Entrepreneurs that start a business without a fixed plan are more likely to succeed according to new research.
A study of 1,000 entrepreneurs by the University of Edinburgh Business School has concluded that writing a business plan within the first six months of launching a business is worthless and could even be counterproductive.
The researchers charted entrepreneurs' attempts to create a viable venture over a six-year period. They discovered that the most successful entrepreneurs were those that wrote business plans between six to 12 months into starting their business. This was found to increase the chances of success by 8%; writing one earlier or later had no noticeable impact on future success.
"Our research shows that writing a plan first is a really bad idea," said Professor Francis Greene. "It is much better to wait, not to devote too much time to writing it, and, crucially, to synchronise the plan with other key start-up activities."
The optimal time to spend on writing a plan was found to be three months. This increased the chances of creating a viable venture by 12%. Spending any longer than this was futile, mostly because the information used to inform the plan loses its currency.
Another new survey has found that younger entrepreneurs are more likely to start a scale-up business. A study of UK scale-ups by Smith & Williamson has found that 42% of high-growth business founders are under 34.
Scale-ups are defined as an enterprise which has grown in either headcount or revenue by 20% for three consecutive years, from a starting position of ten or more employees. However, they are relatively rare - only one in 40 start-ups achieve this level of expansion.
The Smith & Williamson study finds that use of innovation is a key factor in scale-up success - 50% of high-growth companies say technological advances have been critical to their growth, compared to 18% of slower-growth firms.
The findings also show that scale-up founders tend to display greater urgency and optimism. John Smith, scale-up lead at Smith & Williamson, said: "Scale-ups are more optimistic, more bullish and consequently less risk averse. They embrace technology and innovation, using it to their advantage. They are eager for growth and foster a culture of learning and openness, while keeping a close eye on the competition. These traits need not be exclusive to high-growth businesses; any business leader daring to dream bigger can use them as the building blocks for future growth."