Herman Holtz (1994) pointed out "that everyone talks about the
need for a business plan but most people starting ... small businesses
... do nothing about it." There doesn't appear to be any
person who has systematically determined the percentage of entrepreneurs
who start out with business plans. Available estimates have tended to
relate to strategic plans for ongoing small businesses. See, for
example, Rue and Ibrahim (1998; Karger, 1996; Mazzarol, 2001; Sexton
& Van Auken, 1985). As far as new small businesses go, Siropolis
(1997) guess-estimated that only about 5% of them start out with
business plans. There are many reasons why most start-up entrepreneurs
do not write business plans. One common reason is the view that business
plans are intended only for raising business funds, implying therefore
that if an entrepreneur doesn't need external financing, there is
no need to prepare a business plan. Although existing literature
doesn't seem to support the view that business plans are written
exclusively for raising business funds, there is some support for the
view that the single most important reason for writing business plans is
to attract external financing (Kaplan & Warren, 2007). However,
according to Zimmerer & Scarborough (1996) and Ford, Bornstein &
Pruitt (2007), the first and foremost purpose of business plans is to
provide guidelines for successfully managing a business. Raising capital
is a secondary purpose.
Another common reason why most entrepreneurs do not write business
plans is what David Bangs (1993) called the "Man of Action
Problem", the preference for doing things instead of thinking about
them or even writing about them. This view about business plans reflects
the "Just Do It" philosophy, made popular by
entertainer-turned entrepreneur, Wally "Famous" Amos (1999).
He argued that formal business plans take too much time and require too
much skill. Moreover, the analysis that goes into business plans may
predict negative outcomes. Such outcomes could prevent the would-be
entrepreneur from actually becoming one. Mazzarol (2001) has
distinguished between formal business plans and the process of planning.
Almost all start-up entrepreneurs undertake some planning activities,
which may fall under what Van Auken & Neeley call "undocumented
pre-launch preparations" (2000). Start-up entrepreneurs, often
intuitively and informally, develop a sense of an unsatisfied need in
the market and the relevant customer segment that can be helped to
satisfy their need. They then proceed to satisfy the need, often a small
group of customers at a time. This intuitive planning is good enough for
the overwhelming majority of start-up entrepreneurs (Mazzarol, 2001;
Sudikoff, 1994; Gwendron, 2004). Like Wally "Famous" Amos,
most start-up entrepreneurs informally ask themselves some tough
questions, but they just don't document the answers they get in
formal business plans.
This study examines the nature of pre-start-up preparations to
determine when such preparations get documented into formal business
plans and when they remain undocumented and at an intuitive level. For
those start-up entrepreneurs who do not prepare business plans, what are
the specific reasons why they don't prepare business plans? What is
the nature of intuitive planning that some start-up entrepreneurs use.
The study also examines the value of business plans to those who
prepare them. While it is generally known that most business plans are
written for raising business funds, what other purposes do business
plans serve? How do these other purposes stack up with the purpose of
raising business funds?
A common activity textbooks ask students to do is to find out for
themselves what entrepreneurs do in way of preparing themselves for
their ventures (Longenecker, Moore, Petty & Palich, 2003; Zimmerer
& Scarbough, 1997; Ryan & Hiduka, 2006). Following this hint,
senior undergraduate students taking a course on Entrepreneurship and
Small Business Management at a college in New Jersey were asked to
conduct interviews with small business owners who had started their
businesses in the last ten years. A 15-item semi-structured
questionnaire was prepared for the students. The full questionnaire is
available from the author. The initial key question was: What key steps
did you take to determine the likelihood of success for your business
prior to opening day? While students were allowed and expected to ask
follow-up questions regarding any steps indicated by the business owner,
they were required to limit their reports to five key steps given by the
business owner. In addition, the students were required to report on
each step separately and in no more than four sentences on each step.
