The Benefits of Business Planning in Early Stage Small Enterprises

Abstract

This article reports on the results of an empirical study into the nature and role of business planning within the new venture. In order to explore the benefits of business planning and compare the experiences of surviving versus failed businesses, the researchers analyzed 327 micro-enterprises that had been launched during the 1997-1999 period. There was no direct association between early stage planning and survival/failure during the company's first three years. While the learning and efficiency benefits of the business plan were quite high, these benefits were not found to be directly associated with survival or failure.The business plan's impact, both in terms of helping the entrepreneur learn more about managing his/her business and enabling him/her to organize the business more efficiently was significantly higher when the plan (i) incorporated a market research component or (ii) had been prepared with the intent of being used to guide decision-making.SOMMAIRE. Cet article présente les conclusions d'une étude empirique sur la nature et le rôle de la planification des affaires au sein d'une nouvelle opération. Afin d'explorer les avantages de la planification des affaires et de comparer les expériences des entreprises qui survivent avec celles des autres, les chercheurs ont analysé 327 micro-entreprises lancées pendant la période 1997-1999. Il n'existait pas de lien direct entre la planification précoce et la survie ou l'échec au cours des trois premières années d'une compagnie. Tandis que les avantages de la planification étaient appréciables du point de vue de l'apprentissage et de l'efficacité, ils n'étaient apparemment pas en relation directe avec la survie ou l'échec.Pour ce qui est d'aider l'entrepreneur à apprendre à gérer son entreprise et de lui permettre de l'organiser de façon plus efficace, l'impact du plan d'affaires était d'autant plus important que celui-ci (i) incorporait une étude de marché, ou (ii) avait été préparé avec l'intention de guider la prise de décisions.

Business Plans: Are They Relevant to Venture Capitalists?

“…As the founder immerses him/herself in the business plan preparation, some concrete opportunities might take shape and become clear. Moreover, the business plan can serve as a guide for future business decisions, providing a base for a wide range of activities and improve- 382 ASHAMALLA, ORIFE AND ABEL ments in the internal operations (Zinger and Lebrasseur, 2003). A second group of authors seem to think that the business external dynamics have drastically increased over the last couple of decades (Bhide, 1994;Drejer, 2004).…”

“…Their intuition may also mislead them. Well-conceived business plans can safeguard against such entrepreneurial tendencies (Zinger and Lebrasseur, 2003). The discipline and learning gained in the planning process can have particular value in the new venture where many of the entrepreneurs' assumptions have not been tested.…”

The coronavirus (COVID-19) pandemic: challenges among Iranian startups

“…We cannot render our services to our previous customers due to the limitations such as social distancing rules and regulations imposed by the government … we took them for granted, and we are planning for new market research … who knows how long would it take, and if we insist on this market, we will be a loser" (Case #13). Thus, they had to revise their market and marketing plans according to the new facts in the market (Zinger and LeBrasseur 2003). To do so, they needed to consider further segmentation, target market research, and positioning in a newly shaped market.…”

What Factors are Causal to Survival of a Startup?

“…They assert that traditional planning serves founders in communicating the strategy to employees, investors, and other stakeholders (Bangs, 1998). Zinger asserts that the time delay created by developing the plan benefits the founder, who may otherwise act too quickly without a well thought out strategy (Zinger & LeBrasseur, 2003). Hormozi, Sutton, McMinn, and Lucio (2002), assert that traditional strategic planning creates objectives and strategies that are crucial to minimizing risk and improving performance.…”