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To what extent does the use of a business plan guarantee success?

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Introduction

To what extent does the use of a business plan guarantee success? What is a business plan? Business plans are used by businesses as a statement of intent, setting out its objective, policies, and strategies. They are used to give potential investors some security that the business is going to make money, as it includes potential earnings in the plan. Success can be measured in various different ways. Profit is a good way of measuring how well a business is doing, but in a business that is newly created, profit is not always an accurate measurement. They are based on critical assumptions. They provide valuable "road maps" for existing businesses to achieve goals. For start-ups, however, these assumptions are usually nothing more than guesses. The purpose of a start-up is not to start a business as much as to find a viable business model by testing initial assumptions. ...read more.

Middle

When researching the information that you need to include in your business plans, you may learn that allegations you made about your marketing budgets, cost of materials, licensing and permitting, labour costs and other critical aspects of your business are incorrect. Learning this before you launch your business gives you time to make adjustments before you have signed contracts and committed funds. Business plans include budgets that help you manage cash flow- this is critical to keeping your business running. Provides Exit Strategy In addition to providing benchmarks for success, a good business plan sets realistic criteria for shutting down the business to prevent your throwing good money after bad. Solid figures that will tell you the business is untenable can help you to make the decision to shut down a failing business easier and can prevent people from losing more of their own or their investors' money than necessary. ...read more.

Conclusion

Coming up with a comprehensive business plan could take many man hours. Expense It can be very expensive to write a business plan. However, some companies specialize in helping you write a business plan. In this, a consultant will meet with you, get the details of what you hope to do and where you hope to do it, conduct all the rest of the research necessary and then write a plan for you. Depending on how detailed and effective you wish this plan to be, it can be a very expensive option. Conclusion In the end, choosing whether or not to write a business plan or have one written is a choice you, as the business owner, can make. While there are some disadvantages to a business plan, you may have no choice but to have one in the long run. If you can self-finance the business, this becomes less of a necessity, but very few people can do it. ...read more.

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