Pros and Cons of using Business Plan Templates for your business plan
Avoid these critical errors when using business plan templates
Image: Image depicting two roads one showing template business plans and the other custom business plans
If you’re starting a business, odds are you need a business plan.
A good business plan can be the difference between getting funded or withering away.
Using business plan templates can be a cheap way of getting a plan done, after all who doesn’t need to save money.
Especially start-ups.
So, when it comes to writing the business plan, should you use a business plan template?
The answer is - It depends.
Let me explain.
“If you do not know where you are going, every road will get you nowhere.”
Benefits of Business Plan Templates
Your start-up company’s business plan is the blueprint for its future success.
It’s important.
A main benefit of using business plan templates is that a good template forces you to think about the future of your business. For example, working through revenue projections, expenses and break-even numbers helps you understand what it will take for your business to be profitable.
It forces you to do a deeper dive into your competitors and think through how your company will stand out in the market.
Working through all the sections of a good business plan template helps to map your company’s road to success.
Despite their advantages, business plan templates also have major limitations.
Limitations of Business Plan Templates
The first limitation is that working through a business plan template can be time-consuming for people who do not have a lot of experience writing business plans.
The other, and more significant problem, is that Business Plan Templates are generic. They are designed to be a one-size fits all – that’s the nature of a template.
That means they have to be changed and customized for each business. They are meant to be a guide – not a fill-in-the-blank document. Without customization, business plan templates do NOT have the depth of information required to truly represent your business.
When customizing your business plan, you will need to add detail in the market research, competitive analysis and of-course the financial projections. Relying too much on templates in these areas can result in inaccurate or out of date information.
Inaccurate or out of date information in your business plan destroys yours and the business plan’s credibility.
Funders and/or investors want to know that you understand the market and your business details. If they suspect that your plan is generic, they will lose confidence in you, the plan and the business.
Funders Want Customized Business Plans
Banks and investors see hundreds or even thousands of business plans. They, understandably, are not going to fund all of them, so they fund only the best plans.
While banks and investors consider many factors when making funding decisions, the quality of the business plan plays a significant role in their decision.
Here’s a quote from an article published in the Entrepreneurship and Small Business Journal in 2019:
“The business plan is the essential element of planning and communication of the business idea… in obtaining financing, which is particularly relevant in the case of young businesses with a reduced (or non-existent) track record in the market.”
A business plan is critical for new businesses because it provides a type of assurance for banks and investors that you can’t otherwise get without the business already having a proven track record – which is of course not the case with new start-ups.
Even for existing businesses looking to grow, a business plan that highlights their proven track record is going to be critical to securing funding.
Your customized business plan demonstrates yours and your team’s deep understanding of the market, a sound strategic position, and realistic financial projections. In essence, it shows that you've done your homework and are equipped to lead your company.
What about grant funding?
When applying for grant funding, having a customized business plan is just as important.
Grants often have specific criteria that your plan must address. A customized business plan addresses these requirements directly.
What about AI-Generated Business Plans?
AI has a lot of potential to help founder with their business plans. But, here again, founders need to be careful.
AI generated content can be generic, bland, and lack insight.
Still, there are ways to use AI that can help founders write a compelling business plan. But that is a topic for another day / another article.
Just keep in mind that whether you are using generic templates or AI tools, it’s important to customize your business plan to fit the unique aspects of your business.
So, should you use Business Plan Templates?
Yes, but only as a guide and not as a substitute for writing the business plan yourself.
Happy Planning!
p.s. If writing a business plan using a generic template is something you’d like to do, then get the free Business Plans Canada template here.
p.p.s. If you want to save significant time and impress lenders and investors, then work with us – we love writing customized, high quality, winning business plans. Get a free consultation today.
References:
Silva, A. C., & Silva, J. F. (2019). What do investors look for in a startup business plan? REGEPE - Revista de Empreendedorismo e Gestão de Pequenas Empresas, 8(3), 312–335. https://doi.org/10.14211/regepe.v8i3.1365
Fast Company – Do You Really Understand What Your Business Model Is?
Harvard Business Review – Design Your Organization to Match Your Strategy
Harvard Business Review – The Four Faces of Mass Customization
Forbes – Why You Should Invest In A Custom Website (similar logic applies to business plans)
