Planning for the Market: Business Planning Before Marketing and the Continuation of Organizing Efforts

Posted: 17 Nov 2009

See all articles by Scott Shane

Scott Shane

affiliation not provided to SSRN

Frederic Delmar

affiliation not provided to SSRN

Date Written: 2004

Abstract

Argues that writing a business plan before undertaking marketing or promotional activities, such as talking to customers, decreases the likelihood of business termination during the first 30 months. Entrepreneurs are greatly encouraged to complete business plans as part of their organizing activities, but some researchers have argued that writing plans offers little value to entrepreneurs. This advice against planning conflicts with goal setting theory, which is used as the explanatory theoretical framework for this study. Goal setting theory suggests two hypotheses: (1) the likelihood that a new venture will be terminated is lessened by completion of a business plan prior to talking to customers, and (2) the likelihood that a new venture will be terminated is lessened by completion of a business plan prior to marketing and promotion. Goal setting theory also offers explanations of why these hypotheses are valid. The study is based on data from 223 new Swedish ventures founded in 1998 drawn from the Panel Study of Business Start-ups undertaken by the Entrepreneurial Research Consortium. Statistical analysis uses event history models to predict the likelihood of termination following completion of a business plan and undertaking marketing. The results confirm both hypotheses.The bias that holds that business plans impose an opportunity cost on the time of entrepreneurs is challenged. Finally, theoretical implications for entrepreneurship research are discussed. (TNM)

Keywords: National Panel Study of U.S. Business Startups, Entrepreneurial Research Consortium, Panel Study of Entrepreneurial Dynamics (PSED), Startups, Nascent entrepreneurs, Consumer marketing, Marketing, Firm survival

Suggested Citation

Shane, Scott and Delmar, Frederic, Planning for the Market: Business Planning Before Marketing and the Continuation of Organizing Efforts (2004). Journal of Business Venturing, Vol. 19, Issue 6, p. 767-785 2004. Available at SSRN: https://ssrn.com/abstract=1507569

Scott Shane (Contact Author)

affiliation not provided to SSRN

Frederic Delmar

affiliation not provided to SSRN

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
615
PlumX Metrics