As the lean startup method quickly gains popularity among the high-tech startups of Silicon Valley, many entrepreneurs may question the necessity of a business plan. But statistics prove that businesses are overwhelmingly better off when they set goals and implement a plan for how to achieve those goals.
The report, based on a survey of almost 400 small businesses conducted in January 2014 by Palo Alto Software, found that small business owners who regularly plan and track their business’s financial metrics expect more growth in 2014 than business that don’t plan. According to the survey, 79 percent of companies with a business plan say they are better off financially compared to a year ago, while only a third of small businesses without a business plan can say the same thing. Additionally, nearly 75 percent of established companies that have a business plan in place expect to grow more than 10 percent in 2014, compared to only 17 percent of companies that don’t have a business plan.
An optimistic year ahead
Small business owners are also optimistic about the year ahead. A vast majority of small businesses with revenue expect revenue growth in 2014, and only a very small percentage expect a decrease. The survey found that:
91 percent expect an increase in revenue in 2014, and 30 percent said they expect to grow by 50 percent or more
69 percent expect to hire between 1 and 10 employees this year, and 8 percent expect to hire more than 11 employees
81 percent are more optimistic about their company’s finances than they were a year ago
75 percent said they are about the same or better off financially than they were a year ago