These strictures were intended to facilitate content analysis of
Although it was reasonable to assume that some of the business
owners interviewed would mention the business plan as one of the steps
or the only step they had used to assess the likelihood of business
success, the students were required to specifically ask whether a
business plan had been prepared, whether the entrepreneur him/herself
had prepared the business plan, and whether the entrepreneur had found
the business plan useful, including why and why not. In an attempt to
find out whether business plans are prepared primarily for raising
business funds, as is commonly assumed, the students also asked whether
the entrepreneur had obtained bank/SBA loan financing and financing from
family and friends.
Further, since it is commonly known that prior work experience
greatly determines whether or not one starts a business and what kind of
business one starts (Holmes, 2008; Perry, 2001), it was anticipated that
many business owners were likely to mention having or acquiring relevant
business and industry experience as one of the steps or the only step
they took to assess the likelihood of success of their proposed start-
ups. To tap this information more directly, the interview questionnaire
contained questions on what the entrepreneur was doing before starting
the business and whether there was any specific trigger that led to the
decision to start the business.
The students interviewed 378 business owners between 2005 and 2007.
Twenty three interviews were excluded from this study because the
business owners were franchisees where franchisors had provided
substantial preparatory support to the would-be entrepreneurs. Still
other excluded interviews contained too many unanswered questions, i.e.,
five or more interview questions were left blank because the business
owner refused to provide answers to questions, or the answers to
questions were too indefinite. So, the total number of student
interviews examined for this study is 355. Table 1 provides some
demographic information about the 355 business owners and businesses
covered in this paper.
An initial review by the author of 30 completed questionnaires
resulted in the creation of the guidance sheet for coding data from the
completed questionnaires by a graduate student. The same graduate
student keyed the data into SPSS software. The analysis of the data is
limited to descriptive statistics, including cross tabulations.
The responses to the question: "What key steps did you take to
determine the likelihood of success for your business?" generated a
wide range of responses. In the findings being reported in this paper we
focus on responses related to entrepreneurs' business/industry
competencies, investigation of markets and marketing strategies,
preparation of business plans, bank financing, value of business plans,
and reasons why business plans aren't always written.
Entrepreneur's Business/Industry Competencies
An entire 221, 62%, of the 355 business owners interviewed referred
to their industry/business knowledge and experience as a key preparatory
step toward the success of their business start-ups. These business
owners were operating in the same lines of business as their previous
employers, sometimes family members, for example, a landscaping business
owner who previously worked for a large landscaping company. It is
highly likely that most of these business owners "incubated"
their business ideas while still with their previous employers. They had
thought about going into business for long periods of time before and
during their previous employment. Nine of these former employees went
into business after being downsized by their employers. One hundred and
fifty of the 221 business owners who capitalized on their
industry/business experience when starting up were in service-related
businesses. See Table 2. This is 63% of 237 business owners interviewed
who operated service-related businesses. The comparable percentage for
retail business owners was 60%. That for manufacturing business owners
was 70%. Thus, a great number of start-up entrepreneurs interviewed
relied on their employment and industry experience to gauge their
likelihood for success in their business endeavors.
Business knowledge and experience are typically acquired from
employment situations. But sometimes valuable experience, especially
technical experience, can also be acquired through schooling and
training, e.g., opening a restaurant after culinary school, or a beauty
shop after cosmetology school, and hobbies. As can be seen from Table 2,
53 interviewed business owners had these types of knowledge and
experience and considered such knowledge and experience as a form of
preparation for venturing into their own businesses. Acquisition of
appropriate business knowledge and experience should perhaps be
considered as part of the intuitive planning that precedes written
business plans and is often considered a substitute for them. In a later
section we look at the relationship between business
knowledge/experience and the propensity for written business plans.
Investigating Markets and Marketing Strategies
Clearly, and consistent with theory, most start-up entrepreneurs
examine their experiences from work, education and hobbies before
venturing out. Partly due to these experiences and partly due to innate
intelligence and a natural tendency to do some due diligence and
minimize risk, most start-up entrepreneurs also examine certain business
success factors, especially factors related to the markets they plan to
serve. As indicated earlier, one of the key interview questions was:
What key steps did you take to determine the likelihood of success for
your business prior to opening day? It was anticipated that many of the
steps were going to be about markets and marketing.
