23 Feb Writing a business plan does increase the odds of success
Entrepreneurship experts are divided: some believe that a written business plan is crucial to creating a viable start-up – one that achieves profitability – while others think it’s better to skip that step and immediately begin testing ideas with consumers. In recent years the latter approach, popularised by the Lean Startup movement, has held sway. But a new study suggests that written plans have more value than we think.
Researchers examined 1,088 nascent US entrepreneurs over a six-year period. They separated founders who had written plans from those who hadn’t and paired members from each group according to attributes such as education and experience, allowing them to isolate the effects of having a plan. “It pays to plan,” the researchers conclude. “Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non planning entrepreneurs.” The research suggests that a written plan focuses a founder on goal attainment and supports better decision making about allocating and coordinating resources.
Source: by Francis J. Greene and Christian Hopp (Strategic Entrepreneurship Journal 2017)
Whilst not everyone will agree with these findings, my initial thoughts were “you could do no worse than to plan for success”. In my experience, having a plan will certainly provide clarity and direction particularly at those times when you’re at a decision crossroad, with many competing priorities, reverting to the “plan” will help you stay on track and guide you through the decision making process.