peer reviewed articles about business plans

The road to entrepreneurial success: business plans, lean startup, or both?

New England Journal of Entrepreneurship

ISSN : 2574-8904

Article publication date: 19 February 2021

Issue publication date: 18 June 2021

The goal of this research is to investigate the relationship between two different sets of practices, lean startup and business planning, and their relation to entrepreneurial performance.

Design/methodology/approach

The authors collected data from 120 entrepreneurs across the US about a variety of new venture formation activities within the categories of lean startup or business planning. They use hierarchical regression to examine the relationship between these activities and new venture performance using both a subjective and objective measure of performance.

The results show that talking to customers, collecting preorders and pivoting based on customer feedback are lean startup activities correlated with performance; writing a business plan is the sole business planning activity correlated with performance.

Research limitations/implications

This research lays the foundation for understanding the components of both lean startup and business planning. Moreover, these results demonstrate that the separation of lean startup and business planning represents a false dichotomy.

Practical implications

These findings suggest that entrepreneurs should engage in some lean startup activities and still write a business plan.

Originality/value

This article offers the first quantitative, empirical comparison of lean startup activities and business planning. Furthermore, it provides support for the relationship between specific lean startup activities and firm performance.

Business planning

• Entrepreneurship

Lean Startup

Welter, C. , Scrimpshire, A. , Tolonen, D. and Obrimah, E. (2021), "The road to entrepreneurial success: business plans, lean startup, or both?", New England Journal of Entrepreneurship , Vol. 24 No. 1, pp. 21-42. https://doi.org/10.1108/NEJE-08-2020-0031

Emerald Publishing Limited

Copyright © 2021, Chris Welter, Alex Scrimpshire, Dawn Tolonen and Eseoghene Obrimah

Published in New England Journal of Entrepreneurship . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

No business plan survives first contact with a customer – Steve Blank

This quote represents the differing perspectives on the value of business planning relative to the value of lean startup methods proposed by Blank and others ( Blank and Dorf, 2012 ). Much of traditional entrepreneurial training centers on the business plan ( Honig, 2004 ). Collective research on business planning's antecedents ( Brinckmann et al. , 2019 ) and its performance outcomes have found nuanced results ( Brinckmann et al. , 2010 ), but there seem to be at least some instances where business planning reliably increases performance ( Welter and Kim, 2018 ). Studies suggest that the majority of prominent business schools offer business planning courses ( Honig, 2004 ; Katz et al. , 2016 ), and bookstores are filled with books detailing how to write a business plan ( Karlsson and Honig, 2007 ). Nonetheless, the research is fragmented at best, and often results in equivocal findings with regard to its relationship with firm performance ( Brinckmann et al. , 2010 , Delmar and Shane, 2003 ; Gruber, 2007 ). This lack of clear indication from researchers opens the door for critique of business planning from proponents of the lean startup ( Ghezzi et al. , 2015 ).

Lean startup methods have drawn increasing attention in entrepreneurial communities ( Ries, 2011 ). In accelerators, incubators and other spaces within startup ecosystems the wisdom of Eric Ries (2011) and Steve Blank ( Blank and Dorf, 2012 ) can be heard in training sessions and everyday conversations. Some entrepreneurial programs have adopted lean startup methods as well ( Bliemel, 2014 ). On one hand, conceptual articles have described how lean startup fits adjacent to current and past academic conversations ( Contigiani and Levinthal, 2019 ). On the other hand, practitioner articles have discussed the benefits and limitations of the models ( Ladd, 2016 ). In both cases, existing literature describes how these processes aim to avoid the pitfall of launching products that no one actually wants ( Blank, 2013 ).

Despite all the popular attention given to lean startup methods, little empirical research has been completed (see Trimi and Berbegal-Mirabent (2012) , Ghezzi et al. (2015) , and Ghezzi (2019) for exceptions). Some researchers (e.g. Frederickson and Brem, 2017 ) have drawn the parallels between lean startup methods and effectuation ( Sarasvathy, 2001 ), but these parallels do not sufficiently support the use of lean startup methods. While practitioners seem to embrace lean startup methods, academics have offered little in terms of direct investigation into those methods ( Shepherd and Gruber, 2020 ). Most of the research on lean startup methods focuses on cognitive processes ( Yang et al. , 2018 ; York and Danes, 2014 ). Recent critique ( Felin et al. , 2019 ) coupled with the dearth of empirical research calls into question the efficacy of lean startup methods. To that end, more research is needed to see how lean startup methods relate to new venture success especially in comparison to business planning. This is particularly important as new venture formation activities are the practices that can legitimize the firm ( De Clercq and Voronov, 2009 ).

As such, we propose the following question: which individual aspects of business planning and lean startup methods are related to success? We study the components of both business planning and lean startup methods as there is some academic support for aspects of lean startup such as experimentation ( Carmuffo et al. , 2019 ), but limited empirical investigation into lean startup more broadly. We specifically focus on the underlying activities that make up the processes of lean startup and business planning since our initial surveying showed that entrepreneurs often employ aspects of each. To examine this question, we created a survey that captured the various activities – both from lean startup and business planning – that entrepreneurs used in pursuing their new venture and compared those with measures of success.

Our findings suggest that certain lean startup activities and the act of writing a business plan are correlated with success. These findings help to undo a false dichotomy of either lean startup or business planning by suggesting that some activities from each side can lead to success. We contribute to business planning research by offering a possible explanation for the existing equivocal findings. Namely, that the act of writing a business plan may be important, but that the uses of a business plan for feedback or financing are not necessarily associated with success. We contribute to research on lean startup by offering the first quantitative support for specific lean startup activities. Taken together, this research lays the foundation for a more nuanced understanding of the value of business planning and lean startup methods.

Theoretical framework and hypotheses

The literature on business planning is vast focusing on both antecedents to business planning ( Brinckmann et al. , 2019 ) and outcomes of it ( Brinckmann et al. , 2010 ). Honig and colleagues have driven much of the research into business planning since the turn of the century ( Honig, 2004 ; Honig and Karlsson, 2004 ; Honig and Samuelsson, 2012 , 2014 ; Karlsson and Honig, 2009 ). They have challenged prior planning-performance paradigms that suggested planning would naturally increase performance ( Ajzen, 1985 ; Mintzberg and Waters, 1985 ; Ansoff, 1991 ). This debate about the value of planning has underscored the recent research into selection effects associated with business planning ( Burke et al. , 2010 ; Greene and Hopp, 2017 ).

Brinckmann et al. (2010) address this debate directly. Their meta-analytic review of business planning literature suggests that three contingencies need to be considered in terms of the effectiveness of business planning: uncertainty, limited prior information, and the lack of business planning structures. The presence of these three suggest that business planning may be less effective. We look at each of these three contingencies in more depth next.

For uncertainty, planning scholars (e.g. Priem et al. , 1995 ) suggest that unstable and uncertain environments would benefit most from planning as planning can reduce uncertainty through facilitating faster decision-making ( Dean and Sharfman, 1996 ). However, emergent strategies seem to be more effective at controlling uncertainty ( Mintzberg, 1994 ; Sarasvathy, 2001 ). Brinckmann et al. (2010) confirms the latter intuition suggesting that uncertainty makes planning efforts less effective. This logic falls in line with research on effectuation ( Sarasvathy, 2001 ), where planning is described as the appropriate strategy for risky environments and effectuation, in contrast, is appropriate for uncertain environments. Recent work has confirmed this logic depending on how accurate the entrepreneur can be when predicting the future ( Welter and Kim, 2018 ).

Turning to the concept of limited prior information, planning proponents suggest that the shorter feedback cycles in new and small firms combined with the positive motivational effects of planning will make it more effective ( Delmar and Shane, 2003 ). In essence, despite the lack of history for de novo firms, short cycle times create history quickly and planning itself serves to motivate these fledgling organizations. However, Brinckmann et al. (2010) find that these firms lack the information necessary to make such plans effective. As firms pursue novel strategies, planning seems to be less effective or firms abandon plans all together as they move forward ( Karlsson and Honig, 2009 ).

Finally, for plans to be effective firms need to have the structures in place to both plan and make use of those plans ( Brinckmann et al. , 2010 ). New firms tend to lack the organizational structures relevant to create and use plans ( Forbes, 2007 ). While Karlsson and Honig (2009) found that firms typically ignore or abandon plans after they have been made, often due to insufficient support structures, Honig and Samuelsson (2012) show that even when firms change their plans over time there is little impact on firm performance. In general, the literature on business planning suggests that planning has more benefits for established firms with data and history to support both the plan and the planning process.

Business planning activities improve the likelihood of success for new ventures.

Typically, business planning has been analyzed as the single act of writing a business plan (e.g. Honig and Karlsson, 2004 ). However, business planning is made up of a variety of activities ( Gruber, 2007 ), which entrepreneurs may utilize as a whole, or simply choose parts of the business planning process. It is worth noting that these specific activities are not mutually exclusive with lean startup activities that we will detail later. One source of the gap between the prevalence of business planning use and research supporting the efficacy of business plans may be this holistic perspective. The constituent parts of business planning may be executed as a whole, or may be chosen a la carte. Examining the various activities that make up business planning offers insight into which aspects of the process are related to firm performance.

Arguably the first step in the business planning process is the work that precedes the actual writing of a business plan. First, entrepreneurs must collect data – typically external data ( Brinckmann et al. , 2010 ). This data collection process may or may not result in an actual business plan being written and, therefore, can be treated as a separate step itself.

Beyond the data collection and writing, the planning process can play a role in routinizing the initial practices of entrepreneurs. While entrepreneurs may engage in social resourcing ( Keating et al. , 2014 ) and collective sense-making ( Wood and McKinley, 2010 ), the act of codifying the results of these activities can objectify these practices. Entrepreneurs engage socially on a number of dimensions in the pursuit of a venture, but physically writing down a business plan that can be shared externally can serve as a commitment mechanism. Entrepreneurs may share this plan with external stakeholders simply for feedback ( Wood and McKinley, 2010 ) or they may use it to seek funding ( Richbell et al. , 2006 ).

Writing a business plan improves the likelihood of success for new ventures.

Gathering secondary data improves the likelihood of success for new ventures.

Sharing a business plan with potential stakeholders in order to get feedback improves the likelihood of success for new ventures.

Sharing a business plan with potential financiers in order to obtain funding improves the likelihood of success for new ventures.

Lean startup

The concept and the phrase “Lean Startup” stem from Eric Ries (2011) and his popular press book by the same name. The phrase borrows from the idea of lean manufacturing in the sense of eliminating waste and pushing production and supply as late in the process as possible to delay purchasing until the last moment. The book draws primarily on Ries's personal experience in founding a company along with some consulting work. Further development of the ideas around lean startup methods comes from Steve Blank ( Blank and Dorf, 2012 ). Blank (2013) described three principles of lean startup: hypothesis creation, customer development, and agile development. Hypothesis creation represents the belief that founders begin with little more than untested hypotheses. Customer development represents the approach of interviewing and interacting with customers in order to verify or discard the aforementioned hypotheses. Finally, agile development conceptualizes that minimally viable products (MVPs) are deployed quickly to verify the hypotheses that are believed to be true.

These concepts are often practiced by entrepreneurs and taught at incubators and accelerators ( Ladd, 2016 ), but there is little academic research to support these practices. Ghezzi et al. (2015) offer one of the only comparative empirical studies between lean startup and business planning. Their findings from a four-case study suggest that lean startup methods lead to superior outcomes. The majority of other papers are conceptual explorations of lean startup methods focusing on the decision-making of entrepreneurs ( Frederickson and Brem, 2017 ; Yang et al. , 2018 ; York and Danes, 2014 ). These conceptual pieces draw parallels between lean startup and effectuation ( Sarasvathy, 2001 ).

The literature on effectuation is much larger than that of lean startup (see recent reviews and retrospectives by Arend et al. (2015) and Reymen et al. (2015) ). Effectuation has been defined as entrepreneurial expertise that utilizes heuristics to make decisions focused on the means available rather than on desired ends ( Sarasvathy, 2001 ). One heuristic, in particular, has driven the comparison between lean startup and effectuation: experimentation ( Camuffo et al. , 2019 ). However, the comparisons may stem from the lack of clear boundaries in effectuation (see Welter et al. , 2016 ). While some researchers might argue that effectuation is a more robust articulation of lean startup ( Frederickson and Brem, 2017 ), there are significant departures. Effectuation makes no mention of MVPs or agile development, but instead focuses on the means at hand ( Sarasvathy and Dew, 2008 ). These means direct the venture as opposed to a focus on a specific end in mind ( Sarasvathy, 2001 ). This is in contrast to lean startup methods that create specific tests in order to verify a predetermined path ( Blank, 2013 ). Thus, researchers have suggested that lean startup intersects with effectuation, as well as other research streams ( Contigiani and Levinthal, 2019 ; Ghezzi, 2019 ).

Utilizing lean startup methods improves the likelihood of success for new business ventures.

Similar to business planning, lean startup is a process with several component parts from which an entrepreneur may select without needing to accomplish each task. Moreover, these component parts may be used in conjunction with business planning activities. Since lean startup has been developed more by practitioners than academics, there is not a clearly-defined, comprehensive list of activities that constitutes lean startup. Bortolini et al. (2018) review the academic and popular press literature on lean startup and describe the process at a more theoretical level than the work of Blank (2013) and Ries (2011) . Between these two perspectives, a specific list of six lean startup activities can be derived.

The lean startup process begins with customer discovery ( Blank and Dorf, 2012 ). In its most basic sense, the process of customer discovery begins with interviewing potential customers to surface their problems. Blank (2013) describes how lean startups “get out of the building” throughout the process to validate customer assumptions regarding all aspects of a potential business model. This validation process involves a variety of different forms of potential customer interviews.

From there, entrepreneurs craft hypotheses and build experiments as Bortolini et al. (2018) describe. This part of the process can be deconstructed into developing prototypes, showing those prototypes to customers, and running experiments. These sub-processes are discrete steps that may depend on each other, but may also occur independently. For instance, entrepreneurs may develop prototypes in their own quest to improve the product without actually showing a given prototype to potential customers. Alternatively, entrepreneurs may run experiments that do not necessarily involve the use of a prototype. These experiments may include observing customers in their daily routine to better understand customer problems. Each of these processes, however, align with the practitioner perspectives and the theoretical perspectives ( Blank and Dorf, 2012 ; Bortolini et al. , 2018) .

Beyond these specific activities, we examine two other activities within lean startup: collecting preorders and pivoting. Collecting preorders for new products has been suggested by Ries (2011) , but also aligns with research on enrolling external stakeholders ( Burns et al. , 2016 ) and the principles of effectuation ( Sarasvathy, 2001 ). By seeking out early stakeholders to make commitments like preorders or input on prototypes, entrepreneurs seek social resources to enable and direct their progress ( Keating et al. , 2014 ).

Interviewing potential customers improves the likelihood of success for new business ventures.

Developing a prototype improves the likelihood of success for new business ventures.

Showing a prototype to potential customers improves the likelihood of success for new business ventures.

Experimenting to test business model assumptions improves the likelihood of success for new business ventures.

Collecting preorders improves the likelihood of success for new business ventures.

Pivoting based on customer feedback improves the likelihood of success for new business ventures.

We began our study by conducting semi-structured interviews with five entrepreneurs to guide the construction of the survey. These entrepreneurs were selected from the authors' personal networks to represent a variety of perspectives and experiences. The group included two female founders and three male founders; two of the founders created high-tech scalable businesses and three represented small businesses. The interviews lasted 75 min on average.

All interviewees were familiar with business plans. All interviewees had heard of “lean startup” but only one entrepreneur had any education on the subject – they had read Eric Ries's book ( Ries, 2011 ). Nonetheless, none of the entrepreneurs could articulate specific aspects of lean startup or how it would be different from or related to writing a business plan.

The data collected from these interviews was used to develop a survey for distribution to a wider group of entrepreneurs. Within the qualitative data we noted how both business planning and lean startup represented groups of activities to the entrepreneurs. In discussing business planning, all of the entrepreneurs discussed more than simply producing a formal business plan. While four of the five entrepreneurs created formal business plans, each discussed a slightly different process. Some included financial planning while others mentioned secondary research. On the lean startup approach, the entrepreneurs did not specifically state which activities they pursued that were in line with lean startup, but multiple entrepreneurs mentioned each of the aspects of lean startup that we included in the survey.

This qualitative investigation altered our survey design to focus more on the activities that entrepreneurs completed rather than focusing on their understanding of the different approaches. Before distributing the survey, we tested it with two entrepreneurs to obtain feedback on its understandability – one from the original interviewees and one unfamiliar with the research project. Based on these tests, minor modifications to word choice were made.

We reached out to the startup ecosystem in a major Midwestern city. The online survey was emailed to incubators, accelerators, individual entrepreneurs, and organizations that reach outside the Midwest. Participation in the study was voluntary. Participants received a $1 USD donation to a non-profit organization of their choice for completing the survey. A total of 41 entrepreneurs responded to the initial survey request. We excluded seven of these cases because they did not adequately describe their business.

To bolster the sample size, we enlisted the Qualtrics panel development team to collect approximately 100 additional survey responses from entrepreneurs. Qualtrics, in addition to providing online survey tools, is a research panel aggregator with the ability to recruit hard-to-reach demographics. Qualtrics utilizes specialized recruitment campaigns to assemble niche survey panels based on pre-specified criteria. To fit in this group, entrepreneurs must own a business that they have started within the last ten years. Respondents in this group were compensated with $25 USD for their participation and were not offered any donation option. A total of 106 completed surveys were returned from this group. We excluded 20 of these cases because they were unable to adequately describe their business. See the Appendix for the complete survey instrument.