Of the 355 business owners interviewed, 282, 79%, of them referred
to key marketing factors in terms of the steps they had taken to assess
the likelihood of success for their business ventures. Table 3 shows the
marketing factors that were mentioned by business owners. As can be seen
from Table 4, and as should be expected, some business owners mentioned
more marketing factors than others did.
Most business and marketing decisions are dictated by competition
in the location of a business. Zahra, Neubaum & El-hagrassey (2002)
stated that understanding competition is the key to business success.
Bradley (2002), who was investigating factors that had led to
bankruptcies, also found that well over 50% of the surveyed business
owners who had filed for bankruptcy had checked out the competitive
environment. It is, therefore, not surprising that competition and
location, coupled together, was the single most frequently cited
marketing factor considered or evaluated prior to business opening day,
as can be seen from Table 3. It is possible that some of the business
owners who did not mention competition believed that they faced no
competition, even though this is always a mistake. But it is also
possible that knowledge about competition and competitive factors is
part of industry/business knowledge and experience for those who had
such knowledge and experience. Accordingly, they might not have felt
compelled to talk about competition. Indeed, of the 221 business owners
who regarded their employment/industry experience as a or the reason for
their potential business success, an entire 54% didn't mention
competition. The corresponding number for the entire sample was only
Table 3 shows that 152 of the interviewed business owners claimed
to have conducted marketing research. Content analysis keyed on phrases
and sentences such as "marketing research", "I researched
the market", "surveys were conducted", "there was a
focus group", "analyzing industry and demographic data",
and "test marketing a product". Obviously, in many cases
marketing research included an investigation of competition and location
factors. Indeed, 55% of the business owners who stated that they had
done market research also specifically stated that they had examined
competition and location.
Only 39, 15%, of the 257 business owners in service-related
businesses who were interviewed mentioned three or more marketing
factors as steps they had taken to assess the likelihood of success for
their proposed businesses. The comparable figure for small retailers was
25%. Retailers were, therefore, more concerned about marketing factors
than were service-related business operators. Alternatively, 21% of the
business owners in services didn't mention any marketing factors as
steps they had taken to assess the likelihood of success for their
proposed businesses. The comparable number for retail business owners
was 14%. The rather obvious reason for this difference between the
service and retail industries in terms of the emphasis on marketing
factors appears to be that service businesses are, in general, the least
expensive to start and operate. Business failure in service businesses
is not as costly as it is in retail businesses. Headd (2003) found that
service businesses and retail businesses differed in terms of failure
rates. Retailers failed more than service businesses. He suggested that
retailers face a more competitive environment than service businesses
do. There is, therefore, a stronger need for market due diligence in the
retailing industry than in the services industry.
To most business consultants, educators and lending/financing
authorities, the business plan is the ultimate in pre-start-up
preparations. The interview questionnaire, therefore, solicited
information on business plans both directly and indirectly. Directly,
there was a question on whether the business owner had prepared a
business plan prior to opening day, and if not why not. Indirectly, the
question on what steps the entrepreneur had taken to assess the
likelihood for success in his/her business potentially alluded to the
One hundred and seventy-eight, 50%, of the 355 business owners
interviewed claimed to have prepared business plans prior to opening
their businesses. This is a relatively high percentage, given the fact
that the percentage has been estimated to be as low as 5% (Siropolis,
1997). One possible explanation for this is that the business owners
interviewed for this study were conveniently selected, what is known as
a convenience sample. Only business owners who agreed to be interviewed
were interviewed. There was a possibility of self selection bias; people
who agreed to be interviewed might have been more sophisticated and/or
educated than average. Business planning and personal sophistication are
said to be positively correlated (Mazzarol, 2001; Gibson & Cassar,
2002). Second, the concept of the business plan is notoriously loose.
