Advance Planning Pays Off for Start-Ups
We’ve featured the great debate over whether having a formal business plan boosts an entrepreneur’s odds of success. But a new study finds that entrepreneurs who engage in business planning early on are more likely to at least get a business off the ground.
The Small Business Administration’s Office of Advocacy explored how business planning affects start-up activity and whether and when planning was impetus for moving a proposed business forward. Investigators reviewed data from the Panel Study of Entrepreneurial Dynamics, a multi-year sample of nascent entrepreneurs in various stages of starting a business. It looked at three factors: whether business planning was conducted, the level of formality of the plan, and at what stage during the start-up process it was done.
The study found that entrepreneurs with a formal business plan in the early stages of starting a business more quickly completed typical start-up activities, such as getting a patent, saving money for the business or organizing a start-up team. Those that did business planning later in the start-up process tended to finish those start-up activities at a slower pace — especially if they didn’t have a formal written plan. Read more:
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