IESE business school, contributor to forbes, says "While many argue that business plans are no longer needed to start up a company, the very exercise of trying to foresee the future five years from now can be extremely helpful for entrepreneurs. Indeed, research published in the International Small Business Journal demonstrates that engaging in planning activities is associated with better chances of success and greater accuracy"
How to get the best from your planning :
"Take A Wider View Of Planning
Many enthusiastic entrepreneurs get extremely bored detailing business plans and financial projections, often seeing them as obligations imposed by banks or investors. but planning can not only help you attract funding, it also helps you develop your skills as an entrepreneur, giving you a better shot at success.
Previous studies on budding entrepreneurs have tended to concentrate on how the planning process helps them gain legitimacy or gather external resources. But McCann and Vroom’s study looks at how entrepreneurs make ongoing assessments of their fledgling businesses throughout the planning process — transforming their internal views in the process."
Instead of seeing planning largely as an obligation imposed by external parties, focus instead on how it can help you generate new information and insights into your business
Allow Proper Time To Plan
The study found that engaging in planning activities over a period of 12 months led to significant changes in perceptions in three areas:
• How much uncertainty did respondents perceive in their business environment in terms of how markets would develop, the competition and how key stakeholders would react to the start-up?
• Self-efficacy. How confident did they feel about their abilities to effectively run their businesses?
• Expectations of financial performance. How well did they feel their business would perform in financial terms? Did expectations grow or fall over time?
Even experienced entrepreneurs seemed to learn and change their beliefs through planning activities. In fact, serial entrepreneurs’ beliefs changed to a similar extent as novice entrepreneurs throughout the study.
Taking Action
Planning may include actions such as defining potential markets and drawing up business plans with projections. Entrepreneurs who take more actions during the planning stage of a business help reduce the uncertainty surrounding their project associated with financial and competitive factors – namely, attracting funding, attracting customers, competing with other firms, complying with regulations, and keeping up with technological advances.
Team Up
There was also evidence to suggest that entrepreneurs who were part of larger teams saw more positive results, perhaps due to their pooled knowledge and experiences.
Planning may not make perfect, but budding entrepreneurs should ignore it at their peril".
This article is taken from Forbes
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