Last November there was an interesting piece in the New York Times by Scott Shane called “Why Don’t All Entrepreneurs Write Business Plans?” Scott, who is professor of entrepreneurial studies at Case Western University (Cleveland, Ohio), came up with 3 reasons why entrepreneurs don’t plan:
- The ignorance theory - the one most cited by business school professors.
- The ‘Just Do It’ theory – people like to be more action-oriented.
- The ‘don’t-look-under-the-hood’ theory – people who don’t want to test their ideas in case they fail.
I think ‘2’ is the most common reason; that people get frustrated by over analysis and want to put their ideas into action instead. It’s not about entrepreneurs being lazy or ignorant; but smart: they know too much analysis will paralyse their idea, so they want to take a leap and put it out there.
The entrepreneur and blogger Neil Patel who's founded two internet companies, posted a great response to the NYT piece (check out his post here). I think his reasons are much more spot-on:
- Business plans do not automatically result in getting funding.
- You can’t predict the future.
- Time is money: it takes time – away from your business – to write a plan.
- The business world has changed – the idea of a business plan is outdated, things move to quickly for rigid plans.
Neil doesn’t think having a business plan will increase your chances of success. I think he’s right, plans can limit your potential; you need to be flexible, open and enterprising to make the most of a changing market.