Students had been instructed to determine the quality of the business
plan by comparing it to the outline suggested in a textbook by
Longenecker et al (2003) which was being used in the class they were
taking. The students were also referred to the business plan framework
used by Perry in his article "The Relationship Between Business
Plans and Business Success and Failure" (2001). Students generally
found that "comprehensive business plans" were rarely
prepared. Most business plans were of the "summary" or
"dehydrated" type (Longenecker et al, 2003). In terms of
Perry's model (2001), very few business plans covered more than two
planning areas. This was consistent with Perry's findings. In his
sample of 304 failed and non-failed businesses; only 37% had business
plans and on average covered less than 2 of the 5 areas included in
Perry's questionnaire. Given the strong consensus among
commentators on business plans that there is no one best way to
construct a business plan (Gumpert, 1997; Ryan & Hiduke, 2006; Ford,
Bornstein & Pruitt, 2007), in this study claims of business plans
were taken at their face value, provided it was also claimed that the
business plan was a written document. In the interviews students were
advised to request to see the business plan document if one had been
prepared, and 52 students were able to see the actual business plans. In
other cases the business owners didn't show their business plans
but were able to describe them.
It is arguable that marketing factors (marketing research and
marketing plans) constitute the heart of the business plan (Siropolis,
1997). Emphasis on marketing factors was, therefore, expected among the
business owners who had prepared business plans. However, 27, 15%, of
the 178 business owners who started out with business plans included no
marketing factors among the steps they had taken to assess the
likelihood of success for their businesses. It is noteworthy, however,
that 43, 25%, of the 172 business owners without business plans also
hadn't investigated marketing factors. Table 5 includes information
on the relative prevalence of marketing concerns among the business
owners with business plans and those without business plans. The
marketing emphasis was higher among "planners" than among
"non-planners." Alternatively, "planners" were more
likely to have investigated marketing factors than
Business Plans and Bank Loans
In the minds of many business owners, if not most, the key reason
for preparing business plans is to get business financing (Kaplan &
Warren, 2007). Table 6 shows that of the 60 interviewed business owners
who got SBA/bank loans for their businesses, 44, 73%, had prepared
business plans. Table 6 also shows that business owners with business
plans might have sought bank financing in larger numbers than did
business owners without business plans. Forty-four out of 178 business
owners with business plans sought and received bank financing. This is
25%. The corresponding numbers for business owners without business
plans are 16 out of 172, or 9%. There is, therefore, a possibility that
the relatively low volume of bank loans that go to business owners
without business plans also reflects the fact that relatively fewer
business owners without business plans seek bank loans. We shall see in
the next section that the leading reason cited for not preparing
business plans by business owners without business plans was that they
did not need to borrow money from banks. That bank lenders somehow
encourage or force prospective borrowers to prepare business plans, as
has been frequently suggested (Van Auken & Neeley, 2000; Mazzarol,
2001; Kaplan & Warren, 2007) appears to be borne out in this study.
In Table 6 we see that while 73% of the business owners who got bank
loans prepared business plans, only 47% of the business owners financed
by family and friends prepared business plans. It would appear that it
hard to get a business bank loan without a business plan.
In our sample, 16 business owners had received bank loans without
business plans. In fact one study on small business loans (Van Auken
& Horton, 1996) found that banks required business plans only 49% of
the time (although this percentage rose drastically in the case of
minority business owners). The same study found that more important than
business plans were collateral requirements, required 60% of the time.
The Value of Business Plans
The 178 business owners who had business plans were asked whether
they had found business plans useful, and why or why not. One hundred
and seventy, 96%, stated that they had found the business plans useful.
Many reasons were offered. Providing direction was by far the most
frequent reason given, nearly 65% of the time. For example, a children
specialty store owner stated that "At times I have found it very
helpful because it gives me something to follow and accomplish as a
business owner." This reason for preparing business plans is often
referred to as the "roadmap" function of business plans
(Hatten, 2002; Ryan & Hiduki, 2006; Kaplan & Warren 2007).
