The Overemphasis on Business Plans in Entrepreneurship Education: Why does it persist?

Abstract

A quintessential aspect of entrepreneurship academic programs is a course on business plans. However, in reality business plans are enigmatic. Business plans are said to be critically useful for entrepreneurs but most entrepreneurs don't prepare them. Business plans are supposed to lead to entrepreneurial success. However, the correlation between start-up business plans and business survival has been found to be weak. Business plans are said to be a requirement for business start-up financing. However, financial institutions, especially banks, have more objective criteria of determining credit worthiness than relying on written business plans. In view of these doubts about the "functionalities" of business plans, there is a growing voice to de-emphasize them in entrepreneurship education programs. George Gendron, former editor of Inc magazine for 20 years, and David Gumpert, who had already written several textbooks on business plans and is a practicing entrepreneur, have urged educators and entrepreneurs to "forget" business plans. Amar Bhide, of Harvard Business School, among other well-known academic institutions, has attempted to explain why a de-emphasis of the business plan in entrepreneurship education programs is very unlikely in the foreseeable future. The paper evaluates the doubts on the functionalities of business plans and the reasons why de-emphasizing them is unlikely. The paper also contains some recommendations for pedagogical changes to make business plans meet the needs of students more than they do now.