When executed thoughtfully and effectively, business planning is an invaluable tool that enables you to chart overall direction and anticipate changes. However, business planning is not a panacea and can sometimes lead to an entirely new set of troubles. Effective business planning is thorough yet flexible, cognizant of its limitations. In contrast, disadvantageous business planning is sloppy and it overreaches, setting a small business on a faulty path.

False Certainty

Developing a concrete plan for business operations has the potential to convey a false sense of certainty. Plans and projections are based on a planner's or manager's best guess as to how a business will evolve; however, there will always be unforeseen circumstances, such as overall economic climate and new competition entering the market. A business that adheres rigidly to a plan runs the risk of being unable to adapt to new threats and take advantage of new opportunities.

Lack of Freedom

Vibrant businesses thrive in part because employees have the license and opportunity to offer creative input. Business planning tends to be a top-down endeavor; in other words, managers articulate missions and goals, and employees are enlisted to pursue these aims. This process may not allow employees sufficient freedom to influence either the company's long-term objectives or its short-term strategies. This lack of freedom is disadvantageous to the company, which robs itself of the potential for exciting new ideas. It is also disadvantageous to the employees, who miss out on opportunities to become engaged.


Although effective business planning strives for objectivity in order to obtain honest and accurate results, it is virtually impossible to be completely fair and dispassionate when envisioning a future course for your business. Wishful thinking may skew results for even the best-intentioned planners. In addition, a manager or owner with a vested interest in securing financing from a bank or investor may deliberately, or even subconsciously, inflate projections in order to portray future potential that is likely to attract capital.

Time and Money

Business planning can be time consuming and expensive. It may require the services of outside professionals, such as accountants, lawyers and marketing experts, and it may take time away from other endeavors, such as short term problem solving that provide more direct benefits. Business that do not have extra money to spend on professional services or extra time to devote to collecting and interpreting information may risk wasting precious resources on an endeavor whose cost may exceed its benefits.