Keeping the business on track, a control function, was the second most
frequent reason given by the business owners who found their business
plans useful. Only 17, 10%, of business owners gave using the business
plan as a tool for financing as the reason they found their business
plans to have been useful. One would have expected this number to be
higher since 44, 25%, of the 178 business owners with business plans had
used the business plans to get bank loans. It appears that the
interviewed business owners looked at the usefulness of business plans
in longer terms, as opposed to using business plans for raising business
funds, which often is a one-time deal. This study shows that the
business owners who prepare business plans use them and value them for
more than raising funds. Indeed, Table 6 shows that nearly 46 business
owners prepared business plans even though they didn't have to,
since their external financing came from equity loans and
Only 5 of the 178 business owners with business plans indicated
that they hadn't found their business plans useful. One business
owner found the business plan not useful because he hadn't been
able to use it beyond getting a bank loan. Another business owner found
the business plan of not much value because the bank denied him a loan
for his business even when he submitted the business plan. These kinds
of business plan pitfalls generally arise from-single-purpose-use
business plans (Zimmerer & Scarborough, 1996).
Reasons For Skipping The Business Plan
Business owners who started out without business plans were asked
why they hadn't prepared business plans. As expected, a large
number of reasons were given for not writing business plans. However,
these reasons fall into three categories: there was no need to prepare a
business plan, preparing a business plan was inconvenient, and lack of
knowledge about business plans and/or the skills to prepare them. That
the business plan was not needed was by far the dominant category, cited
by 101, 62%, of the 162 of the business owners who explained why they
hadn't prepared business plans. And this reasoning took three
forms: the business owner was not using bank debt financing, the
business owner was so experienced in the line of business he/she was
going into that there was no need for a business plan and the business
owner's business was too simple and small to warrant a business
It was clear from the interviews that business plans continue to be
seen as essentially or exclusively tools for raising business funds,
implying that there was no need for a business plan if the start-up
entrepreneur wasn't seeking external financing. We stated earlier
that this view is shared by some authors (Kaplan & Warren, 2007).
A second reason why some business owners felt that the business
plan was not needed is being already knowledgeable about and/or
experienced in the line of business a business owner was planning to
enter. This reason was commonly given by people with family business
backgrounds. By incorporating market analysis, business planning forces
would-be entrepreneurs to learn more about an industry or a business.
So, industry/business knowledge and experience (or expertise) can be and
was often seen as a substitute for preparing business plans by the
business owners who were interviewed in this study. However, as can be
seen from Table 7, lack of knowledge and experience in the industry or
business was clearly not a particularly strong determinant of preparing
business plans, since 109, 50%, of 219 business owners with industry
experience prepared business plans. This was the exact percentage of
"inexperienced" business owners who didn't prepare
business plans. That is, business owners starting out with
industry/business experience were no more inclined to prepare business
plans than their counterparts without industry/business experience.
A third reason business plans were considered unnecessary by the
business owners who were interviewed was that their business concepts
were too simple and/or their businesses were going to be too small to
warrant the preparation of business plans. For example, a tee shirt
business owner claimed that he didn't need a business plan because
all he did was getting shirts, putting on logos and pressing. Several
authors have suggested that the complexity of the business concept
influences the extent of business planning (Mazzarol, 2001; Perry, 2001;
Gibson & Cassar, 2002)
Thirty-four, 21%, of the 162 business owners who provided reasons
why they hadn't prepared business plans when starting out claimed
that preparing business plans created a variety of inconveniences. They
cited the time it takes to prepare a business plan and the potential for
business plans to prevent the business owner from changing direction
when there is need to change direction. Sometimes business opportunities
are time-sensitive and acting fast is very important. Many a business
owner claimed having looked up some information about the business
opportunity, but not finding the time to put that information in a
written business plan. The lack of time and the fear that a written
business plan would/could stand in the way for change often results in
undocumented pre-start-up activities (Van Auken, 2000; Wally
"Famous" Amos, 1999).
Twenty-seven, 17%, of the 162 business owners who provided reasons
for skipping the business plans pointed to their lack of knowledge about
business plans, what they are and/or how to prepare them. For example,
one luncheonette owner told the interviewer that he had never heard
about business plans because he never went to college.
