The advantages and disadvantages of a business plan

Entering the creation of trade is non that easy. When starting a in the raw jeopardy, 1 should never come unprep bed. If you started a rude(a) venture with out(a) devisening anything first, chances argon, you entrust end up going wherever the malarkey takes you. That is why a traffic proposal is a necessity for individual who is interested in starting a new venture. In the world of patronage, a moving in architectural mean is treated like a countersign for it lets investors and lenders cheat nigh the cargon line you argon nerve-wracking to put up. It as well serves as a manual for suppliers and other stakeholders of the stage assembly line.A business plan may sport its advantages but it besides bear its disadvantages. In this bit of the paper, we shall look at the strong and weak points of developing a business plan for a new venture. However, a business plan is supposed to be an advantage to the business that is why the advantages, as expected, outnum ber the disadvantages.Advantages one advantage of developing a business plan for a new venture is that it identifies what the consumer really wants. Of course, a business plan is all some making your target commercialise patronize the result or military service you be spelling in your new business. Before you washbasin assimilate profits, you must first identify your target market and hunch forward what they really need or want. This is one authorised advantage of a business plan especially for those who argon new in the business scenario. at one time you identify what your target market really wants, you are most probably headed to indentifying the demand for the service or proceeds you intend to offer. Identifying the demand for the product is similarly precise important in launching a new venture because from this, you go out know whether the service or product you are to offer is needed by the people. Of course, you fecesnot barely think about your supplies and your suppliers. Those things im man come after you de statusine the demand for your product.Aside from identifying the target market and the demand for the product or service, the advantages of a business plan similarly include assistance in designing your product that are appeal to the senses of the consumers. Since your purpose in developing a new venture is to machinate profit, the consumers senses are your main target. Designing your product is very important. It includes the packaging of the product and other advertising tools to make the people buy the product. This is overly an important aspect of the business plan for it contributes a dower to the success of the business.Of course, if you are developing a for-profit business, making profit and paying debts impart have to be included in your business plan. Aside from paying debts, your plan should also include measures on how to generate daily income. In this aspect, a business plan is very helpful because you already have your plans on how to manage the pecuniary aspects of the business (which is one of the most important aspects). If you know exactly the fiscal path of what you are venturing, you are most belike to aimdate in terms of profit.Another advantage of a business plan is that it makes the proprietor identify his opponents. When you have the knowledge about your competitors, you leave alone be subject to identify your competitive advantage over the competitors firm. Since you are developing a new business, it is important that you know exactly your edge in the business scenario over the others.If you have plan beforehand about your competitive advantage over the competitors, chances are, in that location bequeath be product differentiation in the market. That is actually a skillful thing because it lessens competition within simi8lar firms. By analyzing your competitors, you go forth be able to create strategies that are effectuateive change surface if at that place ar e some(prenominal) competitors in the market.A business plan is also advantageous because it enables us to indentify new product and service areas, and new or potential customers. In business, it is not single important to bechance the customers for some of them will not be loyal to your firm. It is hard to find new customers when you are just developing a new venture but it is much harder to guard them. The good thing about a business plan is that it helps the possessor of the firm to identify potential customers. If it is hard for the possessor to retain his customers, it would be very helpful to identify new or potential customers. In that way, at least, you will have your next resort.Lastly, an advantage of a business plan is that it allows the business owner to evaluate his business strategies and if his strategies are better-looking the desired results. What is good about a business plan is that it enables the owner to assess whether his strategies are effective or not. If he found out that his strategies are not effective enough to make the business succeed, he skunk immediately formulate new strategies to make the business succeed.As we all know, business strategies are very important, be it human resource, financial, etcetera The business plan serves as a test for the formulated strategies and also serves as way to make room for improvement. If the owner finds out that there is something wrong with his first strategies, he will be able to channel it right away and save his business from falling apart or incurring losses.DisadvantagesAlthough we mentioned a lot of advantages in making business plans, it also has its drawbacks. If the owner is new in the world of business, he may not have all the business skills that a new venture requires. If he happens to be the one making his business plans, the business plan faecal matter be one way of identifying his weaknesses in dealing with business. If the owner is not used to making business plans, people who will look to it will find out the weaknesses of his business skills.Suppliers, investors, and lenders will most likely not to participate in the business when they find out that the person they are dealing with is not that consummate in business. Also, if the other stakeholders of the business find out that the person they are making arrangements with is not as skilled as they thought, they might not trust him with the success of the business. They might even plan to use his weaknesses or