Do Developing-Country Entrepreneurs Need Business Plans?

Donna Rosa
Jan 30, 2022
3 min read

Updated: May 9

Small food processing facility in Africa | donnamrosa.com

Everyone in the entrepreneurship community seems to have an opinion on the topic of business plans. They range from “Yes, they are always needed, no matter how small the business” to “They are a complete waste of time”. The real, unequivocable answer is “it depends”.

You laugh. But it’s the truth, especially for those in low-income countries. So let’s dissect this.

What is a business plan, simply put?

A business plan is a document that describes:

what the business does
where it wants to go
how it will get there

There’s a lot more to it, but let’s keep it simple for now. What entrepreneurs need, though, is a plan that will best help them reach their growth goals.

the types of entrepreneurs in developing countries

Entrepreneurs in developing countries are not all the same; they fall along a continuum. At the risk of oversimplifying, developing-country entrepreneurs typically fall into one of three general classifications.

The Financial Essentials Group - Definitely Not

These are usually informal business owners who have no business training. They have found a way to sell something in order to survive. They may or may not have literacy or numeracy skills. Examples might include a smallholder farmer or a woman selling crafts or vegetables.

These one-person microenterprises clearly do not need anything resembling a business plan. What they need is a small sum of money (perhaps through a grant or village saving and loan-VSL- program) and training in financial recordkeeping. This enables the business owner to:

purchase materials to sell
manage cash flow
understand profit and loss

This small support can have a huge impact on the success of the business.

The Budding Businesses Group – Modified Business Plans

This group of entrepreneurs has usually had some form of education, which may or may not be business related. Their businesses are typically registered, and they may have college degrees. Local jobs may be limited so they start a business, usually based on a particular skill or passion. They have entrepreneurial spirit and can operate a small business but are lacking management skills.

These entrepreneurs may benefit from business skills training that addresses specific issues they face. Most have started their businesses without a business plan, but may need one for two main reasons:

The business is facing problems, has plateaued, and/or does not know how to grow

A basic business plan can help address the problems and chart a course to future growth.

The business owner will likely need business coaching or professional support to steer through the process and develop a realistic, well written plan. This business plan will help the entrepreneur by providing analysis and direction.

The business requires funding to expand

Owners may need growth capital and seek local loans, grants, or other funding that requires a cohesive business plan. It must demonstrate a stable business, growth strategy, and solid financials.

In either case an elaborate 50-page business plan is not the solution, but a basic plan or even a business canvas can provide clarity and key information for both the owner and outside investors.

The Game Changers Group – Formal Business Plans

Entrepreneurs with formal or advanced business education or backgrounds, groundbreaking startups, or innovative business ideas need full-blown business plans.

This group has big plans. They will compete at high levels (often globally) for angel investment or venture capital, so they need sophisticated, detailed, buttoned-up business plans. They are on par with high-potential global startups and usually have access to the most support from investors, institutions, incubators, and other organizations both at the national and international level.

Also see Business Plans, Business Canvases, and Alternatives