This is one of the secrets of successful entrepreneurship

Money

Business plan

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How can you make your way to becoming a successful entrepreneur? That’s the million-dollar question many try to answer but few succeed at. But now, new research has discovered an easy way to boost your chances.

WRITING A BUSINESS PLAN CAN MAKE ALL THE DIFFERENCE WHEN IT COMES TO MAKING A START-UP PROFITABLE

The University of Edinburgh Business School and RWTH Aachen University have discovered that entrepreneurs who write formal start-up business plans are 16 per cent more likely to be successful. The findings suggest that it pays to plan, and planning is more beneficial when the challenges are greatest.

“Writing a plan can make all the difference when it comes to making a start-up profitable,” said Prof. Francis Greene of the University of Edinburgh. He and RWTH Aachen’s Christian Hoppy studied the characteristics of over 1,000 entrepreneurs and their start-ups over a six-year period.

A plan helps detail the opportunity to be seized, what success looks like, and what resources are needed. “A business plan is key to the investment decisions of angel investors, banks and venture capitalists,” Greene told My Salaam.

“If an entrepreneur wants to raise money and grow quickly, eventually they’ll want to write a plan,” he added.

Business plan idea. Picture: Shutterstock/Ape Man

A BUSINESS PLAN IS KEY TO THE INVESTMENT DECISIONS OF ANGEL INVESTORS, BANKS AND VENTURE CAPITALISTS

According to the results, high-growth oriented entrepreneurs are 7 per cent more likely to plan, and those with innovative, disruptive ideas are 4 per cent more inclined to plan than their peers. Entrepreneurs seeking external finance are also 19 per cent more likely to commit their vision to paper.

So why do many entrepreneurs shy away from writing a business plan? The research findings run counter to the strategy of some entrepreneurs, who prefer to act and improvise than to waste time on a plan that won’t survive first contact with the customer.

“Entrepreneurs aren’t prevented from writing business plans as such; rather, they just don’t have time or don’t need to in some cases. They value the flexibility that comes without a proper business plan,” Greene said. 

(Reporting by Seban Scaria)  

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