There is considerable evidence that creating a business plan helps entrepreneurs, business owners and executives achieve more success. For instance, this article cites 20 scholarly research articles that show how business planning is proven to increase business survival rates. One of those studies found that 84.2% of small to medium sized enterprises (SMEs) that created a business plan reported improved financial performance, while 78.9% experienced increased market share.
But what drives entrepreneurs to create a business plan? Is it to improve their strategy so they can be more successful? Is it to raise funding so they can launch their business or take it to the next level? Or is it both funding and strategy?
Since April 2019, we have asked this question to 1,734,884 entrepreneurs, business owners and executives who sought out a business plan for their organization. Specifically, we asked them if they needed a business plan for:
- Funding
- Strategy
- Both Funding & Strategy
Here are the results by year:
Here are the results by quarter:
What we have seen is that the percentage of individuals seeking a business plan for just funding has decreased 37.3% over the past 21 quarters: from 24.6% the first quarter of 2019 to just 15.5% in the first quarter of 2024.
On the other hand, the percentage of individuals seeking a business plan for just strategy has increased 9.3% from 27.8% in the first quarter of 2019 to 30.4% in the first quarter of 2024.
And the percentage of individuals seeking a business plan for both funding & strategy has increased 13.9% from 47.5% in the first quarter of 2019 to 54.2% in the first quarter of 2024.
“What we are seeing is a dramatic rise in the number of entrepreneurs, business owners and executives who want a business plan to improve their strategy,” says Dave Lavinsky, president of Growthink. “When we first started helping clients develop business plans 25 years ago, their number one goal was funding. While entrepreneurs still desire funding from their plans 69.6% of the time today, 84.6% of the time they are trying to improve their strategy.”
One possible reason for the decreased need for funding in business planning is that website and software companies are much less expensive to launch today than they used to be. However, such companies represent only a small percentage of new business starts (most are still traditional businesses like restaurants, trucking companies, construction firms, etc.).
According to Lavinsky, “More and more entrepreneurs today have saved a little money from their jobs and are willing to invest it, often alongside investors and/or lenders, in a venture of their own. Since it’s their own, hard-earned money, they want to make sure their strategy is as strong as possible, so they have the highest likelihood of success.”
It’s good to see entrepreneurs, business owners and executives prioritizing strategy today. Doing so will allow them to achieve more success and will improve our economy!
