One of the questions we often get at Business Plans Canada is to recommend a business planning software.
In this post, we will review the benefits and drawbacks of using business planning software to decide if using business planning software is right for you.
To be clear, we are referring only to online or purchased business planning software and not to business plan templates.
This is a topic for a future blog post.
When it comes to business planning software, the options seem almost endless; however, they all work the same way. Business planning software allows business writers to “fill in the blank” for the sections of a business plan. Once all the sections are completed, the software compiles the sections and provides the entire plan in a Microsoft Word or equivalent format.
While many of them are now available online, there are some that you can still purchase and install on your computer. Regardless of how you access business planning software, using any software comes with benefits and drawbacks.
Benefits Of Using A Business Planning Software
There are two main benefits to using business planning software. They are:
- Ability to work through the plan yourself
There is several affordable business planning software available online. One example is the futurepreneur.ca business writer tool. This tool is entirely free and can generate a business plan for virtually any industry.
Other business plan writer tools such as liveplan.com charge a monthly fee to access their software. Although the monthly cost seems reasonable at $15/month USD or approximately $19.50 CDN, the fact that it is a monthly membership perhaps alludes to the fact that it makes people many months to complete their business plan.
Regardless of the software, you decide to use, the cost is likely to be much cheaper than paying a business plan writer. This makes sense, of course, since the software does not write the business plan for you but provides a tool that guides you as you write the plan by yourself.
Ability To Work Through The Business Plan Yourself
Since the software forces you to complete the plan, it can be a helpful learning tool for those who have not previously written business plans. As you complete the plan, you learn more about your business and your industry.
Assuming you could effectively navigate the software and complete your business, going through the writing process allows you to consider the viability and risks associated with your start-up. You will then be able to explain and defend your business plan.
This is not to say that you can’t get the same benefits when hiring a business plan writer, but it is much better than using generic templates or generic business plans. Generic plans do not work, so writing your business plan will be beneficial.
Drawbacks Of Using A Business Planning Software
Business planning software is not for everyone. There are several drawbacks to using business planning software such as:
- Navigating the software
- Understanding the financial projections
- Writing the business plan
Navigating The Software
Learning to use any software can be challenging. Although software design and user experience have dramatically improved in the last few years, it is still challenging to use any software for the first time.
Unless you are a serial entrepreneur and use the business planning software for many of your businesses, you will likely only use it once. You will probably need to go through a pretty steep learning curve, especially in the financial projections section.
Understanding Financial Projections
Financial documents such as the Income statement, Cash flow statement, and Balance sheet are critical components of any good business plan. Business plan writing software companies boast that these statements are developed “automatically” for the writer.
While the software automatically generates the financial statements, the difficult part is the input into the software. Financial statements are generated based on the writer’s input of financial metrics such as pricing, sales volumes, and various expenses.
Every business will have a unique revenue structure, and adjusting the software to interpret the revenue structure adequately will always be challenging. For example, a company that sells products has to manage inventory, while a company that sells services will have additional revenue and expense models.
It is simply impossible for a business plan software to “easily” fit every financial model, so more adjustments and manipulations are needed.
This is not to say it can’t be done, but just that it will be challenging.
Writing The Business Plan
The final potential hurdle any business plan writer encounters is the ability to write the plan in a way that sells the idea to investors and lenders.
Business Plan writing is a bit of an art and a science. You need to sell your business idea, have the correct information, and demonstrate that your business plan is feasible.
At Business Plan Canada, we are often asked to review business plans that entrepreneurs write themselves.
The passion shows in these plans.
However, there is often missing information, too much information that is not helpful and general writing that is hard to understand.
The ability to write concisely, persuasively, and effectively can be learned. However, if the founder does not already have that skill, they will struggle with writing a good business plan even using the assistance of business planning software.
So, is a business plan software right for you?
If you can quickly learn the software program, interpret financial projections and how they are generated, are a gifted writer, and have plenty of time, then business planning software might be a good option.
If that’s not the case, then you might be better off getting a professional to write your plan for you but with you.
Business Plans Canada can help. Just Saying.
Happy Planning 😊