The business plan as a project: an evaluation of its predictive capability for business success

Although there is extensive research aimed at identifying the main success factors for new ventures, efforts directed at evaluating the real effect of the existence and quality of a business plan on a firm's survival chances have been limited. This study attempts to fill this gap by analyzing to what extent the quality of a business plan, measured according to its economic, financial and organizational viability, constitutes a good predictor of business survival; and how other variables related to the characteristics of the entrepreneur and the business can affect the predictive capability of the model under consideration. Hypotheses are tested using data collected from 2142 service firms. The results show that none of the three variables that evaluate business plan quality (economic, financial and organizational viability) seems to have a determining influence on survival chances. Adding essential characteristics related to the entrepreneur and the business (education and training, experience, kind of motivation, number of employees and start-up capital) does little to increase the model's predictive capabilities.