee engagement and experience, including:

+13% Level of access to relevant people, files and resources
+18% Work-life balance
+23% Ability to manage stress
+24% Overall satisfaction with work
+25% Flexibility
+29% more likely to say they feel highly passionate about their work

Workforce Lab Spring Summer 2024 - AI and employee engagement

“The data shows that employees using AI are having an all-around markedly better time on the job. They’re not just more productive; they’re experiencing greater excitement, fulfillment and pride in their work,” says Christina Janzer, head of the Workforce Lab. “Leaders should take note that using AI at work is correlated with a host of positive associations.”

That said, the data also shows that there’s a gap between executives’ urgency to incorporate AI tools and actual AI use among employees: the majority of desk workers —more than two-thirds—have still not tried AI for work.

So what’s stopping more employees from experimenting with AI tools? Concerns about privacy and data security followed by mistrust of data quality and accuracy top the list of blockers that desk workers cite as limiting factors. Just 7% of desk workers consider the outputs of AI completely trustworthy for work-related tasks, with 35% of desk workers saying AI results are only slightly or not at all trustworthy.

“Companies have urgent, ambitious goals for AI in the enterprise and our research shows there are huge productivity benefits to be gained—but many leaders are still figuring out how to kickstart adoption among employees,” says Denise Dresser, CEO of Slack. “While this is truly a seismic shift in the future of work, there are simple steps every business can take starting today to help onboard employees on AI while maintaining trust.”

What should leaders do to encourage uptake? The PET plan: Permission, education, training

Step one to boost workplace AI use is to clarify permission by establishing clear usage guidelines. This may sound obvious, yet nearly 2 in 5 desk workers (37%) say their company has no AI policy. Desk workers at companies that have established permissions for AI use are nearly 6x as likely to have experimented with AI tools.

The next step is education and training . Only a small percentage of global desk workers (15%) strongly agree that they have the education and training necessary to use AI effectively. Unsurprisingly, the more training and education workers have, the more likely they are to use AI tools, and those who are trained to use AI are up to 19x as likely to report that AI is improving their productivity.

Workforce Lab Spring Summer 2024 - Training Matters

Education and training are fundamental to building trust in AI tools; desk workers who are well trained in AI are 7x as likely to trust AI tools to assist them with work-related tasks compared with desk workers lacking AI training.

Another significant factor in a desk worker’s likelihood to try AI and to consider it trustworthy is whether that worker feels their manager trusts them as an employee. Desk workers who feel trusted by their employers are 94% more likely to have tried AI for work-related tasks, and they’re also more trusting of AI’s accuracy and reliability.

Forecasting the AI future: Three predictions for leaders

The ai hype cycle is far from peaking—it’s just gearing up..

You might think AI couldn’t possibly garner more hype. But sentiment from global desk workers indicates the buzz is just getting started. Today, 47% of global desk workers express enthusiasm for AI to handle tasks from their job (compared with 42% at the start of the year). The majority of desk workers—73%—believe the fanfare around AI is justified, saying they expect it to have a substantial impact on their work lives. This sentiment is even stronger among those who have firsthand experience using AI tools.

This trend is set to intensify as Gen Z and Gen Alpha enter the workforce. The youngest workers show the most enthusiasm for AI, with 55% of workers ages 18 to 29 saying they’re excited for AI and automation to handle parts of their work, compared with 33% of workers over age 60.

Our take: “AI fervor shows no signs of stopping,” says Nathalie Scardino, Salesforce’s Chief People Officer. “At Salesforce, we’ve seen how integrating AI into our workforce strategies can have massive benefits for employees and companies alike. Freeing up employees to focus on more impactful work is good for morale and for business.”

Mind the gap: AI could further marginalize women in the workforce—or give them a competitive edge.

There remains a small but stubborn gender gap in AI uptake, with more men trying AI for work (35% of respondents) compared with women (29% of respondents). Even though younger workers are most likely to have experimented with AI tools, the AI gender gap is largest among Gen Z, with men ages 18 to 29 25% more likely to have tried AI tools compared with women in the same age group.

