If you’re one of the millions of Americans that are planning to leave their work in favor of their own business, then you would need a business plan. Contrary to popular belief, a business plan is not just for impressing investors to give you money, you can use it for other things like as a guideline to keep you and your staff on track with regard to your goals.

Despite its apparent importance, a lot of people still ask if they really need a business plan. If you’re asking this question yourself, then the following discoveries and figures might help you find the answer.

  1. Researchers examined 223 new ventures and found that business planning helps firm founders make decisions, balance resource supply and demand, and turn abstract goals into concrete operational steps.
  2. The same study also discovered that business planning reduces the likelihood of a venture disbanding.
  3. Those who finished their business plans were twice as likely to succeed in growing their business than those who have no business plans.
  4. A study in Australia suggests that possession of a formal business plan was significantly associated with higher gross revenues and growth in sales.
  5. Emerging entrepreneurs who completed a business plan were 6 times more likely to persist in putting together their business than those without a plan.
  6. Entrepreneurs that write formal business plan receive more formal financial support than if they had no plan, according to a 2014 study.
  7. 70% of 3,640 venture capitalists perceive a written business plan to be very important.
  8. In the above study, only less than 2% think that a business plan is unimportant.
  9. An examination of the performance of 135 small businesses revealed that, in general, planners outperformed non-planners.
  10. Despite its proven utility, entrepreneurs who wrote business plans never updated or rarely referred to their plans after writing them.
  11. The desire to plan says a lot about you. Better‐educated founders are planners.
  12. One study found that business planning has a stronger positive effect on the performance of established firms than it does in new firms.
  13. The above study also found that both the written business plan and the process of business planning “augment” the firm’s performance.
  14. A study found that planning can have a positive effect on venture performance, even in highly dynamic environments where its usefulness has been questioned the most.
  15. The same study found that in highly dynamic environments, entrepreneurs get the most value out of planning when they focus on specific activities such as information gathering.
  16. Lastly, the study found that businesses that are less dynamic perform better if they spend a longer time planning.
  17. Writing a business plan before undertaking marketing or promotional activities decreases the likelihood of a business tanking during the first 30 months, according to one study.
  18. There are two common categories of business plans: the traditional plan and the lean startup format.
  19. The traditional plan is more common, according to the Small Business Administration.
  20. Very little formal planning goes on in most small businesses in the US, found one researcher.
  21. But he also found that small businesses who succeeded did more planning than similar firms who did nothing.
  22. Preparedness pays. Researchers found that perceived preparedness rather than the passion of the presenter influenced the decisions of investors.
  23. The same study discovered that quality of a business plan has significant effects on perceived preparedness and the investor’s funding decision.
  24. According to 100 venture capitalists, the business plan should show if the “jockey is fit to ride”; that is, the entrepreneur has the staying power, track record, and familiarity with his or her target market.
  25. There is no one winning business plan template. According to one study, entrepreneurs must customize their business plan according to whether they are seeking funding from a bank, venture capital fund, or business angel.
  26. Prove your profitability on the get-go. Venture capitalists sees long-term growth and profitability as one of the two most important factors for success in the initial screening.
  27. They also make decisions very fast. The same study found that venture capitalists spend only an average of less than six minutes on initial screening and less than 21 minutes on proposal assessment.
  28. According to one study, fast-growth firms develop written business plans as a product of strategic planning, and those plans are used more for internal management purposes than for start-up funding.
  29. The above study also found an association between the completion of these strategic plans and the firm’s profitability.

69% of venture capitalists say that they have not invested in new ventures without reviewing a business plan first.

Author Details
Ishan Jetley is the founder and managing director of Go Business Plans. Ishan has helped fund more than 400 businesses. He has helped businesses raise $150 million in business working capital, inventory and commercial property loans.