That many new small business owners don't prepare formal
business plans for launching their ventures was easily borne out in this
study, as it has often been assumed, but rarely proved. In this study,
50% percent of the interviewed business owners stated that they had
prepared business plans. The most important distinction about the
business owners who had prepared business plans is that they used
external financing, especially bank loans. The study found that
providers of bank loans somehow encourage or force start-up
entrepreneurs to prepare business plans. This finding is similar to that
of Van Auken & Neeley (2000). Although banks sometimes provide
business loans without requiring business plans from borrowers (Van
Auken & Horton, 1994), they would rather lend to borrowers with
documented pre-launch preparations. It is well known that most start-up
entrepreneurs rely more on personal savings and loans from family and
friends than on bank loans (Gwendron, 2004; Van Auken & Neeley
2000). If start-up entrepreneurs rely on loans from family by choice,
which is highly doubtful, they might disregard written business plans.
If entrepreneurs want to reduce their dependence on loans from family
and friends, they would need a written business plan in most cases. In
other words, business plans don't lose value and their place in
business curricula because most start-up entrepreneurs rely on personal
savings and friends, as has sometimes been suggested (Gwendron, 2007).
The study found that business owners seeking external financing
were more inclined to write business plans than business owners who
didn't target external financing. It was also found that the large
majority of business loans went to business owners with business plans.
However, business owners who prepared business plans valued their
business plans more for providing direction, a roadmap function, than
for raising business plans. This would mean that start-up entrepreneurs
should write business plans even when they don't need external
The study found that only a rare person would venture into a new
business without any kind of planning. But most start-up entrepreneurs
stop short of formal/written business plans. The study found three major
reasons for not writing business plans: there is no need to write
business plans, business plans inconvenience the start-up entrepreneur,
and business plans require both knowledge and skill to write them. By
far the most frequent reason cited for skipping the business plan was
the belief that they were not needed. Start-up entrepreneurs who
didn't need external financing overwhelmingly felt no need to write
business plans, thus ignoring other purposes to which business plans can
be put. We have noted already that the business owners who prepared
business plans valued them more as tools for providing direction to
operate the business than as tools for raising business funds. Business
advisors and educators need to stress the multiple purposes of business
A significant number of business owners who hadn't prepared
business plans stated that their industry/business knowledge and
experience rendered business plans unnecessary. While industry
experience and knowledge was viewed as duplicating certain business plan
activities, especially market analysis, 50% of the business owners with
industry experience did in fact prepare business plans. It seems that
the choice to rely more on experience than on written business plans,
where market conditions are objectively evaluated, is reflective of a
propensity for intuitive planning. Mazzarol stated that intuitive
planning and formal planning are opposite mindsets (2001). Intuitive
planning may also be the behavioral orientation of those business owners
who stated that preparing business plans is inconvenient because it
takes too long and prevents the entrepreneur from changing direction
when he or she needs to. Intuitive decision makers don't need as
much objective information as analytical decision makers. This is what
Bangs calls "the man of action problem" (1993). It is known
that expertise improves intuitive awareness (Dane & Pratt 2007).
Intuitive planners don't write business plans under normal
circumstances. They need a lot of encouragement, or even pressure to
write business plans. Such pressure comes if and when their businesses
grow and the owners have to deal with multiple and complex stakeholders
such as accountants and wholesalers (Gibson & Cassar (2002).
The conclusions in this study are very tentative, mostly because of
the nature of the sample; a convenience sample . The 355 business owners
interviewed were those who were convenient to interview by senior
undergraduate students. There is also a possibility that students
preferred to interview business owners who appeared to them to be
"good" business owners. Accordingly, they wanted to learn
something about them and their businesses.
Second, undergraduate students, seniors albeit, conducted the
interviews. They were not trained interviewers. Although they were given
a lot of background information about conducting interviews, there is no
way of knowing that they avoided interviewer bias, such as the
"first impression error".
Additionally, this paper, as many other efforts to understand
entrepreneurs and entrepreneurship, is based upon self reporting: the
business owners themselves stated what they had done before they opened
up for business, sometimes as long ago as ten years. This is a
limitation, although it has been said that starting a business is such a
benchmark event that entrepreneurs generally accurately recall the
details that surround it (Van Auken & Neely, 2000).
Finally, the study is very regional. New Jersey is densely
populated and well served by many kinds of small business promotion
programs. For example, there is a SCORE office at every county community
college. It is possible that most of the interviewed start-up
entrepreneurs had been exposed to some type of small business promotion
program. Some of the conclusions in this study may not be valid for a
more rural setting. This study should be done on wider scale.