One bright spot is that AI use is accelerating at a faster clip among workers of color, with 43% of Hispanic/Latinx desk workers, 42% of Black desk workers and 36% of Asian American desk workers having tried AI tools at work, compared with 29% of white desk workers. And there’s little to no gender gap among Hispanic/Latinx or Asian American employees.

Our take: “As we embrace our future with AI, it’s imperative that we continue to provide access to those who have historically been left out of technology shifts,” says Alexandra Legend Siegel, Salesforce’s Chief Equality Officer. “It is encouraging to see some of the findings on workplace AI tools and we’re committed to continuing to upskill and empower every community to leverage this technology for good in their workplace, careers and lives.”

AI is at risk of increasing busywork rather than reducing it.

AI promises to transform our work lives, and the latest Workforce Index survey shows there’s room for improvement: the majority of desk workers (64%) experience burnout once a month or more, about a third say they regularly feel stress about work, and 30% do not feel passion for their job. At the same time, desk workers estimate they spend about a third of their day, on average, on tasks they consider “low-value” and “not meaningful to their job.”

The top three most commonly cited low-value tasks are unnecessary meetings or work events, managing low-value emails, and excessive paperwork or data entry. In a perfect world, we’d minimize these tasks with the help of AI, creating more time to focus on more meaningful work.

But when asked how they would prioritize the time they get back from AI, “more admin” topped the list, while innovating and creating, learning and skill-building, and networking with colleagues fell to the bottom.

Our take: “AI could really open up a lot of time for workers, but it would be a shame if we waste that time on more busywork,” says Janzer. “If we want to make the most of what AI can offer, it’s up to us as leaders to help our people prioritize the most rewarding work.”

AI fast facts

Workforce Lab Workforce Index Spring Summer 2024 - Fast Facts 1

Methodology

The survey included 10,045 workers in the U.S., Australia, France, Germany, Japan and the U.K. between March 6 and March 22, 2024.

The survey was administered by Qualtrics and did not target Slack or Salesforce employees or customers. Respondents were all desk workers, defined as employed full-time (30 or more hours per week) and either having one of the roles listed below or saying they “work with data, analyze information or think creatively”: executive management (e.g. president/partner, CEO, CFO, C-suite), senior management (e.g. executive VP, senior VP), middle management (e.g. department/group manager, VP), junior management (e.g. manager, team leader), senior staff (i.e. non-management), skilled office worker (e.g. analyst, graphic designer).

For brevity, we refer to the survey population as “desk-based” or “desk workers.”

Was this post useful?

Thanks so much for your feedback!

Thanks for your feedback.

Oops! We're having trouble. Please try again later!

Try Slack with your team for free

Election latest: Labour to win landslide and Farage to become MP for first time, poll projects

The Conservative Party is heading for its worst electoral defeat in history, falling victim to a Labour landslide, and Reform's Nigel Farage is set to become an MP for the first time, according to a major new poll of almost 20,000 people.

Tuesday 18 June 2024 22:00, UK

General Election 2024

Please use Chrome browser for a more accessible video player

Election news

Catch up on our rundown of today's political news
Tories heading for worst-ever defeat - poll
The senior Conservatives who could lose their seats
One of Tories' biggest 2019 donors endorses Labour
Sky News Daily: 'We need an adult conversation about migration'
It's the last day to register to vote - read our handy guide
Live reporting by Samuel Osborne and (earlier) Faith Ridler

Expert analysis

Jon Craig: Poll and defection are double trouble for Tories
Tom Cheshire : The data behind the public's view of immigration
Darren McCaffrey: PM's trip to luxury village shows no seat is safe

Election essentials

Check parties' manifesto pledges: Conservatives | Greens | Labour | Lib Dems | Plaid Cymru | Reform
Trackers: Who's leading polls? | Is PM keeping promises?
Campaign Heritage: Memorable moments from elections gone by
Follow Sky's politics podcasts: Electoral Dysfunction | Politics At Jack And Sam's
Read more: Who is standing down? | Key seats to watch | What counts as voter ID? | Check if your constituency is changing | Guide to election lingo | Sky's election night plans

It's 10pm and here is your rundown for today's political news.

