160 ENTREPRENEURSHIP
Planning and Performance. The firm also benefits from the planning process. Research
shows a positive relationship between planning and performance in new and small
firms.
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That is, firms that plan perform better and are more likely to succeed than firms
that do not.^14 There are four reasons why this is so.- Comprehensiveness: The business plan has to deal fully with all major issues facing
the new venture. This comprehensiveness enables the entrepreneur to see possible
sources of trouble and develop contingent strategies for confronting these problems.
It forces the entrepreneur to develop and demonstrate industry-related competence.^15 - Communication: The business plan communicates the venture’s concept and
potential to various audiences. A plan that effectively transmits the founder’s vision
and excitement can attract valuable resources to the new venture. - Guidance: The business plan sets goals and milestones for the new venture by lay-
ing out the entrepreneurial team’s intentions and establishing the values the
founders intend to foster and preserve. Over time the plan can be a roadmap guid-
ing managers and employees in their decision making. “When in doubt, consult the
plan” can become the firm’s motto in the exciting and turbulent months and years
to come. Without such guidance, an organization can lose sight of its original pur-
poses and strengths. - The Planning Process: Putting together a business plan, consulting it frequently,
and periodically reviewing and revising can improve the venture’s performance
even if some aspects of the plan become obsolete before the ink is dry. The process
of collecting information, sharing analysis, developing norms for decision making,
enunciating the values of the leaders, reviewing objectives, and linking these with
action helps make the company better.
The Internet provides researchers and analysts with valuable sources of business infor-
mation that were once difficult or expensive to access. Google and Yahoo are the most
prominent search engines, but now Wikipedia is developing reliable information on
business, including industry statistics and sources. A few of the best sites for new ven-
ture creation are listed here:
http://inc.com
http://dir.yahoo.com/BusinessandEconomy/Directories/
http://www.lexisnexis.com/academic/
http://www.berinsteinresearch.com/stats.htm
http://www.census.gov/econ/www/widemenu.html
ELEMENTS OF THE BUSINESS PLAN
We offer one version of a standard business plan template below, but it is not the com-
pletion of the template that makes a business plan compelling. There are even pre-pack-
aged templates, and anyone can simply fill out a form. To speak the language of
investors and produce a document that will be useful for decision making and planning,
however, requires the entrepreneur to understand and communicate four crucial and
interdependent elements:- People: Who are the key figures in the new enterprise?
- Opportunity: What is the business model?