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Table 1: Demographic Information
Business Type Service Retail
Number of Businesses 237 (67%) 107 (30%)
Business Age 1-3 Yrs 4-6 Yrs
Number of Businesses 93 (27%) 84 (24%)
Business Technology Low/Medium High
Number of Businesses 255 (72%) 95 (27%)
Owner's Gender Male Female
Number of Businesses 301 (85%) 52 (15%)
Business Size 0 to 5 employees 6 to 15 employees
Number of Businesses 176 (54%) 100 (30%)
Business Type Manufacturing Total
Number of Businesses 10 (3%) 354 (100%) 1 *
Business Age 7-10 Yrs Total
Number of Businesses 167 (49%) 344 (100%) 11 *
Business Technology Total
Number of Businesses 350 (100%) 5 *
Owner's Gender Total
Number of Businesses 353 (100%) 2 *
Business Size over 15 employees Total
Number of Businesses 53 (16%) 331 (100%) 24 *
* Cases with missing or unclassifiable responses.
Table 2: Experience and Line of Industry/Business
Business Sources of Industry/Business Experience
Employment Education Hobbies Experience Total
Service 150 (67%) 18 (18%) 17 (8%) 39 (17%) 224 (100%)
Retail 64 (61%) 6 (6%) 10 (10%) 25 (24%) 105 (101%)
Manufacturing 7 (70%) 1 (10%) 1 (10%) 1 (10%) 10 (100%)
Total 221 (65%) 25 (7%) 28 (8%) 65 (19%) 339 (100%)
Table 3: Marketing Factors Evaluated
Marketing Factors Being Mentioned
Competition/location 163 (31%)
Marketing Research * 152 (29%)
Advertising 73 (14%)
Contacts in the Market 49 (9%)
Customer Targeting 44 (8%)
Availability of Suppliers and Retailers 38 (7%)
Trade Shows and Trade Associations 10 (2%)
All marketing Factors Mentioned 529 (100%)
* Indicated by references to typical primary and secondary tools
of marketing research, such as surveys and examining published
market and industry data.
Table 4: Differences in Emphasis on Marketing Factors
Marketing Factors Business Owners Mentioning Factors
3 or more factors 67 (19%)
2 factors 121 (34%)
1 factor 94 (27%)
None 73 (21%)
Total 355 (100%)
Table 5: Business Plans and Marketing Factors
With Marketing Factors Mentioned
more 2 1 None
factors factors factor mentioned Total
Business Plan 33 (19%) 69 (39%) 49 (28%) 27 (15%) * 178 (101%)
No Business Plan 34 (20%) 50 (29%) 45 (26%) 43 (25%) * 172 (100%)
Total 67 119 94 70 350
* Only 15% of the "planners" mentioned no marketing factors at all.
The figure for "non-planners is 25%.
Table 6: Business Plans and External Financing
With Types of External Financing
Bank Bank Bank and Family and
Business Equity Family Friends
Loans Loans Loans Loans Total
Business Plan 44 (73%) * 13 (61%) 26 (68%) 33 (47%) ** 116
No Business Plan 16 (27%) * 8 (39%) 12 (32%) 37 (53%) ** 73
Total 60 (100%) 21 (100%) 38 (100%) 70 (100%) 189
* Business owners with business plans were more than twice as likely
to get business loans as those without business plans, partly because
they were more inclined to apply for bank loans than business owners
without business plans.
** Loans from family and friends don't normally require business
plans, but nearly 50% of those who got such loans had prepared
Table 7: Business Plans and Industry/Business Experience
With Sources of Industry/Business Experience
Employment Education Hobbies Experience Total
Business Plan 109 (50%) * 13 (57%) 14 (%) 32 (50%) 168
No Business Plan 110 (50%) * 10 (43%) 14 (50%) 33 (50%) 167
Total 219 (100%) 23 (100%) 28 (28%) 65 (100%) 335
* 50% of owners with experience wrote business plans, 50% didn't.
The same split is seen among business owners without experience.
Experience and business plans appear to be totally independent
of each other.