it could BE different

Business Planning Good. Writing Bad

A good plan violently executed now is better than a perfect plan executed next week. George S. Patton


My posting of Business Plans are for Bureaucrats has attracted a fair amount of interest, so here’s some more to consider when it comes to planning and start-ups.

William Bygrave’s publication ‘Pre-start-up Formal Business Plans and Post-start-up Performance: A Study of 116 New Ventures’ published in Venture Capital in 2007 is worth a detailed read. For those that prefer the thirty second read, here are the two key quotes:

“This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture…The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial start-up capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.”

“In a survey of the Inc. 500 in 2002, founders were asked whether they had written a formal business plan before they launched their ventures… Inc. reported that ‘Only 40% said yes. Of those, 65% said they had strayed significantly from their original conception, adapting their plans as they went along…that finding is consistent with an analysis of the Inc. 500 in 1989 when ‘41% of the founders had no business plan at all, 26% had a rudimentary plan and only 28% had a formal business plan’. A study of Harvard Business School alums that had started businesses discovered that no more than a third had written detailed business plans… ‘It’s a pretty universal distribution.’ Put another way, only a minority of entrepreneurs, including even MBAs from a pre-eminent business school, started their ventures with a formal written business plan.”

Note that Bygrave (and I) is not stating that it is a good idea to have no plan. Rather, that a formally written plan is of highly questionable value at the pre-money stage of a company.

So come up with an idea, think about what needs to happen and take action knowing that it could BE different.


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This entry was posted on September 3, 2013 by in Start-ups.
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