Participants and procedures

The participants completed an online questionnaire with thirty-two questions on the details of how they started their business, the success of the business, activities they conducted while starting the business, and demographic variables. The sample was recruited via a snowball sample method as well as through a Qualtrics panel as described above.

The majority of our sample is comprised of Caucasians (81.7%), followed by Black/African Americans (11.7%), then Hispanics (3.3%), then Asians (1.7%). The median age of our sample was 46.5 years old and the sample was 49.2% female. The majority of our dataset is currently married (61.7%) with 55.8% having at least a bachelor's degree. Table 1 shows the means and standard deviations for each of the variables as well as the correlations between them.

Dependent variables

There are various difficulties in obtaining concrete objective measures of success from entrepreneurs. Reasons stem from factors such as small business owners not always running their businesses to maximize financial performance ( Jacobs et al. , 2016 ) or running a business because it allows for a preferred lifestyle ( Jennings and Beaver, 1997 ; Walker and Brown, 2004 ). Because of this, there are a few ways researchers can gain acceptable insight into the success of an entrepreneurial venture. One approach is to use subjective measures when other types of information are unavailable ( Dawes, 1999 ). Thus, following previous research ( Besser, 1999 ; Jacobs et al. , 2016 ) which has noted that entrepreneurial success may not always mean optimal financial measures and instead may be more along the lines of maintaining an acceptable level of income for themselves and their employees ( Beaver, 2002 ) or sustaining a lifestyle more aimed at being part of a creative output than being financially successful ( Chaston, 2008 ), we first analyzed the entrepreneurs' perceived organizational success. A second approach is to ask about objective success measures. We strengthened our study by asking entrepreneurs about objective measures of their firm's success via focusing on their firm's growth, specifically, asking about objective growth indicators in terms of increased number of employees, increased number of customers, or increased revenue as previous research has used these measures to indicate success ( Walker and Brown, 2004 ). Therefore, we analyzed the full model for both the subjective and objective dependent variables.

Given that entrepreneurial motivations can vary widely ( Shane et al. , 2003 ), defining success can vary based on the individual. To address this, studies have surveyed entrepreneurs for their subjective perception of their venture's success ( Fisher et al. , 2014 ; Keith et al. , 2016 ). Walker and Brown (2004 , p. 585) find that “Personal satisfaction, pride and a flexible lifestyle were the most important considerations for these business owners.” They argue that objective, financial measures that are often used in research offer objectivity and accessibility, but may not capture the true value of success for many entrepreneurs. These alternative motivations make success difficult to quantify objectively, leading researchers to utilize more subjective measures. Therefore, in line with prior research on entrepreneurial success perceptions ( Jacobs et al. , 2016 ; Besser, 1999 ), we asked respondents “How strongly do you agree or disagree with the following statement? My business is a success.” Respondents rated their agreement on a five-point Likert scale (1 = Strongly Agree, 5 = Strongly Disagree).

Firm Growth:

To strengthen the findings from our subjective measure of success we also asked respondents about objective measures of firm growth. By asking respondents about obvious measures of growth we can offer a more objective view on the success of the firm. We asked respondents if their firm had grown by any of the following three metrics: number of employees, number of customers, or total revenue (cf. Jacobs et al. , 2016 ). Given the variety of motivations of entrepreneurs, we chose not to limit the type of growth that would reflect success. In some cases, an entrepreneur may seek to increase the impact of the business by providing services to a greater number of customers, while maintaining a lean staff to control pricing. Alternatively, an entrepreneur may be seeking autonomy, and therefore choose not to hire in order to create greater autonomy. However, it is likely that some firm growth – in revenue, employees, or customers – is likely to occur in successful firms. Therefore, we combined these three types of growth as a dichotomous variable, wherein growth in any one or more of these areas would be coded as a “1” for growth and an answer of no growth in all of these areas would be coded as a “0” for no growth.

Independent variables

Business planning.

We defined business planning using four activities. We asked respondents if they (1) wrote a business plan [ Write BPlan ]; (2) gathered secondary data on industry statistics or trends [ Secondary Data ]; (3) shared your business plan with people outside the company for feedback [ BPlan Feedback ]; and (4) shared your business plan with people outside the company for funding [ BPlan Funding ]. These were not loaded as a factor as these do not represent an underlying factor, but rather are individual activities that all represent a variety of activities pertaining to the use of business plans.

We defined lean startup using six activities. We asked respondents if they (1) interviewed potential customers [ Interview ]; (2) created a prototype [ Prototype ]; (3) showed a prototype to potential customers for feedback [ Show Proto ]; (4) conducted an experiment to better understand some portion of your business [ Experiment ]; (5) used customer feedback to alter the direction of your business (“pivoted”) [ Pivot ]; and (6) accepted money for preorders [ Preorders ]. Similar to business planning activities, these were not loaded as a factor, as these activities do not represent an underlying factor, but rather a collection of potential activities.

For each of the IVs, respondents were first asked which of the above activities they engaged in during their venture startup process. The order of the activities was randomized. For each activity that was selected, respondents were asked to rate “how much did each of those activities positively impact the performance of this venture?” Respondents were given a five-point Likert scale (1 = “Not at all” to 5 = “A great deal”) and if the respondent did not do the activity, the response was coded as a 0. To calculate the IVs, each response was weighted by the level of impact. For example, if the respondent rated Experiment as a 5 for a great deal of impact, then it would be coded 5. If it was rated 3, then it would be coded 3. Any activity not completed was not rated (or effectively coded a 0).

We used the ratings to allow for variance in the impact of any activity. In our preliminary interviews, we heard that entrepreneurs may have performed the same activity, such as interviewing customers, but some placed a greater emphasis on this activity whereas others performed it only cursorily. We also performed a robustness check on the data using non-weighted values for the IVs and found similar results (these are available from the corresponding author upon request).

Control variables

We controlled for the following variables: (1) the firm's age in years [Firm Age] ; (2) the entrepreneur's prior startup experience [Ent XP] ; (3) the entrepreneur's age in years [Age] ; (4) the entrepreneur's education level [Education] ; (5) the case sample [case Sample]; and (6) if the firm was a high-tech growth firm [Hi-tech growth firms] . Firm age is likely related to perceptions of success in the minds of entrepreneurs. If an entrepreneur perceives themselves as unsuccessful, they are likely to quit pursuing their venture. Thus, entrepreneurs with older businesses are more likely to have higher perceptions of their own success. Ent XP, Age , and Education have all been investigated in the past for their relationship to entrepreneurial firm performance (e.g. Hechavarría and Welter, 2015 ). We also control for the case sample since our sample was collected in two different processes. Finally, we control for Hi-tech growth firms since some firms in our sample are oriented toward accelerated growth and others may be content with stable returns, which may impact the use and effectiveness of business planning ( Brinckmann et al. , 2010 ).

Regression results for success DV

We tested our hypotheses using hierarchical regression [ 3 ]. In Step 1, we entered Firm Age (in years), the entrepreneur's prior startup experience, the entrepreneur's age, the entrepreneur's education level, the case source, and whether the firm was a hi-tech growth firm as controls ( Van Dyne and LePine, 1998 ). In Step 2, we entered our independent variables that relate to the business plan approach: writing a business plan, gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding. We also included the variables related to the lean startup approach: interviewing potential customers, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, pivoting based on customer feedback, and accepting money for preorders.

Table 1 reports descriptive statistics and correlations, whereas Table 2 presents the hierarchical regression results for the success dependent variable. As can be seen in Table 2 , consistent with H1a , writing a business plan was related to success ( β  = 0.09, p  = 0.09). However, we do not find support for our other hypotheses: gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding were all not significantly related to success.

When we looked at the activities that contribute to lean startup methods, we found that interviewing potential customers ( β  = 0.09, p  = 0.08) and accepting money for preorders ( β  = 0.15, p  = 0.03) supported H2a and H2e respectively, suggesting these are correlated with success. Similar to the business plan approach there was not sufficient support for all our hypotheses: creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting were not supported. The findings with regard to each hypothesis are summarized in Table 3 .

Regression results for growth DV

Similar to the subjective success dependent variable, we tested our hypotheses using logistic regression for our objective growth dependent variable [ 4 ]. A logistic regression was performed for each of our approaches, the business plan and lean startup since our growth DV is dichotomous ( Mason et al. , 2018 ).

Table 1 reports descriptive statistics and correlations, whereas Table 4 presents the logistic regression results for the effects of writing a business plan, gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding had on our growth dependent variable. The logistic regression model was statistically significant, χ 2 (10) = 39.16, p  < 0.005. The model explained 39.2% (Nagelkerke R 2 ) of the variance in business growth and correctly classified 69.2% of cases. As can be seen in Table 4 , consistent with H1a , writing a business plan was related to success ( β  = 0.30, p  = 0.036). As before we did not find support for our other hypotheses: gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding.

Next, we looked at the actions that constitute lean startup, interviewing potential customers, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting based on customer feedback had on our growth dependent variable. The logistic regression model was statistically significant, χ 2 (12) = 53.82, p  < 0.005. The model explained 51.0% (Nagelkerke R 2 ) of the variance in business growth and correctly classified 85% of cases. Our logistic regression results found that interviewing potential customers ( β  = 0.25, p  = 0.08), accepting money for preorders ( β  = 0.89, p  = 0.04), and pivoting based on customer feedback ( β  = 0.34, p  = 0.03), provided support for H2a , H2e , and H2f respectively, suggesting these are correlated with success in terms of growth. We did not find support for our other hypotheses about lean startup activities. These were, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting. The findings with regard to each hypothesis are summarized in Table 5 .

In this paper, we sought to understand the relationship between lean startup activities and success as well as the relationship between business planning activities and success. To answer this question, we began by gathering qualitative data from entrepreneurs to better understand their perspective and language regarding these two approaches. From there, we created a survey and collected responses from 120 entrepreneurs about their activities and their perception of success and the growth of their firms. Controlling for common influencers of success, we found that the act of writing a business plan ( H1a ), interviewing potential customers ( H2a ), and taking preorders ( H2e ) were all correlated with subjective perceptions of success. For the firm growth dependent variable, we found that the act of writing a business plan ( H1a ), taking preorders ( H2e ), and pivoting based on customer feedback ( H2f ) were all correlated with objective measures of firm growth. Interestingly, these results represent a combination of lean startup and business planning activities. What is more, the two activities that are supported by both dependent variables, represent the most well-researched activities. As mentioned, the literature on business planning is well developed ( Honig and Karlsson, 2004 ), and the use of preorders is most directly tied to research on enrolling stakeholders ( Burns et al. , 2016 ) as well as effectuation ( Sarasvathy, 2001 ).

Our results give some understanding to the prior equivocal findings on business planning ( Brinkmann et al. , 2010 ). The qualitative data we gathered suggests that entrepreneurs complete different activities in their business planning process. In the past, there has not been much discussion about separate aspects of business planning or the impact they may have. Our findings suggest that the act of writing a business plan is related to success, but the other business planning activities – gathering secondary data, sharing the business plan for feedback or funding – are not related. This suggests that the planning process itself may mean more than the uses of a business plan. Even if a business plan is not revised or revisited as an entrepreneur pursues their venture ( Karlsson and Honig, 2009 ), the act of writing the plan is still connected with success. Entrepreneurs going through the exercise of planning are likely to gain a better understanding of the entire endeavor of launching a new business. This would give entrepreneurs a better grasp of what the range of possible outcomes would be and likely temper any overly optimistic and unfounded hopes. Therefore, it is likely that simply writing the business plan helps calibrate entrepreneur expectations, which, in turn, helps entrepreneurs achieve success.

Rather than viewing lean startup as a cohesive whole, our qualitative data suggests that entrepreneurs make use of differing combinations of lean startup activities. This discovery informed our survey which offers some of the first direct quantitative evidence of the efficacy of lean startup methods. What we find, however, is that not all activities are linked to success. Perhaps the most straightforward finding is that taking preorders is correlated with both subjective and objective measures of success. If entrepreneurs are able to complete their first sales prior to actually creating their products or services, then success seems much more likely. Venture success, in this case, is agnostic toward the level of innovation in the firm. As such, the critique of lean startup from Felin et al. (2019) as a method that helps orient entrepreneurs to ideas that can be quickly and transparently tested still requires further investigation.

The other relevant activities are those most aligned with customers. Interviewing customers ensures that entrepreneurs design businesses that serve customers rather than building something that no one wants ( Blank and Dorf, 2012 ). However, it is worth noting that interviewing customers must be done with an awareness of the entrepreneur's own cognitive biases ( Chen et al. , 2015 ). Furthermore, pivoting as a result of these discussions with customers also shows a response to customers' desires.

The most interesting aspect of our findings is likely the combination of activities across business planning and lean startup. While lean startup proponents might argue that “no business plan survives its first contact with customers” ( Blank and Dorf, 2012 , p. 53), the act of writing a business plan is correlated with success. It is worth noting that the separation between lean startup and business planning may be a false dichotomy. The underlying activities are not mutually exclusive and do not seem to be detrimental to each other. It is entirely possible, and based on these results advisable, that an entrepreneur would interview customers throughout the process of creating a business plan and use customer feedback to alter both the plan and the business itself. Furthermore, taking customer preorders serves to solidify the relationship between customers and the firm which would only improve that communication.

Limitations

In order to create one of the first quantitative, empirical investigations of business planning and lean startup practices, some tradeoffs needed to be made. We believe that while these limitations may restrict the strength of some of our findings, the direct nature of our approach offers a contribution to the ongoing conversations among scholars and practitioners.

Our sample size is 120. Obviously, a larger sample may lead to more robust and generalizable results. Furthermore, we gathered the sample using two different methods and controlling for the sample method was a significant predictor. We leave it to further research to expand upon our findings and investigate various entrepreneurial samples for differences that may arise.

One of our dependent variables was a subjective measure of success, which may be considered a weakness. We used this measure given the variety of preferred outcomes an entrepreneur may be pursuing – financial objectives, personal objectives, or mission-based objectives. Our other dependent variable was an objective measure of growth across three categories and serves to bolster confidence in the subjective measure.

Another area of concern may be common method variance given that we collected both independent variables and dependent variables from the same instrument. To address this concern, we collected data from individual entrepreneurs that all represented different companies and utilized two different samples so as to minimize the issues that may arise from common method variance ( Chang et al. , 2010 ). Lastly, our independent variables are more objective. For example, writing a business plan is a discrete event as is creating a prototype. For these reasons, we do not believe the common method variance is a major concern for this study.

One other potential weakness is the degree to which entrepreneurs actually utilized the activities of lean startup or business planning. The weighting scheme we employed aims to address this issue by weighting the degree to which entrepreneurs found each activity useful. However, we cannot be sure whether or not an entrepreneur executed the given activity well and this variability goes uncaptured in our study. Quantitative studies like this one will typically suffer from this limitation but case studies may be able to overcome these weaknesses (see Ghezzi et al. , 2015 ).

Finally, our design is cross sectional and does not allow us to make causal inferences. We can only imply the relationship between our independent and dependent variables. Our hope is this is a first step to future research which may be better able to test the causality of the various aspects of business planning and lean startup as they relate to entrepreneurial success.

Implications for research and practice

This manuscript has important implications for research and practice. With respect to research, we have demonstrated that aspects of business planning and lean startup both are associated with success. Furthermore, entrepreneurs seem unlikely to enact either business planning or lean startup wholesale but are likely to pursue individual aspects of these concepts. Future research can investigate how entrepreneurs select between activities as well as how training and education regarding these practices impact the entrepreneurs' choice. The training and education surrounding the entrepreneur represent aspects of the organizing context ( Johannisson, 2011 ), which influence how entrepreneurs construct their firms. Therefore, future research could add further institutional aspects or conduct randomized controlled trials to see the impact of these practices in the organizing context.

In terms of implications for practice, this research highlights the use of a variety of activities when it comes to entrepreneurial success. Some of the activities from both lean startup and business planning are useful for entrepreneurs. This also offers insight for educators as they seek to equip the next generation of entrepreneurs. Educators can offer potential entrepreneurs a wide range of activities without prognosticating one aspect of the false dichotomy between lean startup and business planning.

In this paper, we provide one of the first quantitative empirical studies investigating lean startup methods and business planning. In breaking down these areas, we undermine the false dichotomy between these two startup tools. Our findings demonstrate that truly understanding customers through preorders and interviews can lead to better business plans and better pivots. Ultimately, this results in firms with a greater chance of success. Understanding the variety of activities that entrepreneurs can pursue helps entrepreneurs and educators increase the chances of success for new businesses.

Correlations

Summary regression results for the growth DV

We do not believe that business planning exists as a latent construct necessarily comprised of these activities, but rather each of these activities are potential components of the concept referred to as “business planning” in prior research.

Similar to business planning activities, we believe that lean startup is not a latent construct but rather these activities in some combination is what is meant when practitioners and scholars refer to lean startup. As such we test each of the activities individually rather than as a construct.

Following the extant guidelines on regression assumptions ( Osborne and Waters, 2002 ), we tested our model to ensure the regression assumptions were met. First, to check if our error terms ( Flatt and Jacobs, 2019 ) are normally distributed, the P - P plot suggests normality as the plot is largely linear. Second, to check for a linear relationship between the independent and dependent variable, our residual plot showed a linear relationship. Third, as our variables were not latent, there is no concern for measurement error for this approach. However, we did follow best practices suggested by Flatt and Jacobs (2019) and tested the Durbin–Watson statistic. Our value for this measure is 1.5 and their guidelines are that this statistic should be close to 2. Values between 1.2 and 1.6 represent only a minor violation of the statistical independence of error terms. Finally, to address the assumption of homoscedasticity, inspection of our standardized residuals showed our residuals scattered around the 0 (horizontal line). Therefore, for our dependent variable of success, we can feel comfortable our data meets the assumptions of linear regression.