But firstly you have a couple of hours left before the deadline to register to vote. We have put together a handy guide if you still need to sort it out and make sure you can go to the polls on 4 July - find it here .

Here are the key points from today's election news...

The Conservative Party is heading for its worst electoral defeat in history , according to a poll of almost 20,000 people;
The Ipsos poll also suggested Nigel Farage will win Clacton from the Tories, overturning the incumbent party's huge majority there;
It estimated Labour could win 453 seats, while the Conservatives would take just 115, giving Sir Keir Starmer's party a 256-seat majority ;
The result would mean senior Tory figures such as Grant Shapps, Penny Mordaunt, Gillian Keegan, Johnny Mercer and Sir Jacob Rees-Mogg losing their seats ;
Our chief political correspondent Jon Craig said the poll is "terrible news" for the Tories;
Meanwhile former Conservative Party donor John Caudwell has announced he is endorsing and voting for Sir Keir Starmer's Labour Party.
Our weeknight politics show Politics Hub With Sophy Ridge focused on the issue of immigration, with Labour's shadow equalities secretary Anneliese Dodds saying the country needs a "clear plan" to tackle migration;
During the panel discussion Jim Murphy, former leader of Scottish Labour, said a Labour policy that may work to reduce immigration is "dealing with the gangs in the same way you would deal with terrorists";
And former Conservative MP Philip Dunne said the government's Rwanda scheme is a "deterrent" for illegal immigration, but said the UK and France need to cooperate more.
In Scotland, Anas Sarwar has today launched Scottish Labour 's manifesto, with a focus on improving the future for young people in the country;
He also confirmed that Scottish Labour is against the two-child benefit cap , despite there being no plans to scrap the measure if Labour wins the keys to Downing Street.
Liberal Democrat leader Sir Ed Davey was in Eastleigh, where he discussed sewage - and claimed the Tories would "fail in opposition" just as he says they have in government;
And on a day of special coverage of the migration crisis here on Sky News, an exclusive poll suggested more Britons think immigration has had a negative impact on society than positive.

Here are some other stories you might find interesting:

On the Sky News Daily podcast, Niall Paterson is joined by community correspondent Becky Johnson to discuss what voters think about elections, while economics and data editor Ed Conway digs into the statistics to reveal exactly how big an impact migration, both legal and illegal, has on the UK.

Covering a general election campaign as a journalist can largely be summed up in two words - battle bus.

Not too dissimilar to the coaches that rockstars use for their tours, battle buses are the vehicles each political party uses to transport their leaders, candidates, and advisers around the country during the election campaign.

Sky's political correspondents have each been following a different party - often joining them on the buses.

Here we take you behind the scenes on the campaign trail for the Conservatives, Labour, and the Liberal Democrats.

By Faye Brown , political reporter

Rishi Sunak's "soaring" personal wealth has come under fresh attack ahead of crucial inflation figures coming out tomorrow.

In what will be a key moment in the election campaign, the rate of inflation is expected to ease back to the Bank of England's target of 2% for the first time since spring 2021.

The figures could provide a much needed boost for the embattled prime minister, whose key offering to voters is that the economy has "turned a corner" under his leadership and they should not risk change with Labour.

But the Labour Party says this claim is "rubbished" by data showing more than half of Brits think the cost of living crisis has become worse in the last month.

The party says that Mr Sunak's wealth increased by £122m in the last year, while data from the Office for National Statistics (ONS) shows millions of people continue to struggle.

IMAGES

Without a business plan, you just have an idea that will go nowhere
The Consequences of Not Having a Business Plan
6 Things You're Doing Wrong as an Entrepreneur
Having a Business Plan vs Not Having a Business Plan
PPT
What the Advantages & Disadvantages of Having a Business Plan?

