The Small Business Administration contracted with William B. Garner, a Spiro Professor of Entrepreneurial Leadership at Clemson University and Jianwen Liao, Associate Professor of Strategy and Entrepreneurship at the Illinois Institute of Technology to study pre-venture planning and entrepreneurs. Published February 2009 by the SBA Office of Advocacy, the article titled Are Planners Doers? Pre-Venture Planning and the Start-Up Behaviors of Entrepreneurs reports some interesting findings that all entrepreneurs should know.
First, the professors reported that, indeed, “…early formal planners are doers. We believe that challenging prospective entrepreneurs to accomplish a formal business plan early in the venture creation process will likely enable them to engage in additional start-up behavior that could further the process of business creation.” In other words, the business plan is informative and motivating.
The reasons given in the report for the importance of business planning include:
- Entrepreneur can identify what he or she doesn’t know
- Early identification of needed resources and when they will be needed
- Identification of specific problem solving actions
- Identification of actions needed to attain goals
- Ability to communicate objectives, purposes and activities to others
- Assessment of accuracy of business assumptions concerning resources, knowledge level, potential customers and beliefs
- Reduction in organizational delays
- Reduction in delays in acquiring plant and equipment, and goods and services
- Keeps entrepreneurs on track
- Provides benchmarks
In fact, studies show that even the presence of planning benefits entrepreneurial success. Presence refers to the whether a business plan is completed, while formality refers to a documented business plan. A written formal business plan was found to significantly influence a positive business start.
A lot is written about the benefits of writing a business plan in general terms. It’s good to know that studies of specific companies backs up the generalities. A business plan is a tool for success any way you look at it.
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