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Among financial advisors, whether or not to develop a business plan is a much debated topic. Some analysts think that creating a plan and actually implementing it are two different concepts, and business owners should place more focus on the actual implementation rather than the design. From their perspective, too much time is spent crafting lengthy proposals that sound and look nice but have no real substance. Still, there is a great number of analysts who highly recommend building a business plan to new companies.
The importance of a business plan seems obvious, but there are more reasons it should be done. A few of them are the following:
Learning how to deal with displacement: Defined simply, displacement is understanding the "what-ifs" of the plan. This is where the business owner takes into account the effects of pursuing action A compared to action B; and knowing that by doing action A, actions C and D will not be done. There is a certain amount of forecasting required here, and this cause-and-effect analysis is crucial to any developing business.
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Understanding tax obligations: Business plans are very detailed and include such information as the number of expected employees, targeted business alliances, etc. These proposals require a basic understanding of tax.
The important thing to remember is that business plans are just that, plans. They should be used to guide and set specific objectives for the company. There is always the danger of overthinking and there are plans that are not implemented because of too much detail. However, this should not prevent companies from starting one. It is still generally believed that caution is better than just blindly running the race.
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Bertrand Management Group has helped hundreds of businesses achieve structure through proper business planning. Learn more about sound business plans by visiting this Facebook page.
