A widely-held business school mantra is that a new venture should start with a written business plan. Business plan advocates state that for an aspiring entrepreneur a written business plan has many benefits including articulating the business model, strategic, operational, and financial planning, examining critical assumptions, and fundraising. While there is no argument in the prescriptive literature on the importance of having such a plan in approaching investors, there is much more controversy concerning a business plan’s practical value. Empirical studies into the effectiveness of business plans have produced mixed results. But there is general agreement that two important reasons for writing a business plan are institutional and mimetic pressure. When those two factors are combined, it is expected that would-be entrepreneurs who are seeking external funding and have taken a basic entrepreneurship course are more likely to write a business plan than those who are not seeking external funding and have never taken an entrepreneurship course.
Lange, Julian; Perdomo, Alexander; Suh, Chang; Zhao, Qing; and Bygrave, William D.
"WHY DO ENTREPRENEURS WRITE BUSINESS PLANS? A STUDY OF 457 NEW VENTURES (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 29
, Article 5.
Available at: http://digitalknowledge.babson.edu/fer/vol29/iss16/5