DON'T write a business plan within the first six months of launching a business – it's worthless and could even counterproductive, suggests new research from the University of Edinburgh Business School.
Professor Francis Greene and his co-author found that the key to starting a successful business is being flexible and responsive to opportunities – not having a rigid plan. The researchers discovered that the most successful entrepreneurs are those that write plans between six to 12 months into starting their business.
“Our research shows that writing a plan first is a really bad idea," said Professor Greene. "It is much better to wait, not to devote too much time to writing it, and, crucially, to synchronise the plan with other key start-up activities.
“Writing a plan between six months to a year increased the probability of venture viability success by 8% – but writing one earlier or later than this proved to have no distinguishable impact on future success.”
Entrepreneurs often have to adapt their business dramatically once it becomes clear what their target market actually is, he pointed out, meaning a plan too early is often just a waste of valuable time.
When it came to writing the plan, the optimal time to spend on it was found to be three months. This increased the chances of creating a viable venture by 12%. Spending any longer than this was futile, mostly because the information used to inform the plan loses its currency.
The Edinburgh results come from studying over 1,000 would-be US entrepreneurs. The researchers charted their attempts to create a viable new venture over a six-year period, from 2005 to 2011.
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