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Do Business Plans Matter?

on February 16, 2009 Source: Policy Dialogue on Entrepreneurship

Given all the attention paid to business plans as precursor to business start-ups, you would think that there would be strong evidence that such plans lead to better business outcomes. Somewhat surprisingly, the linkages aren’t quite so clear.

New research sponsored by the US Small Business Administration’s Office of Advocacy finds that the formality of business plans (e.g. are they written or are they complete?) does not seem to have a significant impact in what entrepreneurs do before and after starting a business. Plans do, however, seem to affect the timing of various activities if the planning occurs before a venture is started. With a plan in hand, new entrepreneurs are more likely to complete critical activities, such as market research or developing financial projections, earlier in the start-up process. The authors suggest that by “front-loading” these activities, entrepreneurs who plan may be more successful. However, they caution that further research is needed to test this hypotheis

Study: “Are Planners Doers? Pre-Venture Planning and the Start-Up Behaviors of Entrepreneurs,” by Jianwen Liao and William Gartner.

Category:  General  Tags:  sba office of advocacy, business plans

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