Do Business Plans Make No Difference in the Real World? A Study of 117 New Ventures
Frontiers of Entrepreneurship Research 2005
15 Pages Posted: 21 Dec 2009
This pioneering 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 busi-ness plans. It also showed that businesses with male founders outperformed those with females, and that businesses started by alums with only BS degrees outperformed those with MBA degrees. The ἀndings 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.
JEL Classification: M13
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