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Advantages
- Draws
attention to the business as this can be included in its mission statement
the firm refers to the importance of providing a
consistent, high quality service to customers and
this is only possible if employees are developed to reach excellent standards
- Enhancing the company’s external and
internal image may increase market share and is more likely to attract customers
- Can
attract
quality workforce. The firm operate in a “people environment” it is
essential that it attracts good workers who can deliver top quality customer
service. The organisation prides itself in developing the talents of all
employees to do just this
- Giving back to the local community is
another positive image
- Can give the company a competitive edge
- Positive image makes it easier for the
business to achieve awards
- May
enable
the firm to focus on every detail of the business and
ensure that the project is carefully thought
through
- Can
enable the firm to monitor
the actual progress of the business against the plan
- Can
be used to obtain the support of various stakeholders, including bank,
franchisor and others
- Can
show how the aims and objectives of the business will be met
- Motivate
employees
- Aid decision-making
- A business plan will assist the
firm to set realistic objectives for the
business and the strategies required to achieve them
- It will provide a vision for the future
especially as there are opportunities for expansion in a new market
- It will outline the resources that the
business requires to successfully achieve its objectives, e.g. raising finance
to relocate
- A
cash flow forecast can be drawn up as part of the plan and this will force
management to focus on costs and sources of revenue
- A business plan can be used to support an
application for raising additional finance from a bank
- Objectives set out in the plan can be
monitored and reviewed thus assisting forward planning and target setting
- Fail
to plan, plan to fail – taking the time to draw up a plan will reduce the
chance of failure especially if the business is changing its structure
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Disadvantages
- Can use up valuable resources
- No guarantee to increase market share
- May
be very time consuming to draw up a business plan when this time could be used
to carry out other important tasks
- May
be costly to obtain financial figures and projections that may be beyond their
expertise
- May be misused by others if data is not
confidential
- May be based on assumptions about the
future that do not then occur
- Preparing
a business plan can bring additional pressure to the
firm as it takes time and expertise
- They may have to pay someone to draw up
the plan and this will add to costs
- Much
of the information contained in such a plan is estimated, e.g. cash flow
forecast so it is no guarantee of success
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