Extensiveness of business planning and firm survival: An examination into the drivers of success and survival for knowledge intensive start-up firms

A number of studies have found that writing a business plan increases the likelihood of firm survival. For instance, Liao and Gartner (2006) found that firms that completed a business plan were nearly three times more likely to launch their business than those that did not. On the contrary, other studies have found no association between writing a business plan and success. For example, Honig and Karlsson (2004) found evidence that entrepreneurs only write business plans because they are required to do so by investors, educators and advisors. While the evidence is mixed on the effectiveness of business planning, previous research has not examined individual elements of business plans. Thus, it is not clear which aspects (e.g., financial projections v. marketing strategy) of business planning are positively (or negatively) related to performance and survival. Our study addresses two main issues concerning the impact of business planning in firm survival: 1) Are surviving firms different in the extent of their business planning? 2) Which topical areas within business planning are more (or less) predictive of firm survival? To seek answers, we reconceptualize business planning along four dimensions: service/product description, marketing strategy, financial projections and organizational planning