If you need to write a business plan, it’s tempting to fire up ChatGPT or any other generative AI chatbot and just ask it to create a plan for you. These tools promise to generate business plans with a single click and finish your plan in 15 minutes.

After all, you might get a passable plan with minimal effort.

If these tools are really that good, should you even consider a dedicated planning tool like LivePlan? 

The benefits and drawbacks of letting AI write your business plan

Over the last year, I’ve spent dozens of hours writing plans with AI—I even documented my prompts and results for ChatGPT.

I’ve found that for some parts of the plan, AI can be a helpful partner. It generates ideas, fleshes out concepts, and turns basic notes into convincing prose. However, these benefits simply cannot outweigh the issues still plaguing generative AI tools.

Further Reading: The pros and cons of AI for business planning

Accuracy and consistency 

Imagine making an important business decision based on false data or presenting fictional information to investors. This is not a situation you want to be in.

I’ve personally experienced instances where chatbots have invented market research data. Not only was the data inaccurate, but the AI created fictional sources to accompany it. It certainly made the data look convincing and legitimate, but a little Googling quickly proved that the chatbot had “hallucinated” everything that it presented to me.

AI also struggles to keep a consistent storyline as you use it to develop a business plan. For example, you might start out with a specific idea for your marketing strategy, but the AI might morph that into something else as you go.

You have to constantly and carefully review what it generates to ensure that the statements it makes in one section are consistently referenced in the rest of your plan. 

That said, AI chatbots can be useful for generating ideas. Ask it for a list of marketing tactics, and you’ll get 10 ideas ranging from the obvious to the occasionally interesting. AI just works better as a sounding board rather than a complete business plan generator.

Complex prompts

It often takes multiple complex prompts (your instructions to the AI) to get usable output from an AI chatbot. 

Unfortunately, even with a template, you often won’t get these right on the first attempt. This means all of the time and effort you save by not writing a plan yourself is replaced by how long it takes to create a winning prompt.

When I used AI to generate a complete business plan, I spent hours testing and reworking prompts before I got reasonable output. Even then, AI couldn’t tackle all aspects of the planning process, including market research and financial forecasting.

The real issue is that, by the end, you’ll know more about prompting an AI tool than how your own business works. 

The point of planning is to devise a strategy for your business’s success rather than wasting time wrestling with AI output.

Financial forecasting

When you ask ChatGPT to generate a sales forecast or cash flow forecast for your business, it will confidently do it. If you ask, it will even generate an Excel file for you.

But, AI-generated financial projections can be difficult to edit and adjust.

That Excel file it created for you? It has no formulas, even if you request that they be included. 

What happens when you need to make adjustments to your forecast? You’ll have to re-prompt the AI to generate the file again and again until it gets it right—a time-consuming and frustrating process.

Getting the AI to understand what you’re trying to do is often much more complicated than just doing the work yourself. More importantly, there’s no guarantee that the financial format is correct or that the numbers are accurate for your specific business. Remember that every business is unique, and there are no “one size fits all” financial forecasts. 

Ask the AI to generate a forecast a second time, and you’ll often get wildly different information. In many ways, the process feels like using a random number generator. 

The problem is that generative AI models (and even some AI-driven business planning tools) don’t use a spreadsheet or a consistent and expertly reviewed financial model. They try to reinvent the wheel with every new prompt, and they often get it wrong.

The lack of a consistent and accessible financial model also makes it harder to understand how changes to one part of the forecast impact another. For example, you can’t make a simple change to your sales forecast and immediately see how that impacts your profitability and cash flow.

This lack of flexibility and stability, coupled with invented numbers, makes using AI for financial forecasting a non-starter.

Managing your business

AI chatbots do not offer tools to manage your business and track performance over time. 

After all, a good business plan is much more than a tool for fundraising or a roadmap for starting a business. It’s a management tool that helps you make adjustments as you track your actual results compared to your plan.

The best business planning tools integrate with accounting tools and automatically import and analyze your actual results. They compare your business’s performance to your plan, provide insights, and recommend changes. 

Some people do this work manually. They export data from their accounting software and go through the tedious process of updating spreadsheets to compare their plan to actual results.

Then there are AI tools, which are the worst choice for this task. 

These tools are built to complete tasks as you feed them information. If you want to track your performance over time, you need to start from scratch every single time you want to do an analysis. AI tools don’t store your plan, connect with accounting software, or provide automated reporting.

This is a general problem with the current crop of AI chatbots. Doing repeated analysis and forecasting for a new business is not their strong point. AI may eventually be able to do it well in the coming years. 

But, for now, the best option to automate the process is a dedicated planning tool.

