Hooray. Finally, some good research on the impact of business planning, and particularly business plan software, on business success. There’s been very little on this in the past. Occasionally someone does a study seeking correlation between a formal business plan document and business success, but that’s really the wrong issue, and it generates the wrong response. But today I’m looking at a study of the impact of business plan software, and, specifically, Business Plan Pro. And I’m happy with what I’m reading.
Before I go on, let’s get this right up front: of course I’m biased. I wrote the original Business Plan Pro, and I’m founder of Palo Alto Software.
Happily, however, my bias doesn’t change the actual data. This is direct quote from a paper presented to the University of Oregon Department of Economics by Eason Ding and Tim Hursey, as part of the requirements for their honors degrees, under supervision of Prof. Joe Stone:
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.
The source study was a questionnaire answered by 2,877 Business Plan Pro owners. Ding and Hursey 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.
Bottom line: 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.
I’m still looking through the data on this. I love what I’m seeing so far, but there is more coming, I promise.