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

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) 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 reestablishes the importance and purpose of a business plan in the field of entrepreneurship.