Regardless of what measure of performance academics have looked at, research shows that writing a business plan has a positive impact. I have started a fair number of companies and have never written a business plan.
Now, you could say that is the reason why a lot of my businesses failed, but I could make the argument that financially I’ve still come ahead.
Your business will constantly evolve and change, and if you want your business plan to stay up-to-date, you’ll constantly have to modify it.
Once you start your company, you’ll soon realize that a lot of decisions will have to be made on the fly and that you will have to rely on your intuition. Small Business Administration, over 50% of small businesses fail in the first five years because of lack of capital and lack of entrepreneurial experience.
Careful academic research on the business start-up process reveals that many entrepreneurs never write a business plan.
These studies also show that writing a business plan helps entrepreneurs in a number of ways, including improving their odds of successfully developing a new product, organizing a company, accessing external capital, obtaining raw materials, generating sales and surviving over time.
Many successful businesses today would not withstand academic scrutiny. There are so many holes in the plan without the 20/20 hindsight.
I can imagine what would have been the comments — didn’t we do this in the 80’s as “jolt cola” or “entrenched drink competitors will crush you if it ever becomes popular.” I think a plan is good, but serendipity and opening the business up for opportunities can be even better. Red Bull’s initial aim was a drink for long-haul truck drivers.
Here is why I think you If you are trying to raise money, you’re probably considering writing a business plan, right?
I hate to be the bearer of bad news, but I don’t know of anyone who has raised money by writing a business plan.