Complexity and uncertainty in business planning

Illinois entrepreneurs who are creating a business plan for a start-up venture should make sure to distinguish between complexity and uncertainty. The two may look the same, but they are very different. Complexity means that the situation may be difficult to understand, but with enough information, it can be figured out. Uncertainty means that the amount of information is irrelevant. The situation can be simple or complex, but it is essentially unpredictable.

It is important to keep these distinctions in mind when creating a business plan. One reason is that people might mistake having more information for security. This could mean that they misread an uncertain situation as complex and then get a false sense of security with more information.

However, business people should not let this uncertainty stop them from moving ahead. Uncertainty is usually a temporary state. It may evolve into something simple or complex, but a new business owner can still make a business plan even if there is a great deal of uncertainty. It is better to make a business plan on the back of an envelope and gather more information later than to become paralyzed by trying to analyze an uncertain situation.

Of course, there are aspects of business that must be planned, and for some of those aspects, an attorney may be helpful. For example, a person may not know what kind of legal entity would be appropriate for the venture. This may be complex, but an attorney can explain the advantages and disadvantages of a corporation and a limited liability company. Other aspects of starting a new business may be both complex and uncertain, but it is possible to prepare for uncertainties.

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