Expertise and guidance

Good business planning tools are backed by years, sometimes decades, of research and experience. 

The people behind the tool know how to create a great plan that meets the needs of investors and businesses looking to grow. Good planning apps are full of advice, detailed instructions, and checks to ensure your plan is accurate and complete.

On the other hand, AI tools tend to be jacks of all trades. 

An AI chatbot (or solely AI-powered planning tool) will generate a different version of a business plan whenever you ask. It’s not following a researched outline or proven formula. It’s just regurgitating a combination of things that it’s found online—and not always from reputable sources. 

They lack expertise or any checks to ensure you’re not missing something vital.

Beyond that, they don’t create complete documents with integrated charts, graphs, and the correct format that lenders and investors expect. They can create something that may appear complete, but there’s no way to ensure that everything you need is included. 

The power of LivePlan

This brings me to LivePlan—a dedicated business planning tool designed specifically for entrepreneurs and small business owners. 

It offers a structured, step-by-step approach to creating a comprehensive business plan. And while LivePlan integrates AI, it doesn’t rely only on AI for its output. It uses AI for specialty tasks that help guide entrepreneurs through the planning process, following a vetted and approved formula that results in a plan that gets results.

Critical guidance

One key advantage of LivePlan is that it guides you through the critical thinking required for effective business planning. 

As you work through each section, you’re prompted to consider crucial aspects of your business, such as your target market, competitive landscape, and financial projections. Help is available at every step with detailed instructions and examples to ensure the process is simple and easy to understand even for novice entrepreneurs.

This thoughtful exercise helps you better understand your business and its potential challenges and opportunities.

Bullet-proof forecasting

Unlike static AI-generated projections, LivePlan’s forecasts are dynamic and interconnected. When you update a number in one part of your plan, it automatically updates related financial forecasts—ensuring your projections remain accurate and consistent. 

LivePlan’s AI assistant also helps by recommending revenue opportunities and potential expenses you may have missed. You can even create multiple forecast scenarios to see what might happen to your business if, for example, you choose to hire more employees or purchase more equipment.

Tailored AI assistance

LivePlan’s AI assistant is specifically trained on business planning best practices and the LivePlan methodology. 

We spent hundreds of hours testing and iterating on the core prompts that power the LivePlan assistant, ensuring the suggestions and content it generates are tailored to creating an effective business plan.

It can quickly turn notes into polished text, adjust the tone of voice of your plan, and rewrite any initial writing you’ve done yourself. 

Beyond that, LivePlan’s AI learns as you go, building off the information you provide about your business and getting more customized at every step. 

Ultimately, your business plan should reflect your unique vision and goals. With LivePlan, you retain full control and ownership of your plan, making it easy to edit, update, and share as needed. The AI assistant is an optional tool designed to enhance the planning process, not replace your input and expertise.

Management tools built-in

A plan without action is just a document. 

LivePlan takes things a step further and helps you implement your plan and track your progress with AI-driven reviews that surface important insights about your business performance. Plus, it connects directly to Quickbooks and Xero accounting software, so you can immediately update and track your progress at a glance.

With a dashboard that provides an instant overview of your business’s performance and a monthly review feature highlighting key information about your business, you can be confident that you’re making smart and informed decisions to grow your business.

Human help included

While LivePlan has customized AI built in, sometimes you just need to talk with a real person. LivePlan includes a dedicated customer advocacy team ready to help answer your business planning questions. 

And if you need more than advice, LivePlan can connect you to expert business plan consultants.

Real-world success: Joe’s All-American Tap Cafe

To illustrate the effectiveness of LivePlan, let’s look at the recent success story of Joe St. John, the founder of Joe’s All American Tap Cafe in Vero Beach, Florida.

Joe used LivePlan to write his business plan when he decided to purchase a restaurant and open a family-friendly bar and grill. LivePlan’s prompts and formatting made the process straightforward, allowing Joe to include all the necessary details, from market research to competitor analysis.

Thanks to the thorough and professional business plan created with LivePlan, Joe was able to secure a $225,000 bank loan quickly. “LivePlan was instrumental in our approval process,” he said.

Do you absolutely need AI support?

see what current customers have to say about the AI-powered LivePlan Assistant:

Take the first step

Writing your first business plan may seem daunting, but with the right tools and guidance, you can create a roadmap for your entrepreneurial journey. 

While AI chatbots can be useful for generating ideas and refining your writing, LivePlan offers a comprehensive, user-friendly platform that empowers you to create a professional, lender-ready business plan.

Don’t let uncertainty hold you back from pursuing your dreams. Sign up for LivePlan today and start turning your business idea into a reality.