A Business Plan Will Not Make You More Successful

Palo Alto Software, which makes business planning software, just did a survey to their own users to show that those who completed business plans that they started with Palo Alto were nearly twice as likely to successfully grow their businesses or obtain capital as those who didn’t finish.

This research is a classic example of “there are lies, damnable lies, and statistics” (stolen from Twain who got it from someone else). An even more reasonable conclusion – people who DO SOMETHING and follow through on it are twice as likely to successfully grow their business.

My second book (to be published in December 2010) is titled “Bad Plans Carried Out Violently” and promotes the idea that DOING SOMETHING trumps pre-planning almost without exception. I’ve talked with hundreds of successful business owners and asked them two questions:

1. Did you do a business plan before you started your business?
2. If you did, how well did it project what actually happened over 1 yr, 3 yrs and 5 yrs?

The number of successful business owners who do a business plan before starting their business is statistically insignificant – well less than 1%. The only reason the small minority gave for doing one is because they had to in order to get money from a bank or investor (almost no one does one just for themselves). That should tell you something about the classic “pre-planning” Business Plan we’re all taught is so important.

Of those very few that did do a Business Plan before starting, virtually none of them say their Business Plan projected accurately what actually happened in the next 12 months, or 3yrs or 5 yrs. To the contrary most said their Business Plan was wildly off from what actually happened in the real world.

The conclusion is that successful business owners don’t do a classic Business Plan unless banks or investors are involved, and that they never look at it after that. So it has real value for getting a loan, but not for running a business.

Stop planning and get moving! Do a simple 2-page Strategic Plan and revise it every month with the input your business gives you – you’ll be better off.

“Committed Movement in a Purposeful Direction” and “Implement Now. Perfect as You Go.” – two concepts from my next book – are much more instructive to success than pre-planning. Knowing the end goal is extremely important – knowing beforehand the path for how you will get there is fortune-telling.