Factors Influencing Managers’ Decisions to Prepare a Business Plan

Abstract

This paper investigates factors that influence entrepreneurs’ decisions to prepare business plans. Data is obtained from a survey administered to clients of the Arkansas Small Business and Technology Development Center and designed to address various aspects of financing options. Logistic regression analysis is used to develop a descriptive model that identifies factors and interactions between factors that are associated with the entrepreneur’s decision to prepare a business plan, including greater amount of required start-up costs, financial self-efficacy, size of the business, adequacy of capital resources acquired from business financing, and others. These findings have implications for research related to the preparation of business plans and organizational performance. Mixed results in prior studies may be attributed to failure to control for context and person factors that may influence both performance and the decision to prepare a business plan.

Keywords: Business Planning, Entrepreneurship, Decision-making

JEL Classification: L20