It is worth planning. As mentioned in the last article by Harvard Business Review, entrepreneurs writing business plans are more successful. While this may encourage entrepreneurs to write plans as their first job, writing a plan in subsequent investigations is a very bad idea. It is not too long to wait, waste time and write a plan. In particular, it is important to synchronize the plan with other important startup activities.
The startup business plan seems to be a good idea because it answers basic questions such as “Where are you now?” And “Where do you want to go?” Planning is planned first by describing in detail how to coordinate complex interdependencies such as customers, competitors, sales, logistics, marketing, sales, etc. In the past studies , Categorize more than 1,000 start-up companies as planners and non-planners, and create entrepreneurial business aiming at newer companies.
But the real key to business success is flexibility and responsiveness to opportunities. The business owner needs to keep turning around the business when it turns out that the original customer is not an appropriate customer, or when it turns out that their products or services are suitable for different markets. Because of this reality, the first written business plan is only a fable. And writing a plan takes time to evaluate opportunities. Another danger is to hide. The plan only makes an entrepreneur wrong sense of security, it is not what he imagined, it will prevent you from seeing real opportunities.
In order to provide concrete and practical assistance to start-up, we have returned to a Panel Study of Entrepreneurial Dynamics II from 1,000 promising US entrepreneurs. Based on this representative data, we have rebuilt entrepreneurial attempts to create a viable new business for six years (2005 to 2011). In order to track these entrepreneurs over time, our analysis has paid attention to monitoring the background and starting conditions of the business, such as the formation of founder and previous experience.
In order to control these influences, we used well-known statistical methods to divide promising entrepreneurs into two groups, planner and non-planner. By doing this, we were able to create “statistical twins”. This is a pair of similar startups of various dimensions, except for the difference between planner and planner. This allowed us to grasp exactly the impact of the business plan plan on the feasibility of the project.
On average we discovered that the most successful entrepreneur is an entrepreneur who drafted a business plan between 6 months and 12 months after deciding to start a business. Writing a plan during this time has increased the probability of success of the company’s viability by 8%. But writing sooner or later has no visible effect on future success.
After that, I saw how much time the founder should spend writing a plan. I found that the optimum time to make a plan is 3 months. This has increased opportunities to create 12% executable business. Long-term expenditure was meaningless as the information used to inform the plan lost the currency. Even if I spent one to two months of the plan, it was not too bad. If the choice is either to quickly write a plan or not to write a plan, the contractor should not have written any plans at all.
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We learned that the plan is really important when planned. Even though plans were made in parallel with early activities such as defining the market and gathering information on competitors, opportunities to create new business did not increase. Writing a plan was not useful if the contractor had already hired workers or raised funds from the outside. If the plan is written as part of these activities, entrepreneurs are less likely to do business than those who do not plan.
When we were planning the ideal time, we found out that the business owner talked with the customer, prepared the product for the market, thinking about marketing and advertising activities. Implementing a marketing plan concurrently with these activities will increase opportunities for starting the business by 27%.
But, it should hurt the very important things in writing a good plan. In order to make effective planning, it is necessary to describe in detail what the opportunity is, who the customer is, why you should fear competitors, how the company works, how to earn money.
The new thing is to show that timing is truly important. Advice to entrepreneurs is not to make plans too early, not to spend too much time, so this should be done in parallel with other activities promoting business.
It is good advice not only for entrepreneurs but also for managers of large-scale and growing companies who need to plan under circumstances such as start-up where the information-deficient environment and environment are very uncertain.