Before Creating a Business Plan, an Entrepreneur Must Research Businesses in the Past.

Before creating a business plan, an entrepreneur must research businesses in the past.

You may ask: but why?

Well, that's why I am writing this article from a seasoned entrepreneur's perspective:

There is a saying that goes like this;

Those who do not learn from the past are bound to repeat it. In the context of today’s highly dynamic and competitive environment of entrepreneurship, this saying could not be more accurate.

The original quote is:

“Those who cannot remember the past are condemned to repeat it”

It is attributed to a Spanish philosopher named George Santayana and appears in his 1905 work The Life of Reason. Santayana was a Harvard philosophy professor and aphorist. 

In other words, before you proceed to write your business plan there is a need to immerse yourself in the history of business and enrich your knowledge, here's why:

Why Historical Business Research is Essential?

Over the last ten years, I have been focusing on building and growing businesses (mostly online and for hundreds of international clients as a content marketer), and it is safe to say that comprehending the path of industries and companies has been the key to my success.

Let’s break down why:

1. Identifying Patterns and Trends

History provides a different perspective on market trends, consumption, and innovations. When analyzing the business successes and failures of the past, you can easily notice certain common patterns.

Here are some tips that can be useful for you to predict market trends, define new niches, and prevent mistakes just like a successful entrepreneur would do:

• The 2000 dot-com bubble burst gave investors a good lesson on what not to do and how to avoid overvaluation of their stocks.
• The recent AI boom is making waves around the world and most tech-powered businesses and even traditional businesses are adding AI to their names, but nobody knows the outcome.

What if the AI gets regulated and turns out to be just another bubble? will you be able to survive by removing AI from your business's name?

Think about it, think twice and even thrice before you change, upgrade, or replace your business strategy, etc.

In this way, it is possible to achieve a better understanding of your own business and possible difficulties in this period.

2. Learning from Others' Mistakes

In entrepreneurship, one continuously learns the hard way and that is the rule of the game.

Although it is virtually impossible to eliminate all risks and challenges, one can minimize them by studying other people’s failures.

It also goes without saying that analyzing failed businesses could be equally helpful in understanding what should be avoided to achieve success in your business venture.

Maybe the competitor you are dealing with failed in your industry because of poor cash flow management leading to bankruptcy.

If you know why they failed, you can then put measures in place to ensure that the same does not happen to you.

3. Validating Your Business Idea

Historical analysis can be used to support your idea for a business since it will show that people had similar ideas in the past.

Analyzing similar activities in the past will help you determine the feasibility of your idea and possible obstacles.

For instance, when you want to start an e-commerce firm, understanding the history of other firms that emerged, grew, and sometimes failed in the same business will enable you to understand the market dynamics and customers’ demands better.

This way you will be able to avoid potential risks of making losses if not profits.

4. Developing a Long-Term Vision

In essence, the formulation of successful business strategies is long-term oriented. Thus, examining how industries evolve over a given period will also help you to predict the future of your market.

It can help you plan for the future and prepare your business, prepare a team, and have some leadership qualities by learning and educating yourself for what may lie ahead in the future.

For example, examining the history of the automobile industry can uncover patterns of how the market has transitioned into EVs from Gasoline and turning towards Solar and other fuel, even fuel-less vehicles with the introduction of new technologies and the changing consumer’ demands.

Such information can be useful for the formulation of product development plans and the marketing strategies to be employed and understanding why before creating a business plan, an entrepreneur must research businesses in the past.

Lastly, it can be assumed that innovation is indeed a key factor when it comes to the entrepreneur’s success, yet so is the ability to remember the past.

So, my opinion is:

The time spent in historical business research can prove to be extremely beneficial, help to avoid or minimize certain risks, and enhance the possibilities of creating a successful business.

Do you want to focus on a specific industry or aspect of business research?