Business Plan Length

CNBC aired a segment today reporting that studies show businesses with no formal business plan often do just as well as businesses that have business plans.

A study out of Babson College . . . studied 116 businesses. They found no statistical difference over a set period of time of how well those businesses did by metrics such a revenue or profits . . . . Other studies back this up.

The reporter summarized the advice of venture capitalists and the study's analysts as follows:

If you are thinking about seeking capital from a venture capitalist, you should really think about doing a plan. But really think about sizing it down: five to ten pages. A lot of VCs tell me they want a PowerPoint presentation instead . . . . Keep it shorter rather than longer. Don't waste six month to a year doing it.

Writing a business plan can be a good exercise, because it forces you to consider certain questions - such as the positioning of your product - that you might not otherwise consider. But lengthy business plans are of questionable value.

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Tue Dec 16, 07:15:00 AM 2008

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