Pre-Startup Formal Business Plans and Post-Startup Performance: A Study of 116 New Ventures

Venture Capital Journal, Vol. 9, No. 4, pp. 1-20, October 2007

Babson College Center for Entrepreneurship Research Paper No. 2008-8

19 Pages Posted: 31 Oct 2008

See all articles by William D. Bygrave

William D. Bygrave

Babson College - Arthur M. Blank Center for Entrepreneurship

Julian Lange

Babson College - Arthur M. Blank Center for Entrepreneurship

Aleksandar Mollov

Babson College - Arthur M. Blank Center for Entrepreneurship

Michael Pearlmutter

Babson College - Arthur M. Blank Center for Entrepreneurship

Sunil Singh

Babson College - Arthur M. Blank Center for Entrepreneurship

Date Written: September, 17 2008

Abstract

This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The data set comprised new ventures started by Babson College alums who graduated between 1985 and 2003. 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 startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

Keywords: New venture, Business plan, Performance, Entrepreneur, Business plan competition, Education, Gender, Experience

JEL Classification: M13

Suggested Citation

Bygrave, William D. and Lange, Julian and Mollov, Aleksandar and Pearlmutter, Michael and Singh, Sunil, Pre-Startup Formal Business Plans and Post-Startup Performance: A Study of 116 New Ventures (September, 17 2008). Venture Capital Journal, Vol. 9, No. 4, pp. 1-20, October 2007; Babson College Center for Entrepreneurship Research Paper No. 2008-8. Available at SSRN: https://ssrn.com/abstract=1269484

William D. Bygrave (Contact Author)

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

Julian Lange

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

Aleksandar Mollov

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

Michael Pearlmutter

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

Sunil Singh

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

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