Question

A new business venture must develop a comprehensive business plan to borrow money to get started. Companies such as FedEx and Nike say they did not follow the original plan closely. Does that mean that developing the plan was a waste of time for these eventually successful companies? Why or why not? Please list references ,please.

Answer 1

Developing a business plan prior to opening a business venture is very important to ensure a smooth opening and running of a business. It is not time wasting to prepare a business plan, rather it is time saving. The plan saves an entrepreneur time in acquiring stock, staff needed, obtaining government regulations needed, planning for the amount needed, acquiring an appropriate business location, targeting a given market. The list is endless.

Business planning is also a cost saving tool. While planning, the business owners can source the most cost effective supplies, market research their product and pricing, and many other cost saving action items. By following a plan, they also reduce the amount of errors encountered, thus cutting down on waste which would eat into their profit.

Imagine opening up a business with only a rough idea of what you want to do, no given business location, no clear number of employees you need, no business name, no management in place, and no financial budget. This chaotic "no plan" will mess up the entrepreneur's mind and eventually his probability of success is of luck. Nike did not strictly follow the initial plan, but they did have a plan that governed them in their venture and they did not act blindly.