A quick search on Google shows us that the business community has some strong opinion on the value of business plans. Some deride them as antiquated whereas others see them as the foundation stone for a business growth. Who’s right? Well, it would be nice if someone did some research on the value of business plans.
Does Business Plan Software Help your Business Grow?
This is direct quote from a paper presented to the University of Oregon Department of Economics by Eason Ding and Tim Hursey:
‘This paper examines the relationship between planning and success in the new light of business planning software. Results suggest that planning with software is highly correlated with subsequent successes for a variety of firms.’
Research into Business Plan Software
Tim is the founder of the well-respected Palo Alto Software (Business Plan software firm) and, in fairness, flags this upfront. He adds that, “While I’m not a big fan of surveys, this one is pretty straight forward, and I like the results. Palo Alto Software asked thousands of Business Plan Pro users a couple of dozen questions about their businesses, goals, type of business, years in existence, and business planning. Almost 3,000 people responded.”
Data suggests that those who finished their business plans were about twice as likely to:
- Successfully grow their business,
- Get investment, or
- Land a loan than those who didn’t.
You can see the numbers on the chart above
Why Business Plan Software Makes A Difference.
The researchers used the completion of a business plan as the explanatory variable, the success of the business plan as the dependent variable, and a number of related results – original intent of the plan, type of company, stage of company growth, and so on – as controlling variables.
Tim’s interoperation, which I largely agree with, is that ‘
completing a business plan correlated with increased success in every one of the business objectives that came up in the study (which were: getting a loan, making a major purchase, getting investment, recruiting a new team member, thinking more strategically, and growing the company). In every one of these cases, well beyond the threshold of statistical validity, completing a business plan improved the proportion of respondents who achieved the goal.
The authors of the study said:
The analysis indicates that completion of a business plan is positively correlated with every success variable indicated, even when controlling for intent of using the business plan.
And here’s their conclusion:
Except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.
The problem with free
I’m not sure it’s all to do with the software, to be honest.
BUT, I feel that when you make an investment in something, for example, buying business planning software or templates out of your back pocket, then you’re more likely to follow through.
For me, the investments I make in my career, business and people ensure that I follow through as I am less likely to take them for granted. Why? I’ve invested in them whether financially or emotionally.
In a society where ‘Freemium’ is seen as a business model, we may need to consider the returns we get on paying for things.
If you get it for free, do you really value it?
What do you think?