As this dependent variable was analyzed using logistic regression, we analyzed our data following best practices from Garson (2012) . First, our dependent variable is dichotomous. Second our scatterplot showed no outliers in our data. Third, the correlation table showed no evidence for multicollinearity as no correlations were above 0.9 ( Tabachnick et al. , 2007 ). Hence, we feel our data meets the assumptions for logistic regression.

Appendix Qualtrics Survey

[Business Background]

Started (or am starting it) myself

When you first started pursuing the business, how many people were on the founding team (including yourself)?

High Tech Startup (External/Venture funded)

Steady Growth Business (Internally/Self-funded)

Lifestyle Business

Business Idea

Decision to Start a Business

Occurred Together

Month (1–12)

Year (YYYY)

[Lean Start Up, Business Planning Practices]

Interviewed potential customers

Created a prototype

Showed a prototype to potential customers for feedback

Conducted an experiment to better understand some portion of your business

Wrote a business plan

Accepted money for pre-orders

Used customer feedback to alter the direction of your business ("pivoted")

Gathered secondary data on industry statistics or trends

Shared your business plan with people outside the company for feedback

Shared your business plan with people outside the company for funding

[Demographics]

How old are you? 0.5

Prefer not to answer

Black or African American

American Indian or Alaska Native

Native Hawaiian or Pacific Islander

Living with a partner

Never married

Up to 8th grade

Some High School

High School Diploma

Some College

Associate's Degree

Bachelor's Degree

Some Graduate School

Master's Degree

More than 1

[Success Criteria]

My business is a success

Increased Annual Revenue

Increased Annual Customers

Increased Number of Employees

Thank you for completing the survey!

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Acknowledgements

A portion of this research was funded by the Downing Scholars research grant at Xavier University.

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A Way Forward for Small Businesses

• Alexander W. Bartik,
• Marianne Bertrand,
• Zoë B. Cullen,
• Edward L. Glaeser,
• Michael Luca,
• Christopher Stanton

In the face of existential uncertainty, you must balance urgency with prudence.

Small businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP, and they are facing an existential threat in the wake of the coronavirus crisis.  To understand the economic impacts on small business, the authors surveyed roughly 5,800 companies nationwide. They found these companies to be cash-strapped, with many having shut down or laid off workers, and uncertain about whether federal assistance will work for them. They offer five recommendations for small businesses navigating an uncertain future: 1) Don’t rush decisions, but do make plans; 2) Get in line for the Paycheck Protection Program now; 3) Understand how your customers’ needs have changed; 4) Do some realistic accounting; and 5) Keep your best employees loyal.

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It will be years before we fully understand the economic impact of the coronavirus, but one thing is painfully clear right now: Small businesses across the country are facing an existential threat. Businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP . Yet while these smaller firms are an essential part of the U.S. economy, they’re often financially fragile, with little cash on hand or resources to buffer even a minor financial shock. In the throes of the sweeping disruptions caused by the coronavirus, businesses around the country have closed temporarily. Many have ongoing expenses and little or no revenue and face the prospect that they may never reopen.

• Alexander W. Bartik is an assistant professor of economics at the University of Illinois at Urbana Champaign.
• Marianne Bertrand is the Chris P. Dialynas Distinguished Service Professor of Economics at the University of Chicago Booth School of Business, where she is the faculty director of the Rustandy Center for Social Sector Innovation.
• Zoë B. Cullen is an assistant professor of economics at Harvard University, in the Entrepreneurial Management Unit of Harvard Business School.
• Edward L. Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard.
• Michael Luca is the Lee J. Styslinger III Associate Professor of Business Administration at Harvard Business School and a coauthor (with Max H. Bazerman) of The Power of Experiments: Decision Making in a Data-Driven World (forthcoming from MIT Press).
• CS Christopher Stanton is the Marvin Bower Associate Professor of Business Administration at Harvard Business School.

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Business plan competitions and nascent entrepreneurs: a systematic literature review and research agenda

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• Volume 19 , pages 863–895, ( 2023 )

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Business plan competitions (BPCs) are opportunities for nascent entrepreneurs to showcase their business ideas and obtain resources to fund their entrepreneurial future. They are also an important tool for policymakers and higher education institutions to stimulate entrepreneurial activity and support new entrepreneurial ventures from conceptual and financial standpoints. Academic research has kept pace with the rising interest in BPCs over the past decades, especially regarding their implications for entrepreneurial education. Literature on BPCs has grown slowly but steadily over the years, offering important insights that entrepreneurship scholars must collectively evaluate to inform theory and practice. Yet, no attempt has been made to perform a systematic review and synthesis of BPC literature. Therefore, to highlight emerging trends and draw pathways to future research, the authors adopted a systematic approach to synthesize the literature on BPCs. The authors performed a systematic literature review on 58 articles on BPCs. Several themes emerge from the BPC literature, including BPCs investigated as prime opportunities to develop entrepreneurial education, the effects of BPC participation on future entrepreneurial activity, and several attempts to frame an ideal BPC blueprint for future contests. However, several research gaps emerge, especially regarding the lack of theoretical underpinnings in the literature stream and the predominance of exploratory research. This paper provides guidance for practice by presenting a roadmap for future research on BPCs drawing from the sample reviewed. From a theoretical perspective, the study offers several prompts for further research on the topic through a concept map and a structured research agenda.

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Introduction

Business plan competitions (BPCs) give nascent entrepreneurs the chance to present their business ideas to an industry and investment peer group tasked with judging each project and picking the most viable one (Overall et al., 2018 ). Winners are awarded various prizes (McGowan & Cooper, 2008 ). The purpose of BPCs is to stimulate new entrepreneurial activity and support novel entrepreneurial ideas (Kwong et al., 2012 ). In return, BPC organizers emphasize the benefits of participating, such as cash prizes and financing (McGowan & Cooper, 2008 ), visibility and reputational benefits (Parente et al., 2015 ), networking with other aspiring entrepreneurs (Thomas et al., 2014 ), and meeting potential stakeholders, including customers and investors (Passaro et al., 2020 ).

BPCs have been used by new entrepreneurs to kickstart their business ideas (Cant, 2018 ). They have been popular throughout the years, especially during the global recession in the first decade of the 2000s. BPCs have become widely popular across both developed (Licha & Brem, 2018 ) and developing countries (Efobi & Orkoh, 2018 ; McKenzie & Sansone, 2019 ), as poor economic conditions have driven young entrepreneurs toward any opportunity they can find (Cant, 2018 ). Since the origin of BPCs in the USA in the 1980s (Buono, 2000 ), several universities have implemented them in their educational ecosystem to foster practical learning. From there, BPCs have rapidly spread in Europe (Riviezzo et al., 2012 ) and within developing nations in Asia (Wong, 2011 ) and Africa (House-Soremenkun & Falola, 2011 ). Despite contextual peculiarities, the significance of BPCs is equally pertinent for developed and emerging economies (Tipu, 2018 ), as they contribute to shaping a lively local entrepreneurial fabric (Barbini et al., 2021 ).

Opportunities arising from BPC participation come in various forms, including knowledge (Barbini et al., 2021 ), networking, and promotion (Cant, 2016a ); however, finding economic resources to finance entrepreneurial ventures has proven to be the main concern (Kwong et al., 2012 ; McGowan & Cooper, 2008 ). BPCs are attractive to entrepreneurs, as they can be prime opportunities not only to receive feedback on their ideas, but also to get the monetary funds needed to realize them (Mosey et al., 2012 ). In addition, a successful BPC does not merely identify the most intriguing business idea but also supports entrepreneurs during the early stages of their new ventures, whether or not they win the competition (Watson et al., 2015 ).

Several research streams have emerged around the topic of BPCs (Cant, 2018 ). For example, entrepreneurial education has been investigated in several studies (Licha & Brem, 2018 ; Olokundun et al., 2017 ) as a way to effectively provide learning support to nascent entrepreneurs and boost their chances of success. Moreover, university-based BPCs are being explored in terms of their potential as learning experiences and how specific lessons learned during these competitions may affect future entrepreneurial orientations (Overall et al., 2018 ). For example, some argue that promoting sustainable production during BPCs has a tangible impact on the integration of sustainability practices into future business activities (Fichter & Tiemann, 2020 ).

Start-up competitions have gained global prominence since the 1980s (Kraus & Schwarz, 2007 ; Ross & Byrd, 2011 ). Today, they are a popular form of support for nascent entrepreneurs (Dee et al., 2015 ), featuring steady growth in numbers over recent years (Fichter & Tiemann, 2020 ). Consistent with BPCs’ importance, the literature examining them is growing, with an increasing number of empirical studies published each year. However, despite the attention from policymakers and academics, no attempts have been made thus far to review the literature on BPCs systematically. Additionally, there is a need for a structured research agenda that could shed light on currently unexplored topics in entrepreneurship research, such as the role of institutions in emergent entrepreneurial intentions (Audretsch et al., 2022 ; Barbini et al., 2021 ), contextual factors stimulating nascent entrepreneurial intentions (Zhu et al., 2022 ), and the development of richer theory about practical entrepreneurial training (Clingingsmith et al., 2022 ).

To the best of our knowledge, the only previous attempt at synthesizing BPC literature was performed by Tipu ( 2018 ). While their contribution is of absolute importance, its scope was limited to 22 papers published in the early 2000s and late 90 s, thus leaving a consistent portion of recent academic literature unexplored. Consequently, we believe that a systematic review of the BPC literature could be of interest to both practitioners and academics. Building on previous systematic literature reviews (SLRs) from the entrepreneurship field, we aim to provide a detailed analysis of the relevant literature on BPCs. We focus on several key aspects of BPCs that emerged from the analysis, starting with the ways in which they are currently implemented, the benefits they provide to new entrepreneurs, and the role played by BPC promotion in the early stages of the entrepreneurial life cycle (Cant, 2016a ). Our analysis reveals several factors that influence the successful implementation of BPCs as ways to boost the effectiveness of novel entrepreneurial ventures, including entrepreneurial education for individuals who take part in the program (McGowan & Cooper, 2008 ) and entrepreneurs’ personal traits and dispositions (Kwong et al., 2012 ). Therefore, our study is not limited to a synthesis of the existing literature on the topic; rather, it develops a comprehensive framework for both professionals and academic researchers to guide future projects on BPCs. This study is guided by four main research questions (RQs):

RQ1: What is the current research profile of BPC literature?

RQ2: What are the key emerging topics to be found in BPC literature?

RQ3: What research gaps are currently present in the BPC literature and what future research agenda can be set according to said gaps?

RQ4: Can a comprehensive conceptual framework be synthesized from the literature to help academics, practitioners, and other relevant stakeholders?

Drawing on previous SLR research on entrepreneurship (Kraus et al., 2020 ), we synthesized the literature to reach our research goal and answer the questions listed above. RQ1 was addressed by gathering all the available literature that satisfied the inclusion criteria in terms of research scope, relevance, and keywords. The research profile was then obtained by conducting several descriptive observations meant to understand the volume of annual scientific production, the most cited sources, the geographical focus, the theoretical frameworks used by the authors, and the emerging themes across the sample. RQ2 was addressed by reviewing the literature presented in the sample through in-depth content analysis techniques. From the analysis, the following themes emerged across the sample: (1) BPCs as opportunities for entrepreneurial education, (2) the role of BPCs in the promotion and visibility of nascent entrepreneurs, (3) the contexts surrounding BPCs, and (4) methodological choices and research design in BPC publications. Regarding RQ3, we manually reviewed each document to identify relevant research gaps in the BPC literature. This allowed us to suggest several research questions that could serve as a foundation for future studies. Finally, RQ4 was addressed by developing a framework that synthesized the thematic findings of our SLR.

The present SLR can contribute significantly to both theory and practice. Overall, SLRs critically assess and synthesize extant research, developing a comprehensive theoretical framework that can guide scholars and practitioners. In other words, a systematic review highlights the different thematic areas of prior research, delineates the research profile of the existing literature, identifies research gaps, projects possible avenues for future research, and develops a synthesized research framework on the topic (Dhir et al., 2020 ). Thus, from a theoretical perspective, our study should interest a broad range of researchers, as it links back to the ongoing global conversation regarding BPCs. It does so by synthesizing the knowledge on the topic and formulating a structured research agenda that could serve as a reference for researchers to conduct future studies and address issues of topical interest that have yet to receive sufficient attention from authors. The research agenda is built upon extant gaps found in our in-depth analysis of the sample. Similarly, practitioners can use the findings to recognize the drivers and outcomes of BPC programs and shed light on their core characteristics when designing one. Likewise, policymakers should use the present work as a blueprint for BPC planning, as the findings presented in this paper summarize how to set up a BPC effectively.

The article begins by outlining the scope of the research and explaining what types of studies will be included in the SLR in terms of content. We then explain the methodology used to gather the research sample and provide a descriptive overview of the data. Next, we provide a thematic review of the studies featured in the SLR. We identify gaps in the literature and avenues for further research before finally discussing the study’s limitations, as well as its theoretical and practical implications.

Scope of the review

Specifying the scope of the SLR and outlining its conceptual boundaries enhance the search protocol's transparency and academic rigor (Dhir et al., 2020 ). We achieved the above by clearly defining the theoretical background of the phenomenon under investigation, thus establishing the definition of the term BPC and employing it as the conceptual boundary of the review.

The BPC literature is part of a broader stream of competition-based learning in higher education institutions (Connell, 2013 ; Olssen & Peters, 2005 ). The peculiarities of BPCs consist in the presence of rewards for participation (Brentnall et al., 2018 ), the development of core entrepreneurial competencies (Arranz et al., 2017 ; Florin et al., 2007 ), and the overall effectiveness in terms of entrepreneurial survival (Jones & Jones, 2011 ; Russell et al., 2008 ). Previous research has focused on the core elements of BPC programs, such as mentoring, feedback, and networking; the way they affect future entrepreneurial lives (McGowan & Cooper, 2008 ; Watson et al., 2015 ; Watson & McGowan, 2019 ); and the rewards from BPC participation (Russell et al., 2008 ).

From a geographical perspective, the significance of BPCs is equally pertinent for developed and emerging economies (Tipu, 2018 ), albeit nascent entrepreneurs face unique challenges in developing countries, such as the lack of educational support (Hyder & Lussier, 2016 ) and institutional instability (Farashahi & Hafsi, 2009 ). We find the most significant levels of literary production in the USA (Buono, 2000 ), where BPCs originated back in the 1980s, and Europe (Riviezzo et al., 2012 ). BPC programs are also gaining traction in developing countries, especially in Asia (Wong, 2011 ) and Africa (House-Soremenkun & Falola, 2011 ). In China, for instance, BPCs are recognized as a reasonable means to obtain practical entrepreneurial knowledge (Fayolle, 2013 ). Similarly, in Kenya, there is an unprecedented level of interest in BPCs, especially from stakeholders involved in entrepreneurial education (Mboha, 2018 ). Finally, in Australia, Lu et al. ( 2018 ) noted the importance of funding from the federal government, such as the New Colombo Plan or the Endeavour Mobility funding schemes, in terms of support and promotion of BPC programs.

Despite the broad geographical scope of BPC literature, there is still a considerable paucity of research on the impact of BPCs on local entrepreneurship and enterprise development. Additionally, the few published studies feature mixed results. For instance, the study by Russell et al. ( 2008 ) reported a positive impact of the MI50K Entrepreneurship Competition in terms of job creation and overall funding obtained. However, the results of the study by Fayolle and Klandt ( 2006 ) are contradictory, as they note how entrepreneurial training via BPC participation does not always equate to a successful future venture. In this regard, BPC literature echoes decades-old controversial stances in entrepreneurship research, such as the perceived usefulness of business plans (Gumpert, 2003 ; Leadbeater & Oakley, 2001 ).

At this juncture, we also consider it prudent to formulate the definition of BPC that will be used as a conceptual boundary for the present study. While BPCs worldwide share a core definition and essence, they come in various forms (McKenzie, 2017 ). We adopted Passaro et al.'s ( 2017 ) definition of BPC, highlighting three essential structural and procedural features. The first is the presence of an organizing committee overseeing the competition and sponsors willing to invest in the most promising entries (Bell, 2010 ). Second, the participants are required to submit business plans to participate in the competition, and participants often consist of teams, as knowledge sharing across multiple people is deemed a crucial component of entrepreneurial success (Weisz et al., 2010 ). Third, after an initial screening, only participants with the most promising ideas are asked to further develop their business plans in the final stages of the competition (Burton, 2020 ). Thus, with the above conceptual scope in mind, our study includes contributions that have examined BPCs, their core characteristics, their implications for entrepreneurship education, and both the antecedents and consequences of BPC participation. However, we do not include studies investigating entrepreneurship education, universities' incubators, and generic entrepreneurial themes. Such studies have already been discussed at length by previous researchers.

The SLR approach was undertaken in an attempt to present the current literature in a comprehensive and extensive way. SLRs have been widely used in entrepreneurship research, and we use previously published SLRs as a methodological reference to guide our study (Mary George et al., 2016 ; Paek & Lee, 2018 ; Tabares et al., 2021 ). In accordance with previous work (Hu & Hughes, 2020 ), we performed a systematic review of BPC literature divided into two distinct steps. We first extracted the dataset required to perform the study, in what we will refer to as the data extraction phase. We later profiled the sample obtained in terms of descriptive statistics, such as annual scientific production, most cited countries, authors’ networks, and collaborations. Additional analyses were conducted by using the VOSviewer software tool (version 1.6.10., Leiden University, Leiden, the Netherlands) and Microsoft Excel (Dhir et al., 2020 ). The tools make use of bibliographic data to determine the frequencies of the published materials, design relevant charts and graphs, construct and visualize the bibliometric networks, and calculate the citation metrics.