his business plan against him since they know that he is not a skillful businessman.Another disadvantage of a business plan is when it is not properly thought of. If the info in a business plan is not properly analyze, it may result to wrong marketing decisions which will eventually have a bad effect on the business itself. Although a business plan helps a lot in making the business booming, it may also make the business fail if not done correctly. What makes it hard for a business to succeed is the impulsiveness of the business owners when it comes to decision making. Sometimes, the data in business plans are not analyzed properly that is why decisions are also made incorrectly.If the one who made the business plan is not a professional business consultant or is not really familiar with making a business plan, information potty be interpreted incorrectly. The faulty description of information can result to unrealistic financial projections. In a business, financial matters are very important that is why if financial statements are understated or overstated, it could greatly affect the business. If the information in the business plan is interpreted incorrectly, wrong decisions can be made.The owner can also make unrealistic projections about the financial aspects of the business which can cause further line of works. This would greatly affect the future of the business. Since the business plan somewhat includes the mission and vision of the business, it woul d be a great problem if the business plan fails to make correct projections for the firm.If the business owner is not familiar with making business plans, he may opt to guide a business plan consultant. It is very advantageous actually since they offer quality service and they have been making business plans for many successful businesses. The disadvantage is that the service of these consultants is very expensive. Although they offer good service, it would cost you a lot. The money that can be added to your investment in the business will just go to the payment for the business consultant.If the business owner happens to be saving up for his new venture, he can resort to hiring an twopenny-halfpenny business consultant which is not always good for the business. Sometimes, inexpensive consultants are not as good as the expensive ones. There are also some which uses software that makes business plans. They will just accept the owner of the business certain questions and then enter the information in the software they use. This will eventually lead to improper analysis of data and information in the business plan which will not do the business any good.Assessment of the Biz Air Plan dear by taking a look at the business plans executive summary, we can already have an idea that the financial projections are overstated. With only 6 aircrafts, their projected revenues were 17.4 million. What I am trying to point out here is that what they are trying to build is an air passage company and not just a convenient store or a clothing company. There were statements in the executive summary that seem to understate the losses in the first year. They even projected that there would be a 12% improvement in profits in the companys second year and a long term 16% of sales in the third, fourth, and fifth year.Aside from wrong financial projections, I find the business plan full of assumptions. For example, in the part where in they conducted customer analysis, they chose t o conduct the study during lunchtime and interviewed people who decorate like a business person. In other words, they just imitation that if a person is in corporate attire, he or she could be a potential customer since they assumed that he or she is a businessperson. There is also a part in the paper in which it is stated that as long as the fledges are not delayed, the post experience evaluation should be favourable. I find this very assumptive because it is not only the delay of the flight that affects on whether the customer will or will not like the new airline company.The gladness of the customer does not rest merely on the factor that their flight is on time. Factors such as cleanliness, safety, or the friendliness of the staff also affect the satisfaction of the customer. It is also mentioned in the business plan that by satisfying customers (that is in terms of not delaying their flights), they will serve as salesmen for the airline company who will try to suggest th e companys service to other people. I find this a little imposing for business does not just go that way.Business does not only succeed through word of mouth. When they said that the customers will serve as the salesmen for the airline company, it gave me the impression that they were already assuming that the delay of the flight solely determines customer satisfaction which would later on result to advertising the company. It is very idealistic since they were sort of assuming that all the satisfied customers will defend their company.Another thing that I found very disturbing about the paper is its being overconfident about the services it offers. Of course it is very important that you have confidence in the business that you are set up but not to the point that you will sound pompousness about your business that has not even tried by the people. You can see this in the part where in they discuss the advertising of the service.They mentioned that they are just going to advert ise through newspapers and billboards near airports. I have nothing against that idea, actually. But you dont have to say that you do not have to advertise in televisions because you are sure that at a time the news broke, there would be much television publicity that will come out. I think it will seem very amateur for those who will take a look at the business plan. latent investors will have the impression that they are dealing with unprofessional people.Lastly, there are several faulty analysis and incorrect financial projections which can be the main cause of the failure of the business.Reference2004. Creating Your Business Plan. Online. on tap(predicate) http//www.nvbdi.org/howto/biz_plan.php. 29 July 2007BELLIS, M. 2007. Creating A Marketing Plan for the Independent Inventor. Online. Available http//inventors.about.com/od/licensingmarketing/a/tutor_marketing.htm. 29 July 20072001. Approaches to Writing A Business Plan. Online. Available http//www.caycon.com/plan_options.p hp. 28