Potential entrepreneurs’ assessment of opportunities through the rendering of a business plan

Melodi Botha,Claire Leanne Robertson

doi:10.4102/sajems.v17i3.524

Melodi Botha, Claire Leanne Robertson

Open Access

https://doi.org/10.4102/sajems.v17i3.524

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Abstract

In the field of entrepreneurship and especially during start up, much emphasis is placed on the business plan with regard to entrepreneurship education and training, funding from external investors, business plan competitions and government development agencies in the Small, Medium and Micro Enterprise (SMME) sector. In many earlier studies of well-known entrepreneurship educators, the formulation of a business plan was identified as being the most important feature of any entrepreneurship programme or course. However, the relevance of a business plan has been a topic of intense and unresolved debates in more recent literature. This paper contributes to the literature with regard to the value a business plan adds to potential entrepreneurs. Furthermore it increases the understanding of how a detailed business plan (such as the approved business plan template of the University of Pretoria approved business plan) can enable a potential entrepreneur to assess opportunities. The paper conducts a comprehensive analysis of business plans and the methods of assessing opportunities, in order to reveal similarities between the business plan and opportunity assessment. Based on descriptive statistics and inferential statistics such as ANOVA, and Kruskal-Wallis tests, the findings support the hypotheses that potential entrepreneurs distinguish between ideas and opportunities and develop opportunities through the formulation of a detailed business plan. The pertinent academic and practical significance of this paper is that it highlights statistically significant differences proving that a detailed business plan is a tool that enables potential entrepreneurs to assess opportunities. From a practical point of view, this should help potential entrepreneurs to establish more viable business ventures; however, this would have to be statistically tested in further research. Finally, the study re-establishes the importance and purpose of a business plan in the field of entrepreneurship.

Highlights

Introduction and research questionGlobally, governments spend enormous amounts of money on entrepreneurship education, coaching facilities and mentorship programmes in the SMME sector
The time and resources that are spent by entrepreneurs who write their own business plans could have arguably been spent on other useful activities, such as obtaining new customers, or establishing good supplier relationships (Ashamalla, Orife, & Abel, 2008:383; Karlsson & Honig, 2009:28)
This study is significant as it proves that potential entrepreneurs distinguish between ideas and opportunities and, importantly, develop opportunities through the formulation of a detailed business plan

Summary

Introduction

Governments spend enormous amounts of money on entrepreneurship education, coaching facilities and mentorship programmes in the SMME sector. The reason for this is that entrepreneurs act as engines of growth in the economy (Venkataraman, 1997:119; Ketchen, 2003:281; McMullen, 2011:185). Business plans are seen as the most central evaluation and educational tool in governmental support for new business ventures (Karlsson & Honig, 2009:28). The time and resources that are spent by entrepreneurs who write their own business plans could have arguably been spent on other useful activities, such as obtaining new customers, or establishing good supplier relationships (Ashamalla, Orife, & Abel, 2008:383; Karlsson & Honig, 2009:28). The time and resources that are spent by entrepreneurs who write their own business plans could have arguably been spent on other useful activities, such as obtaining new customers, or establishing good supplier relationships (Ashamalla, Orife, & Abel, 2008:383; Karlsson & Honig, 2009:28). Smeltzer, Van Hook and Hutt (1991:10) state that the business plan is difficult to prepare, requiring the entrepreneur to analyse all aspects of the venture

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