Data extraction

The three central databases utilized for the present study are Web of Science (WoS), Scopus, and Google Scholar, as per the suggestions by Mariani et al. ( 2018 ). The first step in order to conduct the extraction of data was to identify the appropriate set of keywords. Based on the conceptual boundaries of the SLR, we determined an initial set of keywords. The keywords included ‘business plan competitions', ‘business plan contests’, and ‘business creation competitions’. The above keywords were used to perform an initial search on Google Scholar to examine if our keywords were sufficient. The first 50 results were taken into consideration (Dhir et al., 2020 ). We also searched the exact keywords in top journals, such as Entrepreneurship, Theory and Practice ; Strategic Entrepreneurship Journal ; International Entrepreneurship and Management Journal ; and Entrepreneurship Research Journal . Subsequently, we updated the list with keywords from the above sources. We consulted the panel to finalize the set of keywords, which ultimately resulted in the following: business plan competition*, business creation competition*, social business plan competition*, business plan contest*, business creation competition*, pitch competition*, pitch contest*. Data were collected from two databases, Scopus and WoS, which are generally well renowned in previous SLR studies on entrepreneurship (Hu & Hughes, 2020 ). Then, a rigorous set of inclusion and exclusion criteria was established. As for the inclusion criterion, we wanted to include only peer-reviewed works. This decision was made to strengthen the validity of the findings. Consequently, all forms of literature that may not have been subjected to a rigorous review process were excluded. This exclusion criterion thus filtered out conference proceedings, book chapters, editorials, websites, and magazine articles from the sample. The English language was used as an additional inclusion criterion to avoid language bias (Dhir et al., 2020 ). A complete list of the inclusion/exclusion criteria can be found in Table 1 .

Data collection and screening of literature

The search for keywords, abstract, and title was done in selected databases using the search string featured in Table 2 . An initial search in Scopus attained 195 distinct records, including full-length articles, book chapters, conferences proceedings, review articles, and research notes. We filtered out three publications written in languages other than English. Further, after manually reviewing each record, we excluded 36 publications that were not related to BPCs and 29 publications other than peer-reviewed journal articles. This step allowed us to reduce the overall number to 76 unique records. The same research protocol was performed on the WoS database and provided an initial total of 68 records, all of which were published in English. We filtered out 24 records as they were conference proceedings, review articles, book chapters, or meeting abstracts. Subsequently, we merged the two collections and removed any duplicate records we found in the process. As a final step, we performed chain referencing to identify further relevant studies that were not found in the previous steps. We then reviewed each publication title to identify and exclude journals that could be referred to as gray literature. This brought the total number of publications to 58, which we agreed to as the definitive number to be considered for the SLR. While somewhat limited, the final sample size is in line with the standards set for management studies (Hiebl, 2021 ) and previously published SLRs in entrepreneurship research (Paek & Lee, 2018 ; Poggesi et al., 2020 ).

Research profiling

Research profiling allowed us to review the sample in terms of several descriptive statistics meant to give us a comprehensive understanding of the current state of the art of BPC research (Dhir et al., 2020 ). Starting with Fig. 1 , we address the annual scientific production of papers included in the sample. Data suggest how BPC literature has been steady over the past two decades, with a sharp increase in recent years. The year 2018 features a significant spike in publications, with 11 distinct records to consider. These trends are in line with the consistent growth in broader entrepreneurship literature, as policymakers have shown increasing levels of interest in BPCs as effective means to create new jobs, foster innovation, and recover from economic crisis (Barbini et al., 2021 ).

Year of publication of the selected studies

Figure 2 shows the distribution of articles throughout the various sources included in the sample. The International Entrepreneurship and Management Journal , International Journal of Entrepreneurial Behavior and Research , Journal of Entrepreneurship Education , and International Journal of Entrepreneurship and Small Business rank at the top.

Journals publishing the selected studies

In terms of publishing outlets, the variety of journals publishing relevant research on BPC further highlights the increasing attention scholars have devoted to this domain. Through a closer analysis, we note how leading entrepreneurship journals feature most of research articles on BPCs, thus testifying the intersection between the BPC stream and entrepreneurial education literature.

Establishments examined by the selected studies

The examination of the geographic scope of the prior studies is featured in Fig. 3 and it suggests that the majority focused on a single country, with most conducted in the United States. The United Kingdom, China, and Germany also feature a significant number of publications in terms of corresponding authors’ nationality. Other countries include South Africa, Australia, Canada, Italy, Switzerland, Argentina, Brazil, France, Nigeria, and Venezuela. The above results corroborate extant research, as it sees the USA as predominant due to them being where BPC first originated (Buono, 2000 ), thus having a more prosperous and profound history. Consistently with previous research, we also find a solid scientific presence in Europe (Riviezzo et al., 2012 ; Waldmann et al., 2010 ) and China (Fayolle, 2013 ). However, developing countries are lagging, possibly because BPCs have only recently become popular there (House-Soremenkun & Falola, 2011 ).

Figure 4 illustrates the top 10 most cited publications. The three most cited papers were published over a decade ago, thus acting as a theoretical foundation for development of the literature stream. More specifically, the work of Liñán et al. ( 2011 ) on factors affecting entrepreneurial intention levels and education is the most cited. In their work, Liñán et al. ( 2011 ) consider and establish empathy as a necessary precursor to social entrepreneurial intentions. At the time of publication, their findings were exploratory in nature, thus prompting several additional studies to expand upon their results and further develop their conclusions.

Most cited global documents

Furthermore, the study by Russell et al. ( 2008 ) on the development of entrepreneurial skills and knowledge by higher education institutions ranks at second place. Russell et al. ( 2008 ) noted that BPCs provide fertile ground for new business start-ups and for encouraging entrepreneurial ideas. Russell et al. ( 2008 ) were among the first to suggest a positive correlation between BPCs and entrepreneurial development, thus becoming a theoretical cornerstone for studies willing to further explore the benefits of BPCs for nascent entrepreneurs (Passaro et al., 2017 ).

The study by Lange et al. ( 2007 ) is the third most cited work. Lange et al. ( 2007 ) supported the hypothesis that new ventures created with a written business plan do not outperform new ventures that did not have a written business plan. Their work is often cited among BPC literature when discussing theoretical assumptions against the effectiveness of business plans and, consequently, BPCs (Watson & McGowan, 2019 ).

Several research methods have been adopted in the sample, both qualitative and quantitative. Figure 5 illustrates the methodological choices found within the sample, distinguished as qualitative, quantitative, mixed, and experimental research designs. The amounts shown in Fig. 5 are in absolute value and equal to n = 33 for qualitative research studies, n = 19 for quantitative research, n = 2 for mixed research, and n = 4 for experimental research. The most common choice in research design is the use of a specific BPC as a single empirical case study (Barbini et al., 2021 ; Efobi & Orkoh, 2018 ; Li et al., 2019 ). For instance, Jiang et al. ( 2018 ) investigated the “Challenge Cup” BPC to subsequently develop a longitudinal analysis on creative interaction networks and team creativity evolution. Similarly, Barbini et al. ( 2021 ) investigated data from a BPC in Rimini through the use of a mixed-method analysis. On the other hand, studies that focus on the educational implications of BPCs tend to use students as respondents, instead of BPC participants (Licha & Brem, 2018 ; Olokundun et al., 2017 ).

The research designs used in the selected studies

In terms of methodological choices, qualitative research on BPCs is dominated by semi-structured interviews and surveys (Burton, 2020 ; Watson & McGowan, 2019 ; Watson et al., 2018 ). The above is due to how in-depth, open-ended interviews fit a case study research design, thus explaining their popularity in BPC literature (Watson et al., 2015 ). Additionally, amid qualitative research, we find focus groups (Lu et al., 2018 ), fuzzy-set (Lewellyn & Muller-Kahle, 2016 ), content analysis, and cross-sectional research (Passaro et al., 2017 ). Moreover, quantitative studies include partial least squares models (Fichter & Tiemann, 2020 ; Overall et al., 2018 ), regression analysis, longitudinal studies (Jiang et al., 2018 ; Watson et al., 2018 ), and descriptive empirical research based on surveys. Partial least squares regression models are the most popular choice in regards to quantitative BPC research (Fichter & Tiemann, 2020 ; Overall et al., 2018 ), as they have allowed authors to, among other research, test the impacts of several variables on the entrepreneurial activity of BPC participants (Fichter & Tiemann, 2020 ) and to measure the effectiveness of universities’ promotion of entrepreneurship through events, BPCs, and incubators (Overall et al., 2018 ).

Figure 6 was made with the VOSviewer tool and shows the interactions between the most prolific countries in BPC literature. It showcases the co-citation network between the authors in the sample, sorted by their country of origin. In other words, countries appearing near within the diagram have closer collaboration. The size of each bubble indicates the relevance of each country within the network in terms of overall citations. Several main collaboration groups were found, each highlighted in a distinct color. Consistently with the geographical scope of the sample illustrated in Fig. 3 , the UK and the USA play a predominant role in the collaboration network.

The cross-country co-citation network

VOSviewer can also analyze the co-occurrence year between keywords. Through the co-occurrence chronology of keywords, the first co-occurrence time between keywords can be clearly displayed, which helps to understand the research in the field of BPC and how it has evolved over time. The co-occurrence chronology view is shown in Fig. 7 . The color of the line between the keywords in the figure indicates the first co-occurrence time of the two. The thicker the line, the greater the intensity of the two co-occurrences and the greater the number of co-occurrences between the two keywords. We notice how the field initially started around the topic of entrepreneurial education, as highlighted by the purple and blue clusters. Progressively, the focus has shifted towards social media, business development, innovation, and marketing, most likely due to the growing relevance of digital transformation throughout the past decade.

The co-occurrence chronology view of keywords

To provide readers with a comprehensive and in-depth overview of the BPC literature, we analyzed and synthesized the sample using qualitative content analysis. This technique allows researchers to identify key emerging themes from a sample and to group the records depending on their similarities (Baregheh et al., 2009 ). Three researchers conducted the content analysis independently to uncover the thematic structure of the sample. Later, we shared our findings and discussed divergent thoughts and interpretations. The discussion was aided by a senior researcher with relevant expertise in entrepreneurship research. After much debate, we agreed to arrange the results according to four themes: (1) BPCs as opportunities for entrepreneurial education, (2) benefits of BPC participation, (3) the ideal BPC blueprint, and (4) methodological choices and research design in BPC publications. This classification allowed for a more structured overview of the sample that also afforded enough space and detail to adequately review each literature stream. The research questions that emerged from each theme are presented in Table 3 , and they could act as the backbone for future studies on the topic.

BPCs and entrepreneurial education

While entrepreneurship education existed prior to the 1960s, it only became more significant in the second half of the 20th century. Entrepreneurship education was also much more popular in the USA than in the rest of the world, due to a much greater variety of courses at both the undergraduate and postgraduate levels (Dana, 1992 ). Greater academic interest in entrepreneurship was sparked at the beginning of the 21st century, however, and it has increased rapidly over the past two decades, in terms of both scientific publications and courses available to nascent entrepreneurs (Liñán et al., 2011 ).

Overall et al. ( 2018 ) emphasize the importance of universities in entrepreneurial education and BPCs. Oftentimes, universities combine traditional lectures with more practical activities, such as BPCs, to provide students with a more practically oriented schedule. Similarly, Licha and Brem ( 2018 ) highlight the tools and services available to nascent entrepreneurs via universities, including incubators, accelerators, and entrepreneurship-specific teaching methods. The findings of Licha and Brem ( 2018 ) also suggest that universities tend to give their own spin to entrepreneurial programs and that different cultures lead to different results for BPC participants and nascent entrepreneurs in general. While differences may emerge across programs based in different countries (Lewellyn & Muller-Kahle, 2016 ; Zhou et al., 2015 ), the core elements of such competitions remain stable (Parente et al., 2015 ).

Entrepreneurial programs have steadily increased in popularity over the past decade, thus prompting a newly found interest in BPCs as core components of said programs (Laud et al., 2015 ). Raveendra et al. ( 2018 ) identified several skills that universities can transfer to BPC participants, such as time management, problem solving, communication skills, and brainstorming. Although the development of these skills is not, strictly speaking, universities’ prerogative, both governments and employers want skilled entrepreneurs in society (Russell et al., 2008 ). Indeed, BPCs are a prime opportunity for novel entrepreneurs to develop entrepreneurial skills thanks to the potential for networking with peers and a practice-focused competitive environment. Such an opportunity appears to be tied to the historical appeal of BPCs, as they have attracted students from a plethora of disciplines and sectors throughout the decades (Russell et al., 2008 ).

When BPCs are approached with positive attitudes and open minds, participants can actively benefit from what they learn during their entrepreneurial journeys (McGowan & Cooper, 2008 ). The results of their learning experiences tend to emerge during their entrepreneurial careers, as entrepreneurial skills are held in high regard by various stakeholders and shareholders alike, including investors and business angels (Olokundun et al., 2017 ). Several empirical case studies strengthen these findings, illustrating the importance of BPCs as learning opportunities and their importance in terms of future entrepreneurial life (Cervilla, 2008 ; Li et al., 2019 ; Mancuso et al., 2010 ). It is worth mentioning that some studies in the sample had contradictory results, as universities are not always able to promote entrepreneurship with satisfactory results (Wegner et al., 2019 ).

However, the conversation around entrepreneurial education is still developing. For example, not much has been said about interdisciplinary personalized training and self-learning activities (Li et al., 2019 ). Cervilla ( 2008 ) echoes the same necessity in terms of creating and nurturing an interconnected environment around universities and spin-offs. A first set of exploratory findings suggests that the intervention of external professionals could benefit the entrepreneurial education of students; however, much remains to be said about which skills are valued the most by nascent entrepreneurs (Raveendra et al., 2018 ), incentives and returns for universities that host BPCs (Parente et al., 2015 ), and BPCs as a means to instill proactive entrepreneurial intentions in students (Olokundun et al., 2017 ).

Additionally, the debate surrounding the role of higher education institutions in entrepreneurial education remains very active. While universities’ support for BPCs has been proven to benefit participants in the past (Saeed et al., 2014 ), the findings of Wegner et al. ( 2019 ) suggest that the actions of universities have little to no impact on students’ entrepreneurial intentions. Contradicting results can also be found in other studies (e.g., Coduras et al., 2016 ; Shahid et al., 2017 ), which suggests that additional research is needed to expand this literature stream further. Authors have stressed the importance of intangible benefits gained from BPCs, as participants view them as valuable learning experiences and hold the competencies gained from them in high regard, albeit not entirely useful in day-to-day routines (Watson et al., 2018 ). Still, on the topic of competence development, studies have highlighted that stressing the importance of specific skills during BPCs can seriously impact future entrepreneurial ventures (Overall et al., 2018 ).

Finally, several points of contention emerge when discussing the educational outcomes of BPCs. The literature suggests that nascent entrepreneurs rely on BPCs to refine their business ideas and get feedback (Grichnik et al., 2014 ; Tata & Niedworok, 2018 ); however, empirical and theoretical contributions to BPCs as learning experiences are limited and unclear (Schwartz et al., 2013 ). To address this issue, Watson et al. ( 2018 ) claim that researchers need to understand how participation in university-based BPCs affects entrepreneurial learning outcomes among nascent entrepreneurs. So far, the results have been contradictory. Fafchamps et al. ( 2014 ) found little to no impact on the growth of such entrepreneurial ventures.

Non-educational benefits of BPC participation

It goes without saying that winning a BPC implies a significant increase in visibility, which could lead to finding new stakeholders who could prove useful to the project (Parente et al., 2015 ). However, gray areas still exist. As Parente et al. ( 2015 ) suggest, the role of media coverage could be further improved by involving experts specialized in business and entrepreneurship, instead of generalist media alone. Competition promoters should also invest considerably more time and resources into social media promotion, as social media platforms have become more and more prominent over the years for both entrepreneurs and their potential market (Cant, 2016b ; Palacios-Marqués et al., 2015 ). This is especially relevant for tech-savvy entrepreneurs who are active on social media platforms and could benefit from social media exposure, but they need institutions to act accordingly in this regard (Botha & Robertson, 2014 ). Cant ( 2016b ) found that participants in BPCs were satisfied with the exposure they received from the event, noting that it was worth the effort. However, the author also stressed the importance of event promoters being savvy with social media promotion, which was not always the case.

More broadly speaking, BPC winners have been shown to possess a greater survival rate in entrepreneurial life due to a number of factors, including financial aid, attractiveness in the eyes of stakeholders, and a positive impact on investors (McKenzie, 2017 ). Additionally, McKenzie ( 2017 ) analyzed the YouWiN! competition and noted its impact on the survival rates of established firms and start-ups. The main effect of the competition was to enable firms to buy more capital, innovate more, and hire more workers, hence making the BPC an effective tool for long-term growth. The above results add to a pre-existing debate that has characterized entrepreneurship research in the past, as authors do not seem to reach a universal consensus on the perceived usefulness of business plans (Gumpert, 2003 ; Leadbeater & Oakley, 2001 ). Still, on the topic of firm survival, the results of the study conducted by Simón-Moya and Revuelto-Taboada ( 2016 ) are especially interesting for policymakers responsible for aid programs aiming to foster entrepreneurship, as they show how the quality of a business plan alone can be a necessary condition but not a sufficient condition to explain firm survival. Hence, there is a need for policymakers and institutions to foster entrepreneurship via institutional aid and programs, BPCs included.