VIDEO

1.2 Why create a business plan?
Disadvantages of not having vehicle Insurance #legal #motivation #indialegal
WHY Write a Business PLAN for Your NEW BUSINESS
New to Old

COMMENTS

14 Pros and Cons of a Business Plan
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. Video unavailable.
The Consequences of Not Having a Business Plan
Another consequence of not having a business plan includes missed opportunities for growth. An effective business plan will identify the opportunities your business can use to succeed. This gives you an idea of what a successful trajectory looks like for your business and how you can get there. Failing to plan ahead means that every business ...
14 Critical Reasons Why You Need a Business Plan
Build a strategy. 4. Crafts a roadmap to achieve important milestones. A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. For your plan to function in this way, your business plan should first outline your company's short- and long-term goals.
10 Reasons Not to Write a Business Plan
Early perseverance pays off. 7. Accept uncertainty as the norm. You will never remove all uncertainties, so accept them, and plan your activities in an incremental fashion. Too often, a business ...
Do You Need a Business Plan? This Study Says Yes
Planning can help companies grow 30 percent faster. One study (1) published in 2010 aggregated research on the business growth of 11,046 companies and found that planning improved business performance. Interestingly, this same study found that planning benefited existing companies even more than it benefited startups.
Advantages and Disadvantages of Business Plan
Hence a good business plan is one which has the scope of flexibility in it. Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other ...
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 ...
The importance of a business plan
To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business. 1. To help you with critical decisions. The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and ...
Business Plan: What It Is, What's Included, and How to Write One
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
What Is a Business Plan? Definition and Essentials Explained
It's the roadmap for your business. The outline of your goals, objectives, and the steps you'll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. A business plan can help you explore ideas, successfully start a business, manage operations, and ...
Business Planning: It's Importance, Types and Key Elements
The Advantages of Having a Business Plan. Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.
5 reasons you need a business plan
Here are 5 reasons why you need a business plan: 1. It will help you steer your business as you start and grow. Think of a business plan as a GPS to get your business going. A good business plan guides you through each stage of starting and managing your business. You'll use your business plan like a GPS for how to structure, run, and grow ...
The Importance of Business Plan: 5 Key Reasons
A business plan contains detailed information that can help determine its success. Some of this information can include the following: Market analysis. Cash flow projection. Competitive analysis. Financial statements and financial projections. An operating plan. A solid business plan is a good way to attract potential investors.
15 Reasons Why You Need a Business Plan in 2024
15. Effectively navigate a crisis. Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up.
12 Reasons You Need a Business Plan
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 ...
Nine reasons why you need a business plan
Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals. 3. Reduce potential risks. Prevent your business from falling victim to unexpected dangers by researching before you break ground.
10 Business Plan Benefits You Might Be Forgetting
Business objectives will be clear. Use your plan to define and manage specific measurable objectives like web visitors, sales, margins or new product launches. Define success in objective terms ...
Advantages of a Business Plan: Definition and What It Entails
Increased Clarity. A business plan helps you make decisions about important aspects of your business, including capital investments, leasing, and resourcing. A strong business plan helps you determine the most important business priorities and goals to concentrate on. #10. Helps to Secure Talent.
What are the advantages of business plans?
The advantages of a business plan. Although a business plan takes time and money to create, it can help save both in the future if done properly. Below we take a look at some of the key advantages of creating a business plan: 1. It helps you forecast future steps.
Advantages of a good business plan
Perhaps the single most essential advantage of a business plan is using it to convince yourself whether the prospective business is actually a good idea. The plan is a good place to test assumptions about what business conditions will be needed to make the entity a success. Realistic modeling with the plan is good way to decide whether there is ...
Advantages and disadvantages of business planning
Advantages. Enables owners of new or existing business to review their ideas and see if it will provide a profitable future; Reduces risk- guide for business for what to do and when; Allows business to measure success against plan; make changes if need be; help ensure finance is available e.g. bank loans, lenders will see if business is organised
How to Write a Business Plan (Tips, Templates, Examples)
While it's not required when starting a business, having a business plan is helpful for a few reasons: Secure a Bank Loan: ... FireStarters' competitive advantage is offering product lines that make a statement but won't leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target ...
The Advantages of Having a Business Plan: A Blueprint for Success
Here follows a discussion about the advantages of having a business plan. A business plan goes beyond a mere collection of numbers and projections; it is a comprehensive guide that outlines your goals, strategies, and tactics. It equips you with the confidence and purpose needed to navigate the ever-changing market landscape successfully.
The Top 5 Benefits of Having a Business Plan
The Benefits of Having a Business Plan: . 1. Increased Clarity. A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on. 2.
How to Write and conduct a Competitive Analysis
Once you've done your research, it's time to present your findings in your business plan. Here are the steps you need to take: 1. Determine who your audience is. Who you are writing a business plan for (investors, partners, employees, etc.) may require you to format your competitive analysis differently.
The Key Benefits To A Comprehensive Business Plan
The Key Benefits To A Comprehensive Business Plan. getty. Starting a new business is an exhilarating adventure filled with many possibilities with the thrill of turning a vision into reality.
Why Your Business Shouldn't Be Your Only Retirement Plan
Providing a 401(k) plan to employees, for example, is common practice, but business owners don't always contribute to their own 401(k)s. Even if they did, it still may not be enough to ...
Making a plan to pay for long-term care: Insurance and other alternatives
Finding benefits to pay for care. Understanding what benefits you have or may qualify for is a critical part of planning for long-term care, financial advisors say. Figuring out where you want to ...
Despite AI enthusiasm, Workforce Index reveals workers aren't yet
Quick take: Using AI tools at work is associated with a host of positive outcomes, from improved productivity to higher employee satisfaction. But executive urgency to incorporate AI is outpacing its use among employees. A new global survey of desk workers from the Workforce Lab at Slack, a Salesforce company, finds that two-thirds of workers have still not tried AI tools and 93% do not ...
Election latest: Boris Johnson 'drafted in to counter Reform'
Following Reform UK's manifesto launch on Monday, it's been reported the Tories have now "drafted in" former prime minister Boris Johnson to help counter the threat from Nigel Farage's insurgent ...

