The interesting thing about business plans…
Author: Russell SmithJuly 30, 2012
Many years ago, Inc magazine (an American business magazine) included 100 business start ups in a study on business plans. They noted down the businesses that had completed a business plan before they had started trading and the ones that hadn’t. They then studied them for the next two years.
They found, surprise-surprise, that the businesses who had completed business plans were much more likely to still be in business two years down the line.
But this wasn’t the interesting thing….
The interesting thing was when they then surveyed the businesses that had completed the business plans and were still in business. They asked them what effect the business plan had had on their success. Surprisingly, the businesses responded that after completing the business plan they rarely, if ever, referred to the business plan once they had started trading.
So what was the correlation between the business plan and businesses succeding in business? It was that they had spent the time to complete the business plan. Whilst they hadn’t made a point to refer the business plan in any significant way once they had started trading, they had made the time to really think through all their opportunities and challenges, to get their numbers straight and to understand what was going to happen in their business.
You’ve heard the saying, failing to plan is planning to fail, but in this case it appears to be very true. Taking the time out to think and plan had a major impact on business success.
I often see businesses with great ideas not go through any significant business planning process. Sometimes, people can get through sheer willpower and force of nature. Often though businesses hit problems quickly and because they haven’t spent the time to anticipate these problems they end up not knowing how to react and overcome the hurdles.