Moreover, Fichter and Tiemann ( 2020 ) found that the promotion of sustainability in competitions leads to the integration of sustainability practices into future entrepreneurial activities. However, they warn that policymakers need to effectively plan the integration of sustainability with the entrepreneurial mindset of BPC participants, as generic sustainability orientations do not automatically lead to the integration of sustainability goals into future business activities (Cornelissen & Werner, 2014 ). This sentiment has been echoed in more recent research (Daub et al., 2020 ). The debate on the importance of BPC participation still features a few areas that have yet to be fully explored and discussed. For example, Tata and Niedworok ( 2018 ) claim that the evaluation of business plans changes throughout the phases the idea undergoes, which leads to a more prominent role of subjective feedback in the very early stages of their development. Much like business plan evaluators, nascent entrepreneurs change the way they value their competencies over time (Watson et al., 2018 ): what appeared most useful during their time spent educating themselves might not coincide with what is deemed most relevant during their actual entrepreneurial life; however, more evidence is required to get a proper understanding of this phenomenon.

The ideal BPC blueprint

Several studies have been conducted to explore the contexts in which BPCs thrive and the traits they need to possess to successfully shape future entrepreneurs. Cant ( 2018 ) was one of the first authors to provide a tentative blueprint for future competitions, which included a call for a more structured approach and better planning via a set of universal traits that a BPC should possess regardless of the country or culture in which it is set. Drawing on Bell ( 2010 ), Cant ( 2018 ) also stresses the importance of a go-to model as a means for inexperienced institutions to organize and manage a BPC properly without the need for previous experience.

Additionally, several common trends have emerged that could help determine a generalized BPC blueprint as accurately as possible. First, it is important to ensure that the BPC is embedded in an entrepreneur-friendly ecosystem in which both nascent entrepreneurs and professionals, such as venture capitalists, business angels, and generic investors, can interact and network with each other in a seamless way (Passaro et al., 2017 ). The formulation and development of a business plan is an extremely important yet delicate step for new entrepreneurs, and being able to effectively assess their opportunities and make use of feedback from established professionals is crucial (Botha & Robertson, 2014 ). This two-way feedback mechanism can be implemented both in the early stages of competitions via workshops and lectures and after the winner is picked so that everyone has the chance to understand their results and improve (Cant, 2018 ).

Cant’s ( 2018 ) blueprint stresses the importance of industry specialists aiding participants with their submissions. This finding is supported by a case study by Moultry ( 2011 ), in which industry professionals effectively participated in lectures, provided panel discussions, and helped conduct a BPC for pharmacy students. The vast majority of students who took part in the experiment claimed that the help of industry professionals significantly increased their understanding of business plans and consequently increased their chances of future entrepreneurial success. Moreover, establishing a collaboration network that ties BPC participants to industry professionals greatly increases the chances of survival for university spin-offs (Cervilla, 2008 ).

Finally, an effective BPC should provide winners and, when possible, participants in general with enough resources to fund the early stages of their entrepreneurial journeys (Feldman & Oden, 2007 ; Kolb, 2006 ). Funding nascent entrepreneurs through BPCs could provide several benefits that significantly increase their chances of survival, while also providing them with new opportunities, such as access to debt and equity capital (Burton, 2020 ). However, nascent entrepreneurs themselves need to be able to convince investors that their business ideas are worthy of their funding and resources, and in that regard, opportunity templates vary among people who occupy different professional roles (Tata & Niedworok, 2018 ). While expressing their concerns about founders speculating on financial rewards in the business-idea phase and proposing their own BPC evaluation framework, Tata and Niedworok ( 2018 ) call for a balanced number of jurors from each professional domain to mitigate unfair rating biases. However, much about BPC blueprints remains to be determined. Cant ( 2018 ) explains that there are no set rules applicable to all competitions and that, given the increase in popularity of BPCs all over the world, evaluating similar competitions in Europe and Asia would be a natural progression for this specific literature stream.

Methodological choices and research design in BPC publications

The BPC literature features several research design choices, with both qualitative and quantitative approaches to data collection. Generally speaking, there is a noticeable predominance of empirical research based on case studies and descriptive analysis of BPC scenarios (Efobi & Orkoh, 2018 ; Li et al., 2019 ), with little emphasis on theoretical underpinnings or theory development. Multiple longitudinal studies were identified in the sample (Mosey et al., 2012 ; Watson et al., 2018 ; Jiang et al., 2018 ). We were not able to find SLRs on the topic of BPCs, other than the one performed by Tipu ( 2018 ).

From a qualitative perspective, there were several case studies from both developed (Licha & Brem, 2018 ) and developing countries (Efobi & Orkoh, 2018 ; McKenzie & Sansone, 2019 ). A few qualitative studies have also taken an experimental approach (Fafchamps & Quinn, 2017 ; Fafchamps & Woodruff, 2017 ), which was made possible by the availability of students and higher education institution facilities at the authors’ disposal. Semi-structured interviews were conducted in a few studies, mostly with exploratory intentions (Burton, 2020 ; Watson & McGowan, 2019 ).

Only one study can be labeled as mixed methods research (Barbini et al., 2021 ), whereas the remaining studies were quantitative. Methodological approaches using partial least squares regression are prevalent in BPC research (Overall et al., 2018 ; Wegner et al., 2019 ; Fichter & Tiemann, 2020 ) in which authors attempted to test the impacts of several variables on the entrepreneurial future of BPC participants. For example, Fichter and Tiemann ( 2020 ) used structural equation modeling to test whether the integration of sustainability goals into BPC programs affects the future business outcomes of nascent entrepreneurs, especially in terms of the inclusion of sustainability topics. Moreover, Wegner et al. ( 2019 ) applied a similar research design to determine whether universities’ role in promoting entrepreneurship contests such as BPCs positively affects students’ entrepreneurial intentions. Finally, Overall et al. ( 2018 ) used the theory of planned behavior (TPB) as a theoretical framework to measure the effectiveness of universities’ promotion of entrepreneurship through events, BPCs, and incubators.

Additionally, the topic of BPCs is multi-theoretical in nature, allowing scholars to use various theoretical underpinnings to investigate their nature. The sample features several theoretical frameworks used by authors, including screening and signaling theory for the analysis of early-stage venture-investor communication (Wales, et al., 2019 ); the Fishbein–Ajzen framework to predict planned behavior based on four components of reasoned action (Overall et al., 2018 ); institutional theory as a means to explain variation in entrepreneurial intention (Lewellyn & Muller-Kahle, 2016 ); and variations of the psychological model of “planned behavior” (Liñán et al., 2011 ). It is worth noting that while theoretical perspectives are plenty, records featured in the sample do not use multiple theoretical lenses in the same study. Finally, we find a few studies synthesize and develop their unique theoretical frameworks based on extant theory and empirical observations (Wen & Chen, 2007 ; McGowan & Cooper, 2008 ), even though a considerable portion of the sample features purely empirical results (McKenzie, 2017 ; Moultry, 2011 ).

Research gaps

Several research gaps were identified in the sample. To give a more thought-out structure to the presentation of these results, we classified the gaps into two categories: gaps related to the data and gaps related to the analysis.

Data-related gaps

A few studies had generalizability problems. The exploratory nature of some case studies presented intrinsic limitations to generalizability, as the findings were sometimes not applicable to different contexts (Cervilla, 2008 ; Li et al., 2019 ). For example, Licha and Brem’s ( 2018 ) study features two universities located in Germany and Denmark. Future research could expand upon their findings by investigating several other universities in different countries to strengthen and confirm their results.

Several studies have employed qualitative research methods using exploratory (Parente et al., 2015 ) or experimental approaches (Efobi & Orkoh, 2018 ; McKenzie, 2017 ). There are inherent weaknesses in such research, as self-reported surveys cannot guarantee unbiased responses (Efobi & Orkoh, 2018 ). Similarly, semi-structured interviews feature the same bias; however, their results can be verified with follow-up quantitative research on a larger scale (Licha & Brem, 2018 ; Watson et al., 2015 , 2018 ).

Some studies were also limited due to their sample sizes. Small-scale studies are valuable for exploratory research, as they allow for an initial step into a novel investigation, but they lack in terms of representativeness (Tornikoski & Puhakka, 2009 ; Watson et al., 2018 ; Barbini et al., 2021 ). For example, Wegner et al. ( 2019 ) warn readers of the intrinsic limitations of small sample sizes and ask for larger-scale surveys that could potentially test and expand the results of their initial exploratory research. Moreover, Watson et al. ( 2018 ) claim that it is important to investigate other types of competitions and not limit the scope of BPC research to university-based competitions. In doing so, future research could yield new insights and even adopt comparative perspectives to determine the differences between the two worlds (Watson et al., 2018 ).

Gaps related to analysis

Several main gaps were identified related to analysis, including a narrow focus of prior research, limited geographic scope, and a lack of theoretical underpinnings. A few studies were conducted with very narrow foci, effectively leaving the door open for future studies to bridge the gaps they highlighted. For example, Barbini et al. ( 2021 ) focused on the educational backgrounds of nascent entrepreneurs without considering the implications of their work experience. This gap could be addressed in some capacity by future research. Furthermore, Wegner et al. ( 2019 ) point out that their research shared the same limitation, as they focused on comparing individual students’ entrepreneurial intentions rather than comparing the same individual’s intentions over time. They suggest that future research could explore the influence of universities and BPCs on students’ entrepreneurial intentions (Liñán et al., 2011 ).

Another issue related to the analysis was the limited geographic scope of the sample. While the BPC literature includes contributions from both developed and developing countries (Olafsen & Cook, 2016 ), contextual empirical evidence from both sides of the spectrum is limited. Cross-cultural analysis from different countries could lead to new findings and a more comprehensive look at the BPC phenomenon, especially in developing countries, as thus far only one study exists.

Finally, another gap identified in the sample was the lack of theoretical underpinnings in many of the studies. Most of the selected manuscripts featured qualitative case studies or empirical survey-based data (Cervilla, 2008 ; Li et al., 2019 ). Although their findings were insightful, the authors themselves note that the exploratory nature of most of the studies reflects the need for more theory-building studies on BPCs or the implementation of behavioral theories to strengthen the hypotheses developed by researchers.

Potential research areas

We identified several research areas that could be explored in the future by entrepreneurship researchers. Our selection was based on a combination of our manual review of the content included in the sample and the need for further research expressed by the authors themselves. The suggestions refer primarily to the replication of exploratory research, the need for further longitudinal research, and the testing of hypotheses and measures developed by the authors, each of which is discussed below.

Replication of exploratory studies

The lack of representativeness in the studies was the most evident and recurrent gap highlighted in the sample. Scholars could start from the preliminary research findings provided by current BPC research and replicate studies in different geographical contexts. Although BPCs share several similarities in the way they function and are managed, differences in their efficacy and the survival rate of winners and participants in general can arise. However, replicability is useful for demystifying not only the entrepreneurial lives of winners, but also BPC designs themselves. For example, the blueprint developed by Cant ( 2018 ) can be replicated and tested in several contexts to validate its effectiveness and to provide novel insights into it. Future research is required to explore this ongoing debate and to find as much information as possible on how to plan the support of professionals from outside of universities accordingly (Burton, 2020 ) and how they affect BPC participants’ attitudes and entrepreneurship intentions (He et al., 2020 ).

Longitudinal studies on BPC participants’ entrepreneurial survival

Multiple authors have called for longitudinal studies designed to follow the lives of BPC participants both prior to and after the contests take place. A few longitudinal studies already exist; however, they have also called for more studies with similar research designs. For example, Watson et al. ( 2018 ) call for longitudinal research to test the notion of competition competency they introduced in their study. Similarly, Jiang et al. ( 2018 ) claim that their longitudinal approach was severely limited by being narrowly focused on a single competition. Therefore, they call for further longitudinal studies to strengthen the validity of their findings.

Collecting longitudinal data seems to be a fitting way to contribute to BPC research, specifically, and to entrepreneurial research, more broadly, as metrics could help researchers understand the development of nascent entrepreneurial ventures over time while highlighting the effects of factors such as entrepreneurial education or institutional support for BPC participants at the beginning of their journeys (Wegner et al., 2019 ). Currently, little research has been conducted on a longitudinal basis; thus, there is still a severe lack of understanding of BPCs’ impacts on the entrepreneurial teams and businesses that emerge from them (McGowan & Cooper, 2008 ).

Utilization of diverse research methods

Scholars could make use of a more diverse set of research methods in future BPC studies to overcome the paucity of theoretical contributions and quantitative research in general. While several exploratory studies serve as a strong starting point for BPC research (Burton, 2020 ; Parente et al., 2015 ), it is important to approach the topic in a more multidisciplinary manner, for instance, by including more mixed-method studies in the future (Barbini et al., 2021 ). This could lead to more comprehensive results and a more holistic understanding of the BPC literature among academics and practitioners (Efobi & Orkoh, 2018 ).

Diverse theoretical perspectives

Little theory is currently available on BPCs (Cant, 2018 ). Although multi-theoretical in nature, BPC literature draws on a limited number of existing theories, such as the quadruple-helix model (Parente et al., 2015 ) and the TPB (Overall et al., 2018 ). While the results from exploratory research are interesting and valuable, most of these studies are not underpinned by theory or theoretical frameworks of any kind. Furthermore, the paucity of theoretical underpinnings in our sample can be used as a prompt for future research. To date, only a few studies have grounded their research in established theories (Lv et al., 2021 ; Overall et al., 2018 ). Future research could try to bridge this gap, especially with behavior-centered theories and frameworks, which could be used to address several research questions in terms of BPCs’ impacts on future entrepreneurial lives and the way nascent entrepreneurs incorporate what they learn during competitions into their everyday professional practice (Watson & McGowan, 2019 ).

Theoretical framework

After reviewing the theoretical underpinnings found within the sample, we find a predominance of the conceptual framework developed by Fishbein and Ajzen ( 1975 ), namely the theory of reasoned action (TRA), which allows for a systematic theoretical orientation on beliefs and attitudes to perform a certain behavior. By using the TRA as a base reference, we synthesized extant theoretical research found in the BPC literature. We listed several independent and dependent variables depicted in previous work, reviewed the connections found between them, and illustrated the role played by moderating variables. The framework also serves as a reference to determine the impact each factor has on BPC participants in their entrepreneurial futures. The framework is illustrated in Fig. 8 .

BPC theoretical framework

In the context of BPC, several antecedents can be identified as determinants of future entrepreneurial behavior. Our framework draws on previously published theoretical underpinnings to define both the antecedents of entrepreneurial activity and the multiple intrinsic factors that contribute to its multifaceted nature. We start by identifying entrepreneurial intention and entrepreneurial competence, which have been investigated in the literature through the theoretical lens of the TPB (Ajzen, 1991 ). Then, drawing on the theoretical model Lv et al. ( 2021 ) developed, we expect entrepreneurial teaching and practice support to positively impact future entrepreneurial intention and the development of entrepreneurial competencies. This theoretical assumption is backed by a few studies (Liñán et al., 2011 ) and deemed worthy of further attention. For example, future research could adopt a hierarchical multiple regression to determine the impact of entrepreneurial teaching on future entrepreneurial intention (Olokundun et al., 2017 ). Alternatively, the impact could be investigated through multiple regression models by developing a set of factors tailored to the entrepreneurial education programs and extracted via questionnaires (Liñán et al., 2011 ).

Drawing on entrepreneurial research, we find the perceived desirability of entrepreneurship and the perceived feasibility of entrepreneurship (Schlaegel & Koenig, 2014 ) as the two main attitudes toward entrepreneurial intentions (Ajzen, 1991 ; Fishbein & Ajzen, 1975 ). In other words, per the theoretical model proposed by Overall et al. ( 2018 ), entrepreneurial orientation leads students and nascent entrepreneurs to the desirability of an entrepreneurial career and the perceived feasibility of said career, which subsequently influence their entrepreneurial intentions. Then, drawing on the TRA and TPB frameworks, we propose that when individuals possess strong desirability toward an entrepreneurial career and perceive said career as feasible, they will most likely form entrepreneurial intentions (Overall et al., 2018 ).

We define entrepreneurial teaching as the essential aspect of entrepreneurship education. Research suggests that educational support affects nascent entrepreneurs by providing them with adequate skills to tackle better entrepreneurial life (Grichnik et al., 2014 ; Tata & Niedworok, 2018 ). In other words, entrepreneurial education programs actively contribute to entrepreneurial development (Škare et al., 2022 ). The positive effects of educational support on entrepreneurial success and intention can be found in empirical studies (Thomas et al., 2014 ; Passaro et al., 2020 ). More specifically, we note entrepreneurial education as a key factor in influencing innovation and development. The entrepreneur’s competencies are seen as an individual and organizational resource that needs to be properly developed through educational programs in order to bring out its potential for the entrepreneurial future (Salmony & Kanbach, 2022 ). Overall, drawing on the theoretical framework of Lv et al. ( 2021 ), we find both entrepreneurial teaching and entrepreneurial practice, intended as BPC participation, to affect their entrepreneurial intention significantly.

A set of moderating control variables can be used to provide a more comprehensive overview of the influence played by the stakeholders mentioned above. Wegner et al. ( 2019 ) suggest that future research could specify how age moderates the relationship between entrepreneurial support variables and the outcomes of BPC participants. Other studies have also supported the use of age as a moderator of the effectiveness of BPC support on entrepreneurial intention (Cant, 2018 ; Passaro et al., 2020 ). Furthermore, McGowan and Cooper ( 2008 ) claim that entrepreneurs’ levels of knowledge could be tested as moderating variables of entrepreneurial intention and behavior, as BPC participants might have different backgrounds and levels of expertise, which could influence the outcomes of their entrepreneurship activities. Additionally, Lewellyn and Muller-Kahle ( 2016 ) propose using gender as a moderator of entrepreneurial activity. Finally, Terán-Yépez et al. ( 2022 ) discuss the use of affective dispositions as variables influencing entrepreneurial activity. Future research could expand upon their findings and use hope, courage, fear and regret as moderating variables of entrepreneurial intentions.

