Advantages & Disadvantages of a Business Plan
Business: Cambridge International GCSE (2027 Exams), topic 1.3.13
Advantages and Disadvantages of a Business Plan
There are advantages and disadvantages of creating business plans.
Advantages
- Business plans provide parameters for setting targets.
- Management can check staffing, incomes, product ranges and lots of other things against previous business plans and expansion plans.
- A business plan can be used as a benchmark against outcomes like cashflow, production outcomes or service delivery. The plan can also be compared to the behaviour of competitors and the business’ own performance in past years.
Disadvantages
- Businesses need to be flexible and able to adapt to a changing environment. A business plan may stop a company changing.
- Business plans can be costly and time consuming to make. If an entrepreneur has less time to spend designing a good product and selling to customers, then the time spent making a business plan may be negative for the business.
- Also, forecasts of revenue and profit may be misleading and lead to bad decisions.
Test yourself on Advantages & Disadvantages of a Business Plan
Which of the following is not a disadvantage of making business plans?