14 Pros and Cons of a Business Plan

What Are the Pros of a Business Plan?

What Are the Cons of a Business Plan?

Related Posts:

The Consequences of Not Having a Business Plan

What Is a Business Plan?

A Lack of Direction

Missed Growth Opportunities

Unclear Organizational Structure

Don’t Know Where To Start With a Business Plan?

Failing to Prepare is Preparing to Fail: A Case Study

Partner With GreenGate for the Plan Your Business Needs

Recent Posts

Atlanta, USA

Brighton, UK

Advantages and Disadvantages of Business Plan

Advantages of Business Plan

Disadvantages of Business Plan

1. Validate Your Business Idea

2. Set and Track Goals

3. Take Action

4. Manage Resources

5. Make Decisions

6. Manage Risk

7. Communicate Internally

8. Communicate Externally

9. Secure Funding

10. Grow and Change

Related Questions

Business Plan Benefits: What are the benefits of a business plan?

Business Plan Importance: Why is business plan important?

The importance of a business plan

What is a business plan?

Why is a business plan important?

What is the purpose of a business plan?

10 reasons why you need a business plan

1. To help you with critical decisions

2. To iron out the kinks

3. To avoid the big mistakes

4. To prove the viability of the business

5. To set better objectives and benchmarks

6. To communicate objectives and benchmarks

7. To provide a guide for service providers

8. To secure financing

9. To better understand the broader landscape

10. To reduce risk

Business plan FAQs

What industry-specific issues can business plans help tackle?

How can small business owners use their business plans to pitch investors or apply for loans?

Understanding the importance of a business plan

Related Posts

What Is a Business Plan?

Key Takeaways

2 Types of Business Plans

Why Do Business Plans Fail?

What Does a Lean Startup Business Plan Include?

Table of Contents

Become a Business and Leadership Professional

Business Analyst

Post Graduate Program in Business Analysis

Here's what learners are saying regarding our programs:

Assistant Consultant at Tata Consultancy Services , Tata Consultancy Services

What Is Meant by Business Planning?

What Are the 4 Types of Business Plans?

Operational Planning

Strategic Planning

Tactical Planning

Contingency Planning

What Are the 7 Steps of a Business Plan?

Conduct Research

Have a Goal

Create a Company Profile

Describe the Company in Detail

Create a marketing plan ahead of time.

Be Willing to Change Your Plan for the Sake of Your Audience

Incorporate Your Motivation

What Are the Basic Steps in Business Planning?

Summary and Objectives

Services and Products

Our Business And Leadership Courses Duration And Fees