Entrepreneurial intention as a variable that affects entrepreneurial behavior is backed by a theoretical study conducted by Overall et al. ( 2018 ), underpinned by the TPB (Ajzen, 1991 ). A positive correlation between the two was deemed consistent and statistically significant. In conclusion, the above framework could help explore the connection between BPC participation and the development of entrepreneurial activity, which thus far has received little empirical attention in research. Future research could delve further into the impact of BPC participation and institutional support on entrepreneurial activity to give proper closure to a long-lasting debate on the usefulness of BPC as a stimulant for entrepreneurial practice (Fayolle & Klandt, 2006 ; Russell et al., 2008 ). In addition, many methodological approaches could effectively encapsulate the impact described above, as seen in entrepreneurship research. For instance, future studies could employ a longitudinal case study approach (Overall et al., 2018 ) to follow nascent entrepreneurs in their journey and determine the impact of BPC participation. Longitudinal studies have proven effective in capturing the factors and variables influencing entrepreneurial life over the years (Petty & Gruber, 2011 ).

Conclusions

The purpose of this SLR was to critically analyze the literature related to BPCs and set the future research agenda for the area of entrepreneurship. To the best of our knowledge, ours is the first SLR to review research focused on recent BPC literature (Tipu, 2018 ), thus making our contribution original in its approach. The originality of the study lies in it being the first attempt at conducting an SLR on the topic of BPCs and contributing to science in several ways, as depicted below. Our study on BPC research has several implications for both academics and practitioners. From a theoretical perspective, our study makes several contributions to BPC and entrepreneurship literature. It does so by not only synthesizing extant research, but also by providing a structured research agenda built upon the several gaps found amid BPC literature. A further contribution to science is the development of a theoretical framework that will enable future researchers to have a bird’s-eye view of the domain and structure their future contributions accordingly. From a practical perspective, the study is of interest to practitioners and nascent entrepreneurs, as it provides policymakers and practitioners with a BPC blueprint featuring state-of-the-art characteristics and several key implications on how and why participating in BPCs is beneficial to nascent entrepreneurs. We propose a more detailed look at both theoretical and practical implications below.

Implications for research

Our main research contribution is a detailed review of the recent literature on BPCs, which can be deemed original, as no authors have attempted to systematically synthesize the existing BPC research. Our approach to the design of the SLR was twofold. We first provided a descriptive overview of the sample in terms of annual scientific production and geographical relevance. We then applied qualitative content analysis to highlight key emerging themes that were used to identify foci for future research directions. Based on our classification, we contend that the theoretical advancement of this research area requires greater attention to both antecedents and consequences of BPC attendance.

Our second contribution was the development of a research framework to synthesize existing knowledge on BPCs and to provide new and original insights into the BPC literature stream. Our framework explicates the role played by BPCs in the professional lives of nascent entrepreneurs (McKenzie, 2018 ; Overall et al., 2018 ) in terms of how it affects their entrepreneurial behavior (Burton, 2020 ; Passaro et al., 2017 ) and identifies the specific characteristics BPCs should feature to be as effective as possible. The same framework also helps define the scope for future research, as it identifies several avenues that future entrepreneurship scholars should explore (Fichter & Tiemann, 2020 ; Li et al., 2019 ). The framework provides future researchers a bird’s-eye view of the existing knowledge base in the area, indicating, at the same time, what remains underexplored or ignored. Additionally, by profiling extant research on BPCs, we offer scholars a comprehensive overview of potentially appropriate outlets for their studies, along with the most widely used methods and theories that could help them design their future research.

Finally, we contribute by systematically uncovering crucial research gaps in the reviewed literature on BPCs from both a methodological and a content perspective. From a methodological perspective, our analysis has revealed the need for future research to broaden the methodological scope of BPC research (Efobi & Orkoh, 2018 ). Thus far, the BPC literature stream has been dominated by empirical research featuring case studies and experimental designs (Cervilla, 2008 ; Li et al., 2019 ; Mancuso et al., 2010 ). Quantitative and mixed-method research is needed to further expand upon the findings of exploratory BPC research and to test their validity on a larger scale. From a content perspective, our study has defined a structured research agenda synthesized from extant gaps. We have identified and listed several research questions that could drive future work on the topic. Additionally, our study has highlighted the uneven distribution of BPC research from a geographical standpoint. While their significance is equally pertinent for developed and emerging economies (Tipu, 2018 ) and BPC programs are becoming increasingly popular in developing countries (House-Soremenkun & Falola, 2011 ; Wong, 2011 ), our findings suggest that country-specific production is still lagging behind pioneering nations, namely the USA and the UK. Hence, there is a need for additional evidence from developing countries, along with cross-cultural analyses to highlight the cultural differences in BPC and entrepreneurial education.

Practical implications

Our study has multiple implications for BPC practices. First, it provides policymakers and practitioners with a BPC blueprint featuring state-of-the-art characteristics. Drawing on Cant’s ( 2018 ) BPC blueprint, which was an attempt to identify an ideal set of characteristics for BPCs, we reviewed and expanded upon their findings by adding new points of view taken from empirical studies found in our sample to add new insights and incorporate more contributions from the literature. Overall, the ideal BPC should feature active participation from industry professionals, as they can provide participants with valuable insights into the professional world (Botha & Robertson, 2014 ), which BPC research has shown to be important (Moultry, 2011 ). Furthermore, a serious effort should be made to guarantee BPC participants funds and financial resources for the early stages of their entrepreneurial lives, as material support and knowledge sharing are both crucial to increasing their chances of survival (Burton, 2020 ; Passaro et al., 2017 ).

Second, our study informs practitioners of the importance of longitudinally monitoring BPC participants throughout their entrepreneurial lives (Watson et al., 2018 ). Longitudinal data allow a better understanding of the factors and variables influencing entrepreneurial life (Petty & Gruber, 2011 ). This could help BPC organizers better weigh the design choices in their educational courses by monitoring the returns they get from the seeds planted during the developmental phase of nascent business ideas (Jiang et al., 2018 ). Longitudinal monitoring of BPC participants is valuable in several ways. As suggested by McKenzie ( 2017 ), BPC winners tend to possess a greater survival rate in entrepreneurial life, which contributes to the debate on whether the quality of business plans affects the future survival rate (Simón-Moya & Revuelto-Taboada, 2016 ). Practitioners and policymakers should be asked to monitor and support BPC participants after the competition. As noted by Cant ( 2018 ), building a long-lasting collaboration with BPC participants increases their chances of survival, regardless of whether they have won the actual competition. The role played by BPC organizers in building a post-competition collaborative network is vital and has a significant impact on the survival rate, employment, profits, and sales of ventures participating in BPCs (McKenzie, 2017 ).

Our study could also be beneficial to managers, entrepreneurs, and professionals alike, as it can provide them with several key implications on how and why participating in BPCs is beneficial to nascent entrepreneurs, in terms of visibility, knowledge development, and networking opportunities (Thomas et al., 2014 ; Passaro et al., 2020 ). This is true both for novel entrepreneurs who have yet to emerge and for industry professionals who are willing to get in touch with future generations of entrepreneurs and stimulate the discussion around the topic of BPCs (Barbini et al., 2021 ). While participants generally obtain more tangible benefits from winning BPCs, their very participation in the competition can provide several intangible benefits as well, primarily in terms of networking opportunities and skill development. In this regard, our study is of practical significance for nascent entrepreneurs willing to partake in BPCs, as it features a clear depiction of what to expect to gain from the competition.

Limitations and future research

We adopted an SLR methodology to analyze the available research on BPCs. Our systematic review of the BPC literature provided descriptive and original contributions to the field. Four research questions were addressed in this article. RQ1 was addressed by providing an overview of the current state of the art of BPC research in what we refer to as research profiling. Fifty-eight unique records were extracted from the Scopus and WoS databases and analyzed in terms of annual scientific production, publication sources, geographical contexts, and influence in terms of citations. We addressed RQ2 by adopting qualitative content analysis and identifying several emerging themes across the sample, which led to a structured overview of the existing knowledge on BPCs. In regards to RQ3, we were able to identify several research gaps in the empirical literature and suggest avenues for further research. Finally, we addressed RQ4 by developing a theoretical framework that uses the above sample as its foundation. The framework aims to investigate the multidimensional nature of BPCs and provide future researchers with a theoretical underpinning for their studies.

In regards to future research directions, our systematic review has highlighted several thematic areas of prior research and investigated extant gaps both in terms of topics and in terms of methodological choices. We have, thus, identified various possible avenues for future research and presented them in a theoretical framework, that acs as a synthesized view of the existing research, serves as the basis for identifying visible gaps in prior research and suggesting various theme-based research questions and avenues of future research. In other words, the framework aims to investigate the multidimensional nature of BPCs and provide future researchers with a theoretical underpinning for their studies.

There are a few caveats worth mentioning regarding this study, some of which are intrinsic to the SLR methodology. First, the sample may not have included a few records that did not appear in the online repository due to missing or different keywords. Although chain referencing reduces the chances of this happening, the risk is still there and needs to be addressed. Second, our research protocol included only peer-reviewed journal articles written in English, as conference proceedings, book chapters, and review articles were excluded from the sample. Future research could include gray literature and other sources to compare their results with those published in peer-reviewed journals. Third, the scope of the SLR was limited to BPCs. Therefore, it did not explore nascent entrepreneurs or the role of entrepreneurial education in universities in general, despite both topics being strongly related to BPCs. Future SLRs could take a broader approach and discuss the topic of entrepreneurial education, to which the BPC stream contributes.

Data availability

The datasets generated during and/or analysed during the current study are available from the corresponding author on reasonable request.

* Articles included in the sample of the Systematic Literature Review

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Dana, LP., Crocco, E., Culasso, F. et al. Business plan competitions and nascent entrepreneurs: a systematic literature review and research agenda. Int Entrep Manag J 19 , 863–895 (2023). https://doi.org/10.1007/s11365-023-00838-5

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• MANAGEMENT ACCOUNTING

Effective financial projections for a startup

Get a business started with meaningful financial projections..

• Management Accounting
• Business Planning

Today's business world is bursting with startups, particularly in the technology industry. One of the biggest contributors to a startup's success is a sound business plan that includes meaningful financial projections.

Accountants have the skills to help entrepreneurs build logical financial assumptions to increase the probability of attracting investments. Refining these projections can also help startups develop a growth strategy by keeping information simple and hitting on the key metrics, such as market size.

This list of practical considerations for startups and the accountants who support them is by no means exhaustive, and for many readers the concepts may be familiar. It's meant to serve as a handy guide to key conversations that can keep a startup on the right track.

An Excel workbook providing a more detailed look at the three-year projections in this example is available here .

Revenue will influence the rest of the profit and loss (P&L) assumptions. So if revenue estimates are materially misstated, the company risks overstaffing or understaffing and/or purchasing assets incorrectly. Revenue is also a key metric for potential investors. Estimates do not need to be precise, but they do need to be realistic and supported by a viable story.

Step 1: Collect critical inputs

Four crucial inputs are used to calculate revenue for a new business: revenue levers, revenue drivers, activity assumptions, and pricing.

Revenue levers: Revenue levers are the various opportunities to earn revenue. Levers can include products and/or services, software maintenance agreements, channel partner sales, etc. Start with a list of all the revenue levers that will produce income over the period of the financial projections.

Revenue drivers: Revenue drivers are the activities that influence how revenue levers produce income. Each revenue lever could potentially have a different driver. Think about what activity will increase or decrease revenue for each lever.

Revenue driver activity assumptions: Activity assumptions are the inputs that will indicate how the revenue driver will act. To determine assumptions, work with marketing, sales, or the CEO, depending on the company organization.

Pricing: Pricing is a necessary input to calculate total revenue. This article does not go into detail on pricing methodology. If prices have not yet been determined, read pricing guides and/or articles to ensure effective pricing methods are being implemented.

Step 2: Convert inputs into the revenue estimate

Now that the revenue inputs have been determined, it's as straightforward as inputting the data into a model that calculates total revenue. In its simplest form, the calculation is revenue driver assumption multiplied by price for each revenue lever . If the driver is marketing spend, there will be an additional step to convert dollars spent to revenue earned.

Create revenue calculations for three to five years by year, quarter, or month. A monthly calculation is helpful if your revenue driver is new clients, as clients will be attained throughout the year and will not provide a full year's revenue in year 1. The monthly or quarterly detail should be summarized by year to report the total annual impact.

Be sure to include an estimate for churn. Revenue can be easily overstated or understated without a reasonable estimate on the business that will be lost over the period of the pro forma.

Step 3: Review the final revenue outcome

Take a step back from the detail and reflect on the total revenue result.

On the SEC's website, check the public Forms 10K of competitors or companies in the same industry and compare net revenue. If there are no publicly listed companies to provide financial comparisons, perhaps check with the potential investment banker or capital provider. It may be able to provide a range of financials that are typical in a similar industry. If forecasted revenue in year 2 is higher than the industry leader, then review the calculations for accuracy and activity assumptions for reasonableness.

Consider the growth year over year. The business should show steady growth over the years at a realistic rate. Then calculate the compound annual growth rate (CAGR) to easily identify growth over a period of time. CAGR is an easy comparison tool for investors to use.

Revenue do's

• Use a range of activity assumptions to determine a worst - case scenario and an optimistic scenario. Determine what makes the most sense within this range.
• Build the revenue estimates using calculations of inputs so you can easily pivot and create new scenarios.
• Show revenue increasing over time at an attractive yet realistic rate.

Revenue don'ts

• Don't create revenue assumptions without having a calculation or story to support the total.
• Don't overcomplicate the calculations with additional details that do not materially change the result.
• Don't forget to reflect on the result.

COSTS OF SALES

Costs of sales (COS) are the costs directly related to a product or service, and they represent the cost of producing revenue. Product costs will include raw materials, labor, production equipment depreciation, etc. Service industry companies' COS include salaries of professional service providers; software - as - a - service companies' COS include hosting fees. Measuring the gross profit (revenue minus COS) and gross margin (gross profit as a percentage of revenue) assists in determining profitability and long - term viability.

Compare margins to industry benchmarks or similar companies. COS may be higher at the start, but it is important to show higher margins over time as efficiencies are gained.

SG&A EXPENSES

Selling, general, and administrative (SG&A) expenses include all other expenses outside of product costs and capital purchases. Consider the following major categories:

Salaries and benefits

Build a headcount plan by role for the pro forma period by month. This approach creates a hiring plan based on revenue timing to properly support the business. It also allows for quick adjustments when modeling revenue changes.

Sales staff hire dates should correspond with the sales cycle. If a full sales cycle is three months, then the headcount plan should include sales salaries at least three months before the first month of planned revenue. Ensure other variable sales expenses relate directly to the revenue estimates, including sales commissions, bonuses, and other selling expenses.

Include benefits and payroll taxes in addition to the base salary.

Marketing expenses

Business - to - business relationship building and business - to - consumer advertisement and promotions drive revenue. Marketing expenses as a percentage of revenue vary depending on the industry and the company's size, but they will typically fall somewhere between 5% and 20% of revenue. Years 1 and 2 require higher marketing spend as the company is promoting awareness; however, projections should show increased efficiencies over time.

Several one - time and recurring legal - related costs are associated with incorporating a new business. Consider the following to avoid expensive surprises:

• Negotiation of customer contracts.
• Business license fees.
• Industry - specific state licensing.
• Incorporation fees.
• Other legal fees relating to copyrights and/or trademarks.

IT-related costs

Most new businesses require a website and have some technology needs, even if the industry is not technology specific. Technology ignorance is dangerous for any new business owner and can create unplanned expenses. Consider the following:

• Data storage.
• Website hosting fees.
• Software and software maintenance.
• Data security efforts.

Consider all other potential business expenses such as credit card fees, office rent, office supplies, etc. It is safe to create high - level estimates in this area based on revenue, location, industry, etc.

SG&A do's

• Stay familiar and current with technical terminology and cost structures to avoid expensive surprises.
• Ensure the staffing plan and marketing plan align with revenue assertions.
• Compare expenses as a percentage of revenue to industry averages and benchmarks.

SG&A don'ts

• Don't underestimate accounting and legal needs during inception.
• Don't forget business necessities like call centers and credit card fees.

CAPITAL INVESTMENTS

Estimate capital investment dollars needed by year and by category between hardware, software, equipment, inventory, etc. The capital plan should:

• Correspond with the revenue growth and demonstrate a return on assets.
• Show that the business can scale and that the capital investments can set the business up for continual growth.
• Create a purchasing plan for the business and describe to investors how funds will be allocated.

In the simplest form, cash flow equates to projected EBITDA (earnings before interest, taxes, depreciation, and amortization) less capital investments. There are many other balance sheet implications for cash flow (accounts receivable, payables, inventory, etc.). Depending on the industry and round of investing, that level of detail may be unnecessary. If the industry has an exceptionally long cash cycle or includes a large upfront inventory investment, then an annual cash implication estimate should be made on those pieces. Otherwise, EBITDA and capital investments will be sufficient for the seed round. After the seed round, working capital impact will be beneficial to get a full cash flow look.

THE PRESENTATION

Now that the estimates are complete, it is time to transform the work into a collection of facts that potential investors and business owners can use to drive decisions. The initial information and discussions should focus on high - level assumptions and give confidence that the business can scale and grow as the example outlines. (See the sidebar, "Example for High - Level Projections," below.)

Item 1: Condensed profit and loss statement

Present the following sections in a P&L format for each year over the three - to five - year period:

Revenue: Include a row for different revenue levers with a total net revenue.

