The Proven Best Time To Write A Business Plan
A recent study by Harvard Business School looked at more than 1,000 startups over a 6 year period to determine the effects of business planning on a startup's success and defined the best timing for creating a business plan.
Here are the key takeaways from the study:
- Entrepreneurs who plan are more likely to create a successful venture - The study found that individuals who took the initiative to plan for their startup were more likely to create a viable venture over non-planners. The act of planning helped entrepreneurs schedule out a plan of attack, and identify links between action and outcomes for their business.
- Business plans are best written 6-12 months after the entrepreneur decides to start their business - Committing to a business plan while the entrepreneur is talking to potential customers, getting their product ready for market, and contemplating marketing and sales strategies have shown to increase a startup's probability for success by 27%.
- Don't spend too long on your business plan - The sweet spot for time spent contemplating, strategizing, and creating a business plan is 3 months. Spending this amount of time increased a business' viability for success by 12%.
Despite this study's helpful findings, it did not account for a business plan's utility to an entrepreneur. If a business plan helps an entrepreneur organize his/her thoughts and injects confidence into taking action, it may be useful for a particular entrepreneur's personality to create an initial business plan, and to create a second one as their perspective on the business pivots or grows.
Regardless of timing, business plans should always be viewed as a navigation tool, rather than a concrete map to be followed to a tee. Maintaining flexibility and pivoting according to changing circumstances of the business is always the best business plan there is.
To learn more about the study's findings, you can read more here.