Individuals Who Write Business Plans Are 2.5x More Likely to Become Entrepreneurs
Many people have business ideas over the course of their careers, but often, these ideas never come to fruition, or they get lost amidst our daily obligations. Interestingly, studies support the notion that those who write business plans are far more likely to launch their companies.
Data from the Panal Study of Entrepreneurial Dynamics in fact suggests that business planners were 2.5x as likely to get into business. The study, which surveyed more than 800 people across the United States who were in the process of starting businesses, therefore concluded that “writing a plan greatly increased the chances that a person would actually go into business.”
Of course, causation of this phenomenon is hard to pin down. There are several different possible reasons why this correlation between writing business plans and actually starting a business may exist. But William Gartner, Clemson University Entrepreneurship Professor and author of the Panal Study, believes that “‘research shows that business plans are all about walking the walk. People who write business plans also do more stuff.’ And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.”
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The Importance of The Business Plan
Anytime you assign your thoughts to paper, you hopefully achieve clarity of purpose; good writing demands it. For the small-business owner who is understandably a bit “fuzzy” on some of the details of launching a business and all that it involves, a business plan can crystallize concepts and ideas.
In this way, a business plan becomes a compass, supplying direction and focus as an entrepreneur's business vision takes shape.
Many small-business owners liken the launch of their business as a journey. It's an apt analogy – and one worth extending. If you wouldn't embark on a trip across town, much less across the country, without figuring out how you're going to get there, it defies logic how anybody could consider embarking on the journey of a lifetime without a business plan. It should take the front-row seat before the journey even begins.