COS: Show total dollar amount, cost as a percentage of revenue, gross profit (revenue less COS), and gross margin (gross profit as percentage of revenue). If possible, show COS at the individual revenue lever.

SG&A: (1) Categorize the expenses into salaries, marketing, and all other. Present the category subtotals in dollars and as a percentage of revenue as well as the SG&A expense grand total; (2) consider categorizing any other major expense that may be specific to the business; and (3) do not show any expense assumption detail here.

EBITDA: Include EBITDA in total and as a percentage of net revenue.

Item 2: Cash flow

Add two rows underneath EBITDA for each year: one for total cash flow for that particular year and one for cumulative cash flow.

Item 3: Capital investments

Include the capital plan by project and year.

Item 4: Bullet points on key revenue and cost assumptions

Add key assumption points to give the reader an idea of how the revenue and costs were estimated without going into too much detail. These can be points on the same page as the P&L or on a separate page.

Revenue: Revenue drivers, churn, revenue assumptions, and how the assumptions change year over year.

COS: Significant expense drivers. This could be product - specific labor expenses or materials.

SG&A: Total marketing, selling, and administrative headcount year over year with key roles, total one - time startup expenses, and any other material expense that may be specific to the business.

Item 5: Metrics and graphs

Break - even point: The break - even point can be calculated in dollars or units and will indicate at what level of sales the company will cover all fixed costs. This metric is beneficial internally for pricing and production purposes. For external readers, it indicates roughly how long it will take before the company starts generating a profit.

Payback period: The payback period is the length of time it will take to pay back the original investment. Investments with a long payback period are undesirable; however, the required period will range by investor and business industry. Technology projects typically have a desired payback period of one to two years.

Graphs: Graphs are a great way to visually communicate financial results and tell the story of the business. Consider including the following information in a colorful graph format:

• Revenue over time with a trend line.
• EBITDA over time with a trend line.
• Cash flow over time with a break - even point and a payback period point.
• Revenue drivers and assumptions over time.

Size of the market: Give the reader an idea of the full market potential and what piece of the market the business is trying to attain.

Item 6: Presentation of do's and don'ts

• Keep it simple.
• Round numbers to thousands or millions.
• Highlight the key assumptions.
• Don't use decimals.
• Don't confuse the overall story by giving too many details.
• Don't request less or significantly more cash than required to bridge the business to profitability as outlined on the P&L.

Example for high-level projections

This made-up example outlines high-level projections investors like to see:

Stuff Faux Less is a new thrift store that buys and sells used home goods and clothing items. Stuff Faux Less has an online presence and recently developed software to assist in thrifty shopping. This software allows thrift stores to easily inventory new items using specific keywords and alert a shopper when a desired item becomes available. Lastly, Stuff Faux Less has a personal shopper tool. Using the tool, a customer pays a small fee to have a personal shopper select and retrieve outfits based on the customer’s style.

There are three revenue opportunities associated with Stuff Faux Less’s business model:

REVENUE LEVERS

1. Product sales

Revenue driver: Foot traffic and conversion rates.

Revenue assumptions: 70,000 visitors in year 1 at a 30% conversion rate and a $30 average order; 140,000 visitors in year 2 at a 32% conversion rate and a $30 average order; and 150,000 visitors in year 3 at a 34% conversion rate and a $30 average order.

2. Personal shopper fees

Revenue driver: Advertising spend and advertising return.

Revenue assumptions: One personal shopping order will occur for every $1.50 in advertising dollars spent in year 1, $1 in year 2, and $0.95 in year 3.

3. Software license revenue

Revenue driver: Sales staff and number of licenses each sales team member is able to sell per year.

Revenue assumptions: 10 new licenses in year 1; 11 additional licenses in year 2 net of churn; and 13 additional licenses in year 3 net of churn.

ASSESSING PROJECTIONS

On the P&L, the sales staff’s projection supports the estimated software licenses sold, and the advertising projected spend supports the shopper fee income.

About the author

Tiffany Hovland, CPA , is the owner of Hovland Consulting LLC.

To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, a  JofA  senior editor, at  [email protected]   or 919-402-2304.

AICPA resources

• " Don't Fall for These Presentation Myths ," CPA Insider , Oct. 1, 2018
• " What Investors Want to See ," JofA , Oct. 25, 2017
• " Crowdfunding Brings New Opportunities for CPAs ," JofA , Oct. 2015

CPE self-study

• Financial Forecasting and Decision Making (#733970, text; #163153, online access)
• Financial Performance Management Program (#165364, online access)
• Planning and Budgeting (#165383, online access)
• Pricing Strategy (#165379, online access)

For more information or to make a purchase, go to  aicpastore.com or call the Institute at 888-777-7077.

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Strategic Planning for a Very Different Nursing Workforce

The COVID-19 pandemic amplified and intensified dramatic changes already emerging within the nursing workforce. This article examines and extrapolates from current trends to enable nurse leaders to prepare for the future nursing workforce and practice environment. Suggestions for strategic planning including imaging and prioritizing from a set of options for achieving a desired future state are offered. Strategic planning focusing on the wise use of nursing expertise and creating a positive professional practice environment can support the transition from the current crisis to a more resilient health care system supported by the full utilization of the knowledge and skills of registered nurses.

• • The COVID-19 pandemic amplified existing forces creating a very different nursing workforce.
• • The future workforce will be increasingly shaped by Generation Y and Z nurses and the disruptive forces of the pandemic.
• • Strategic planning for a different nursing workforce needs to address the wise use of nursing expertise and creating a positive work environment.

Although staffing and concerns about employee well-being have long been a challenge for nurse managers, the intensity, persistence, and uncertainty of the COVID-19 pandemic exacerbated the situation. From the start of the pandemic, nurse mangers’ work pivoted from engaging and aligning the nursing workforce for the purpose of delivering consistent safe and high-quality patient outcomes to sourcing personal protective equipment, communicating an ever-evolving understanding about the novel virus, and subsequently implementing rapidly changing policies and practices. As the pandemic wore on, the emotional toll on the well-being of staff and relentless demand for staffing became an increasing concern. By July 2021, 75% of nurse leaders identified emotional health and well-being of staff; 61% identified surge staffing, training, and reallocation; and 47% identified staff retention, furloughs, and layoffs as a top challenge. Even more concerning, nurse leaders indicated that their ability to respond to these challenges declined over the past year, with the ability to respond to staff retention, furloughs, and layoffs dropping by 24%. 1

If anything, since July 2021, forces in the environment may have made these challenges more onerous. Just as vaccination rates were rising and infections were ebbing, the emergence of the delta and omicron variants dispelled hopes of the pandemic dissipating any time soon. The overwhelming and relentless patient care demands are driving a massive upheaval in the nursing workforce as evidenced by increasing nurse burnout, overreliance on the use of travel nurses, early retirements, and mounting resignations. The number of nurses either leaving or considering leaving their positions dramatically increased, driven primarily by insufficient staffing, workload, and emotional toll. 2 In 2020, the turnover rate for staff RNs was 18.7%, an increase of 2.8% from the prior year, with time to fill a position still at 3 months. 3 RN vacancy rates are at 9.9%, increased by a percentage point from the prior year, and a third of hospitals report a vacancy rate exceeding 10%. 3 A recent study of over 100,000 health care employees in the United States found that nearly 30% of registered nurses (RNs) were at risk of leaving their current employer, and nurses younger than 35 at their current job less than 1 year are most likely to leave. 4 Even as nurses are leaving organizations, onboarding of new employees has become more complex. In many colleges and universities, the education of recently graduated nurse rapidly shifted to a virtual platform, and clinical experiences were transitioned to simulations. As graduate nurses entered the most difficult practice environment in several decades, orientation processes and precepted experiences were disrupted. First-year RN turnover remains high, at 23.9%. 3 Burgeoning demand drove the use of travel nurses to increase by more than 200% and, although solving an immediate and critical need, simultaneously exacerbated the problem with unsustainable labor expenditures and fueling frustration with existing staff. 3 , 5

Many of these trends were not new. The pandemic highlighted and exacerbated factors and forces that were already emerging in the nursing workforce. As the Baby Boomer generation continues to age, the demand for health care has been increasing as the gap between nurses leaving the profession and people graduating nursing school was expanding. On the supply side, Baby Boomer nurses have been retiring at the rate of about 60,000 per year for the past decade. 6 By 2020, the median age of RNs was 52 years, and 19% were aged 65 or older. At the same time, in 2019, US nursing schools turned away nearly 80,500 qualified applicants due to a lack of faculty, education space, and resources. 7 The exit of mature RNs has resulted and will continue to result in a striking loss of clinical and organizational experience, judgment, leadership, mentorship, relationships with colleagues, and expertise in how to overcome barriers to get things done for patients. 8

As Baby Boomer nurses retire out of the system, Gen X and Gen Y (Millennial) nurses increasingly fill the entry-level, middle management, and senior leadership roles. Gen Z nurses, born between 1995 and 2012, have been entering the workforce for a number of years. But these nurses enter the workforce underprepared. Even prior to the pandemic, studies demonstrated a continual decline in initial readiness of novice nurses to practice in highly complex and dynamic care environments, failing to demonstrate the competencies required of a nurse. 9

Beyond the demographics, the experiences of nurses contribute to issues with work, the workforce, and staffing. Burnout rates, now estimated at above 50%, were reported to be as high as 22% to 43% in nurses even prior to the pandemic. 10 Inefficient work processes including those associated with documentation; excessive workloads including working when insufficiently staffed and overtime; organizational climate factors including poor management culture and lack of physician–nurse collaboration; work–home conflicts; and deterioration in control, autonomy, and meaning at work have been associated with burnout in nurses.

Strategic Planning in the Current Environment

Clearly, whether or not the pandemic occurred, nurse leaders needed to attend to changes in the nursing workforce. Equally as clear, this pandemic will have an indelible impact on the workforce for some time. Nurse leaders should anticipate and prepare for a very different nursing workforce and a very different staffing environment. If anything, the pandemic has made the need for thoughtful strategic planning to address the complexity of issues more necessary and more urgent.

As nurse leaders simultaneously manage through the existing crisis and pressures of meeting staffing demands for existing patient care with an already diminished and exhausted nursing workforce, investing time in strategic planning may feel onerous. Two years ago, “Strategic Planning in an Age of Uncertainty: Creating Clarity in Uncertain Times” was published. 11 The article espoused that in today's rapidly evolving health care environment, continuing business as usual or tinkering with existing approaches would be insufficient and advocated that strategic planning may be most important in uncertain and turbulent times. Of course, as the paper was written, none of us had any idea of the turbulence and disruption that would be caused to our health care workplace from the COVID-19 pandemic.

As burdensome as strategic planning may be in the midst of intensity and uncertainty of the pandemic, failing to plan carries more dire consequences. Not only will lack of planning prolong the situation, it fails to position the organization for strong and sufficient nursing care in the future and makes the profession of nursing vulnerable to external forces and individuals who do not understand the complexity and nuances of nurse staffing “solving” the problem for us. Today’s pressures affecting the workforce demand that we step out of the turbulent pressures of daily staffing and prepare for a different nursing workforce.

Strategic planning aligns the energy, resources, and activities of an organization to work toward a common goal—addressing the needs for a future workforce that meets the organization and patient care needs while supporting nurses to thrive. Strategic planning applies a systematic, thoughtful, and disciplined process to understand emerging trends; explore and imagine a desired future; consider alternatives; determine and prioritize viable options for success; and execute on the course of action to attain the desired outcomes.

Understanding the Future

Planning for the future requires both acknowledging the current forces stressing the workforce as well as examining and predicting the future work environment. To begin strategically planning for a very different workforce, nurse leaders will find it helpful to invest some time in understanding the future, outlining the forces that will affect both demand and supply of nurses.

Caring for an aging population, transitioning from the overreliance on acute care to managing population health, achieving health equity, reducing health care’s impact on climate change, and navigating as COVID-19 becomes an endemic infection are all looming and relevant issues in addition to the increasingly pressing concern of a nursing workforce shortage. 12 Although national trends will be informative, gathering data about local community needs and the organization’s projections for the nursing workforce will provide necessary specificity. The critical question is “what does our population need from nursing to deliver optimum care in the future?”

Engaging a wide range of internal stakeholders, such as the planning, finance, and quality departments, can be helpful in outlining demand drivers such as customer needs, societal forces, payer practices, and emerging technologies. Human resource departments can offer support with detailed information about impending retirements, turnover rates, and local data on the availability of new nurses and support staff. Colleagues from other organizations can help to identify emerging trends, market forces, and disruptive innovations to create a robust picture of the future state.

The goal is to understand both the work demands and the changing nature of the workforce now and for the next decade. At this stage, nurse leaders should prepare for a work environment increasing shaped by Gen Y and Z nurses. Understanding the culture and expectations of these generations should help form plans for recruiting, onboarding, developing, and retaining nurses. Although Gen Y nurses grew up in the Internet era, Gen Z has always lived in a “phigital” world where the lines between digital and physical realities have been blurred to the point of irrelevance. Gen Z nurses, growing up during a robust gig economy (with everything from Airbnb to Uber) have fundamentally different expectations about personalization, work–life balance, and work itself. 13 Not surprisingly, this generation took advantage of market forces to fill travel nurse positions that provided them the ability to make a meaningful contribution while having more control over both their work and personal lives. Demands for work–life balance, flexibility in work schedules, and customization in work experiences can only be expected to increase.

Having lived in a world with an explosion of knowledge, younger nurses view education as the key to success. They seek continuous training and expect strong mentorship along with support and intellectual stimulation in the workplace. As nurse leaders consider planning for professional development of the future workforce, they should plan for robust ongoing professional development programs. Strong preceptors need to be prepared to teach both critical thinking and how to manage one’s well-being. In addition, recognizing that Gen X and Y nurses crafted their lives in the digital space and that newly graduated nurses have likely spent some or all of the past 2 years being educated via remote learning, nurse leaders should increasingly consider a hybrid approach to education and training. In addition, Gen Z is culturally diverse, is globally connected, and accepts multiculturalism as a way of life. Nurses from Gen Z will generally bring a more expansive view of and expectation for racial, ethnic, and gender diversity and inclusion as well as concerns for addressing the sustainability of the environment. 14

In the future, the nursing profession will still be an occupation largely composed of women who typically carry hefty personal responsibilities at home. Particularly during the pandemic, women were disproportionally affected with the burden of domestic responsibilities, caregiving and homeschooling children, and supporting elderly or ill family members. 15 Organizations with the desire to attract and retain younger women must strategically plan to offer support with the demands of personal responsibilities.

And, of course, the nursing workforce of the future will need to process and recover from the intensity of the pandemic. Nurse leaders will need to plan on supporting the mental and emotional health of nurses, particularly younger nurses, who have suffered through the pandemic for some time.

Setting the Direction

Setting the direction fundamentally begins with creating a vision. As hard as it may be to set aside the pressures and anxieties of today’s staffing demands and workforce challenges, changing the trajectory for the future starts with imagining the desired state. Nurse leaders should think boldly, imagining a world where nurses find meaning and joy in their work; have the authority and control to fully apply their knowledge and expertise; enjoy partnership and collaboration with their team; where the system fluidly and fluently manages the onboarding and retirement of nurses and growth in the mastery of their practice in between; and where nurses are able to live their lives whole and wholeheartedly. Organizational and professional goals should be addressed including things such as envisioning a world where nurses understand and contribute to the value proposition of healthcare; craft a collegial professional practice environment; invest in their and their colleagues’ development and well-being, and enthusiastically adapt and innovate to emerging changes and societal needs. All of this is for the purpose of nurses adding their unique value to patient outcomes, the organization, community, and profession. Each organization should start strategic planning by imaging and creating their own unique vison for what “wild success” would look like.

This vision sets the framework for generating alternatives and prioritizing approaches to attain the desired future state. Nurse leaders can consider a variety of options including the wise use of nursing expertise and creating a positive professional practice environment. The wise use of nursing expertise includes garnering sufficient resources, maximizing nurse time on professional practice, and designing care delivery to match patient care needs in a way that creates interesting work for nurses. Creating a positive professional practice environment includes engaging and re-engaging nurses with professional governance; creating a culture of well-being; manage retirements, resignations, recruitment, and onboarding; and investing in nurse leaders.

Wise Use of Nursing Expertise

Garnering sufficient resources.

As a starting point, nurse leaders must recognize and contend with the economic forces at play in health care today. Hospitals lost an estimated $323 billion in revenue in 2020 and are projected to lose an additional $53 to $122 billion in 2021. Although government support bolstered the health system, demands of the pandemic coupled with a sluggish recovery of patient volumes and increased expenses have resulted in nearly half of America’s hospitals and health systems operating with negative margins. 16 Workforce expenses are a significant factor in the financial challenges that hospitals face. In January 2021, hospitals experienced a 30% increase in labor expenses per adjusted discharge from the same time in the previous year. 17

In this climate, 1 strategic approach is being a good economic steward of the valuable resource of nurses by ensuring that efficient and effective workforce management practices are in place. Nurse leaders need to ensure that those responsible for nurse staffing are implementing best practices. Skillful attention to using nurses in a cost-effective manner will be critical now and in the future.

Underlying the ability to provide a positive practice environment and to attract and retain a sufficient cadre of engaged nurses is the need for all hospital leaders—from the board to the nurse at the bedside—to recognize the value and subsequently wisely invest in and utilize nurses. Many nurse leaders navigated through historic financial pressures on hospitals and health systems, with downsizing, down-skilling, and external forces affecting nurse staffing. As in the past, those less familiar with the necessary and valuable contribution that nurses make to the quality of patient care outcomes will naturally look to reducing staffing, potentially to the point of adversely affecting patient outcomes. 18

This requires some work on the part of nurse leaders to educate their colleagues to reset the perceptions of nursing as a cost to one of a value-adding asset. As nurses have long known and as became apparent to many others during the pandemic, the economic and human toll of unstaffed bed—not nursing care—is the real cost to the system. Nurse leaders must change the conceptualization as expenses to revenue and value generators. In addition, nurse leaders must make their work crisper and clearer to others within the system. To do so, nurse leaders must tell the story of what it takes to educate and prepare a nurse, the complexity and skill required to align nurse staffing with the talent to meet patient care demands, and the infrastructure that supports the evolution and application of evidence-based knowledge necessary to adapt to and meet the changing patient and system demands for quality nursing care.

Maximizing Nurse Time on Professional Practice

Both nurses themselves and others within the system need to understand, clarify, and articulate where nurses can contribute their unique value to producing desired patient outcomes. Inherent in strategically pivoting to focus on the value of nursing is for nurses themselves to bring their insights and expertise to identify, reduce and eliminate non-value-added practices and wasteful care. 19 Many of the rapidly implemented practices launched at the height of the pandemic offer insights into opportunities for identifying and eliminating non–value-added work. Building upon the creativity, innovations, and renewed collegiality of the pandemic offers an opportunity to eliminate waste from unnecessary nursing tasks, uncoordinated care activities, ineffective handoffs, and unnecessary administrative complexity.

Nurses desire more time with their patients, but studies show that a significant amount of their time is spent on documentation and non-nursing activities. Nurses spend between 19% and 35% of their time on documentation 20 and that electronic heath record (EHR) usage leads to heightened cognitive workload for nurses. Increases in cognitive workload can result in stronger feelings of exhaustion and burnout. In addition, time motion studies find that nurses spend approximately 10% of their time on delegable and non-nursing activities 21 due to insufficient staffing or inattention by other departments or other nursing support staff such as patient care assistants and unit secretaries.

Nurses need to be engaged to identify those elements of their practice that detract from the intellectual contributions and care, and to eliminate, reduce, or innovate all offer strategic opportunities. A component of reducing the workload for nurses is to investigate or innovate using technology to help. Robots and remote telemonitoring can support and augment nursing care delivery, particularly in high-repetition, low-risk tasks as well as support quality and safety. Service robots powered by artificial intelligence are already being deployed and tested in inpatient care environments to assist with supply delivery and patient mobilization. 22 Asynchronous communication tools can reduce the volumes of interruptions. In addition, new innovations such as redesigning documentation systems or using camera computer vison are being explored to significantly reduce the burden of EHR documentation. At a minimum, streamlining documentation to eliminate unnecessary information and reduce the complexity of data entry and retrieval should be explored. Insights and opportunities for improving the EHR abound by exploring where nurses document the same information in numerous places, documentation order does not match workflow, and there are long and invaluable task lists and frequently ignored alerts. 23

A component of using nurses wisely is ensuring sufficient supportive personnel. Physicians and nurses only comprise about 20% of the health care workers. A large percentage of those in health care are direct service workers, which include patient care assistants, medical assistants, operating room assistants, environmental services staff, and dietary service workers. A large percentage of direct service workers are women, people of color, and immigrants, amplifying issues of inequality along gender, racial, and class lines. Many of these employees earn minimum wage, live in poverty, and/or rely on some form of public assistance. For this group, the combination of low pay, lack of accessible and affordable childcare, and availability non-health care employment opportunities without the exposure to infectious diseases made either not working or working in another industry more appealing. 24 Nurse leaders have a strategic opportunity to work with their human resource departments to ensure that these positions are attractive within the marketplace and to create roles for direct service workers as the precious and non-easily renewable resource they are. Beyond offering competitive salaries and attractive benefit packages, hospitals can couple the hiring of high-demand, entry-level employees with a plan for with skill development for career advancement. Supporting frontline workers with a pathway for career advancement within the institution can improve recruitment and retention and creates long-term sustainable economic transformation and improved well-being within the community. 25

Redesign Care Delivery Models

At the height of the pandemic, another area where nurses responded with innovation and creativity was in implementing a variety of care delivery models. Everything from using team-based care to cross-training and cross-utilizing nurses to perform new patient care and support functions were rapidly employed. These innovative models offer insights to reimagining nursing care delivery models and staffing practices with a lens to strategic planning for a different healthcare workforce.

For example, during the pandemic, more than 60% of nurses floated across units, acuity levels, and settings, and about one-third indicate interest in continuing to do so if well cross-trained. 12 In the future, planned cross-training has the opportunity to create interesting professional work, enhance the flexibility of the workforce, and vary the intensity of assignments in a way that could be protective of well-being. Both within the acute care setting and as more care is moved to the digital and outpatient/home environment, nurse leaders can reimagine staffing roles in a way that are not unit or department bound. Coupling the intensity of inpatient care with roles in telehealth, community, and in-home care models may provide a way to diversify and add interest to the work while maximizing the valuable contributions of nurses. As hospitals and health systems increasingly attend to social determinants of health, nurses could toggle—even on a weekly or monthly basis—between working in inpatient and community settings. Health systems could reimagine nursing roles where part of the assignment is in acute inpatient care and other part is in outpatient ambulatory settings. Diversifying the intensity of the work, changing the weekend work expectations, and altering the shift length demands could create interesting work experiences in a way that retains or even enhances clinical expertise at the inpatient bedside. Virtual nursing using videoconferencing technology and hospital-at-home care are other options for utilizing the deep knowledge and expertise in a different practice setting. Already demonstrated to be a clinically feasible and efficacious way of providing high-quality acute-level patient care in a cost-effective manner, increasing access to digitized and mobile medical diagnostics and interventions will likely make hospital-at-home care more common. 26 Acute care nurses could work a combination of full-time and intermittent nursing roles in inpatient, telehealth, virtual, and home settings.

Another source for potential strategic planning were the team-based staffing models with an RN supervising a team of licensed practical nurses (LPNs), aides, technicians, and non-nursing staff used during the pandemic. Many nursing colleagues suggesting relying on LPNs to fill RN vacancies or supplement RN staffing. They share how successful this model was early in their careers and lament the loss of LPN talent to care delivery. Certainly, the loss of nursing personnel overall impacts patient outcomes and yet an abundance of evidence associates RN staffing and skill mix with the quality of patient outcomes. 27 , 28

Rather than reverting to a model that offered value in a previous patient care environment, ensuring that new models are driven by future demands can be a valuable outcome of strategic planning. For example, advanced practice registered nurse (APRN)-led acute care staffing models could offer promise. Between 2010 and 2017, the number of NPs in the United States more than doubled, and is projected to more than double again by 2030. Although this added assets for advanced clinical practice, it simultaneously reduced the number of RNs. 29 Although some of this is due to increasing numbers of nurses pursuing higher education with the desire to remain a nurse but move from in-hospital practice, there is an opportunity to reimagine the role of APRNs at the bedside in acute care settings. Team-based nursing care with APRNs as the clinical leader could craft an engaging inpatient role for these nurses in a way that simultaneously delivers and coordinates patient care while also serving as a mentor for novice nurses and guide in implementing evidence-based practices and quality improvements for more experienced colleagues.

Nurse leaders would be wise to be informed by and learn from the past and contemporary evidence while considering and exploring new staffing models. Clarity on licensed capabilities, distinguishing nursing task versus professional responsibilities, coaching, and mentorship are all necessary skills for effective delegation and a collaborative work environment. Delegation skills must be learned, practiced, evaluated, and improved. Building skills in teamwork and collaboration will contribute to long term success. Evidence-informed guidelines for intercollaborative practice are currently scarce and will be needed to ensure that all caregivers are working to optimize their and each other’s scope of practice and to enable the success of any new staffing model. 30

Creating a Positive Professional Practice Environment

Engage and re-engage nurses with professional governance.

As nurse leaders look to redesign the work and care delivery models to meet the needs of the future, 1 area where history can be most informative is re-examining the early literature on Magnet® recognition. In the nursing shortage of the 1980s, qualitative research using a positive deviance lens examined those hospitals that were “magnets” for nurses. Hospitals that had waiting lists of applicants despite the shortage were found to have a professional practice environment that enabled nurses to control their practice. 31 Transformational leadership; structural empowerment; new knowledge, innovations, and improvement; and exemplary professional practices all undergird a practice environment that maximizes the contribution of nurses.

Professional governance is the cornerstone of professional practice, providing the structure and process for nurses to actively control their practice through decision making in their areas of accountability. Not surprisingly then, professional governance and a Magnet® work environment are consistently associated with improved nurse satisfaction and patient outcomes. 32 Particularly after the pandemic, rather than allowing the frustrations and moral outrage to devolve into endless suffering, powerlessness, and fear, nurse leaders should harness the collective experience to fuel constructive progress. 33 Fundamentally, actively involving frontline nurses in addressing the challenges and devising the solutions to the issues of nursing and healthcare aligns with the intrinsic and deep-seated desire for autonomy, mastery, and living a life of purpose. 34 As evidenced by the rapidity of practice innovation during the pandemic, nurses themselves have the insights and expertise about how to creatively adapt to meeting complex patient care situations, apply innovative new nursing interventions, craft evidence-based policies, and advance clinical practice. By strengthening and supporting professional governance, nurses can work together to exert their professional autonomy and control over their practice, improving and demonstrating their value, and using their clinical expertise and judgment to address the complex demands of the future.

Culture of Well-Being

Certainly, after the turmoil of the pandemic, a component of strategic planning requires creating a culture of physical, mental, and emotional well-being for nurses and all employees. At the most basic level, nurse leaders must look to implement strategies that reduce the mental, physical, and emotional workload. With all of the talk and efforts aimed at improving resilience of the nursing workforce, nurse leaders must understand and put equal, if not more, effort at creating resilient workplaces. Resilient workplaces are partially created by minimizing the cumulative “pile-up” of external, internal, and employee stressors—in essence, reducing the demand for individuals and the organization to be resilient. This requires learning to moderate the level of demand. Productivity and employee engagement are maximized when the work is interesting, meaningful, and challenging as long as the demands match or slightly exceed resources. Both well-being in the workplace and the quality and quantity of work performed is hindered by strain (too much challenge) as well as boredom (too little challenge). 35

During periods like the pandemic, when the work demands are excessive, the only solution to not overstretch or at least offer some protection to the adaptive capacity of employees is to lessen work demands and offer protected breaks away from the intensity of patient care. This includes both break time within work shifts as well as days off between shifts. Structures, processes, and practices to ensure that time off—from 30-minute breaks within the shift to uninterrupted days off to planned periodic vacations—should be in place. As tempting as it is, nurse leaders and staffing coordinators should not be interrupting nurses on their days off with relentless requests to work extra shifts. In addition, much like travel nurses have intense 13-week assignments followed by a 2-week mini-vacation before their next assignment, nurse leaders can ensure that full-time staff are planning and regularly using uninterrupted vacation time. Creatively, 13-week rotations—for example, a busy inpatient rotation followed by a telehealth assignment—can create interesting job variability coupled with a differing work intensity that could be very protective of nurse well-being.

Strategically, nurse leaders also need to recognize the difference between building individual nurse resilience and building interventions into the work environment to create a long-term culture of well-being. Self-care and peer support need to be encouraged, valued, normalized, and hardwired within organizations. Creating safety about talking through the difficulty of patient care, reducing stigma and normalizing asking for help, and embedding a process where nurses can openly share and process their experiences can protect nurses from burnout and reinforce collegiality. To process and recover from the moral injury experienced during the pandemic, nurses will need to share their experiences, debrief on the whole event, and process their emotions. In addition, embedding practices for meaningful recognition, from “everyday” patient care activities to significant professional accomplishments, reinforces the valuing of nurses’ unique contributions. 36

Manage Retirements, Resignations, Recruitment, and Onboarding

In the near term, nurse leaders should prepare for nurses who resigned or traveled who might express interest in returning to the workplace. Strategic options range from making travel nurses “do not hire” so as to not further aggravate those nurses who remained on staff to welcoming all nurses back into the practice setting to rebuild staff expertise. Generosity of spirit and sensitivity to the inordinate pressures that everyone faced during the pandemic can be a helpful guide. Whatever the approach, nurse leaders will want to acknowledge the difficult personal and professional forces—from unemployed family members to inaccessible childcare to overwhelming burnout—that all staff faced and honor the choices that people made. With that lens, nurses can plan for how to best approach and respectfully manage both nurses interested in reentering and nurses who remained.

With the retirement wave of baby boomers escalating over the next decade, nurse leaders should anticipate the need for organized knowledge transfer between soon-to-retire and younger nurses. Every hospital and health system has a cadre of experienced nurses who have both deep clinical expertise and knowledge about how to get things done. Losing long-tenured nurse employees is not only the loss of patient caregivers, but also a loss of experienced guides and mentors for more novice nurses. Understanding the impact of nurses aging out of the system and planning for the hiring and education of replacement nurses in a strategic manner can avoid a continuous stressor of turnover, vacancies, and insufficient staffing.

As nurse leaders prepare for a retirement wave, 1 option is to creatively plan for how to keep the expertise of experienced nurses within the health care system. Exploring the reasons for and goals of retirement or resignations may offer insights and enticing possibilities for redesigning roles, creative work schedules, new practice roles, or mentoring opportunities. Strategically thinking about how to reengage nurses who are considering leaving can take a variety of approaches from “won’t you reconsider” conversations to exploring work alternative to inviting people back after some time off. Historically, these conversations have been managed one-on-one by the employee’s nurse manager. Having an infrastructure that supports or supplements nurse managers in letting nurses know that their contribution is important, and exploring alternatives may be valuable in retaining talent in some capacity.

Of course, the plans for addressing retirements and resignations assumes that there will be a sufficient number of new nurses available. As part of strategic planning, nurse leaders should take a long-view of the pipeline of students interested in entering the profession and take necessary steps to bolster future cadre of nursing students. Once again, this is an area where past experiences can be informative. In the 1990s, hospitals focused on managing expenses by reducing nurse staffing. Nurses appropriately publicly protested, explaining the dire consequences of inadequate staffing. An unintended consequence was that the desirability of nursing as a career was diminished. Nursing school enrollments dropped an average of 5% annually. The Johnson & Johnson Campaign for Nursing’s Future reversed the enrollment trend through positive messages and portrayals of nurses on national media. Today, even as nurses legitimately portray the physical demands and emotional exhaustion of working through the pandemic, nurse leaders need to recognize the possible adverse impact of ongoing negative stories. The initial rise in nursing school applications may be a response to the heroic images and desire to help; but as the relentlessness of the pandemic fatigues everyone, negative depictions about the practice conditions may adversely impact interest in entering the profession and long-term growth of the nursing workforce. 8

Unfortunately, retirements and nurses leaving the profession result in a loss of nurse expertise that is coupled with declining readiness by newly graduated nurses to practice. Evidence indicates that initial competency of newly graduated nurse has been declining at an alarming rate even prior to the disruption of education and clinical rotations during the COVID-19 pandemic. 37 As a result, strategic preparation for onboarding and support for life-long professional development will be necessary. Transition to practice programs will need to strengthen clinical skill proficiency as well as the critical thinking required to provide safe and effective patient care. Professional skills such as time management, delegation, interpersonal communication, evidence-based practice, leadership, and well-being will also need attention for nurses to be successful in clinical practice.

New approaches will be needed to meet the learning styles and expectations of technologically savvy, digital native new nurses. Hybrids of in-person and virtual learning opportunities, including immersive experiences and competency assessments, can engagingly facilitate a novice nurse’s progress from possessing “textbook knowledge” to applying skills in the clinical setting as well as the higher-order thinking and knowledge work required for today's clinical practice.

Investing in Nurse Leaders

All of this strategic work relies on having nurse leaders who have the skills and demonstrate the behaviors necessary to create a high-performance workplace built on collaboration, commitment, and purpose. Decades of research have demonstrated the pivotal role that nurse leaders play in creating positive work environments and influencing intent to stay. Consistently, studies report a significant positive correlation between transformational, servant, and authentic leadership styles and job satisfaction. Leaders with the ability to promote and support teamwork and to empower employees are able to create work environments with both direct and indirect influence on nurses’ job satisfaction. Transformational leadership requires spending time teaching and coaching nurses, guiding their professional and personal development, and developing and enhancing their strengths. Transformational leaders engage nurses in decision-making, listening to their concerns and doubts, as well as involving them in achieving organizational goals. 38 , 39 All of these leadership behaviors require investing time in developing nurses as leaders, ensuring they understand and can apply the knowledge and behaviors necessary for skilled leadership.

These are complicated times, and pretending that simplistic solutions will resolve nursing workforce issues and challenges would be naive. Yet, the status quo is clearly unsustainable. Nurse leaders need to plan today for the future.

When planning, nurses have a rich history filled with opportunities to learn from our mistakes and apply what we know about the value of nurses and the fundamentals of creating a professional work environment. Much like in past shortages, observing for and amplifying positive deviance can provide a path forward. The pandemic equally demands and enables nurse leaders to be more creative and bolder in crafting the future of the nursing workforce.

Nurse leaders can foster conversations to reimagine nursing roles and care delivery, prioritize actions that will achieve those visions, and execute in a way that creates a stronger and more impactful profession of nursing. With a clear vision and a roadmap, nurses can navigate from where we are today into a more palatable solution—the creation of a future that meets both patient care needs and supports the professional practice of registered nurses in a way that enables them to make a meaningful contribution.

Marla J. Weston, PhD, RN, FAAN, is chief executive officer at Weston Consulting, LLC, in Washington, DC. She can be reached at [email protected] .

Note: The author would like to thank Vicki Buchda, MS, RN, NEA-BC, for her review of the paper.

Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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