My Dissertation Work

What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning.

Y3858629

Supervisor: Jocelyn Hayes

August 2009

Dissertation submitted in part fulfilment of the degree of MA in Management Studies

The York Management School University of York

1 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. ABSTRACT

Many authors argue that a business plan is an essential tool for every start-up business. Recent studies concluded that the preparation of a business plan has absolutely no effect on business success. Moreover, some studies’ recommend skipping the preparation of the business plan completely.

The first aim of the dissertation is to seek for the connection between the preparation of a business plan and the common strategic problems. The second aim is to find

2 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning.

ACKNOWLEDGEMENTS

First of all, I would like to thank my parents and my girlfriend for their support and encouragement during all of the academic year. Without their help, studying in UK would have been unthinkable.

Secondly, I would like to thank Mrs. Jocelyn Hayes for her support with my dissertation. She helped me during the whole project and helped me in the formation of my ideas.

I also would like to thank Mr. Andy Gurnell and Mr. Zbyněk Lukavec for their goodwill. They helped me greatly in terms of enlargement of my scope. Their information on the background of support services was priceless.

Finally, I would like to thank to all of the respondents who dedicated time and effort to complete my questionnaire.

TABLE OF CONTENTS

ABSTRACT...... 2

ACKNOWLEDGEMENTS...... 3

TABLE OF CONTENTS...... 4

TABLE OF FIGURES...... 6

LIST OF TABLES...... 7

CHAPTER 1 – INTRODUCTION...... 8

1.1 Introduction...... 8

CHAPTER 2 – LITERATURE REVIEW...... 9

2.1 General and Economic Background...... 9

2.1.1 SMEs in UK...... 9

2.1.2 SMEs in the Czech Republic...... 10

2.2 Strategic problems of SME...... 11

2.2.1 Lack of financial resources...... 12

2.2.2 Marketing problems and customer concentration...... 13

2.2.3 Management resources and human resources...... 14

2.3 Business Plan...... 16

2.3.1 Business plan and its role to business...... 16

2.3.2 Writing down the business plan...... 17

2.4 Relevancy the business plan...... 21

2.5 The summary of the literature review...... 21

2.6 The link between literature review and the research...... 22

CHAPTER 3 METHODOLOGY...... 24

3.1 The nature of the research...... 24

3.2 Sampling...... 24

4 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 3.3 Questionnaire...... 25

3.4 The interviews...... 26

ANALYSIS OF FINDINGS...... 30

4.1 Limitations and legal documents...... 30

4.2 The analysis of interviews...... 30

4.2.1 An interview with Mr. Andy Gurnell...... 30

4.2.2 The interview with Ing. Zbyněk Lukavec...... 32

4.3 The analysis of the results from questionnaires...... 33

4.3.1 UK respondents...... 33

4.3.2 Czech respondents...... 34

4.3.3 Business plan and problem solving process...... 35

4.4 Answers to the research questions...... 37

4.4.1 What differences are there between UK and Czech entrepreneurs in terms of their adoption and use of business plans?...... 37

4.4.2 Could a business plan help in avoiding or solving problems which entrepreneurs are facing?...... 39

CONCLUSIONS...... 41

REFERENCES...... 44

APPENDIX 1 - TYPES OF FINNANCIAL SOURCES

APPENDIX 2 - CASH FLOW FORECAST

APPENDIX 3 - PROFIT AND LOSS FORECAST

APPENDIX 4 - QUESTIONNAIRE

APPENDIX 5 - INTERVIEW CONSENT FORM – A. GURNELL

APPENDIX 6 - INTERVIEW CONSENT FORM – ING. Z. LUKAVEC

TABLE OF FIGURES

Figure 2.1.1 Share of enterprises, employment and turnover by size of enterprise UK private sector, start of 2007...... 10

Figure 2.1.2 Share of enterprises and employment by size of enterprise Czech private sector, 2006 (%)...... 11

Figure 2.3.1 Planning: analysis, communication, synthesis and action...... 17

Figure 3.4.1 Uses of different types of interview in each of the main research categories...... 28

LIST OF TABLES

Table 2.2.1 Use of personal finance by UK SMEs...... 13

Table 4.3.1 The structure of a business plan in UK sample...... 34

Table 4.3.3.1 Strategic problems in SME’s...... 35

Table 4.3.3.2 Business plan and strategic problems by respondents who prepared a business plan...... 36

Table 4.3.3.3 Business plan and strategic problems by respondents who did not prepared a business plan...... 37

CHAPTER 1 – INTRODUCTION

1.1 Introduction

The aim of the dissertation is to discover which aspects of the business plan can show to have a useful role to play. In this case, the research is seeking a connection between the preparation of a business plan and its ability to help a company to solve or avoid common strategic problems.

The aim of the another part of the dissertation concerns a comparison of entrepreneurial behaviour and attitude towards the business plan in two separate countries – UK and the Czech Republic.

The research proceeds on two different levels. Firstly, there are two interviews with experts from specialized organizations as providers of advice for start-up companies (UK and the Czech Republic). Secondly, there is internet questionnaire that was spread amongst owners of small and medium enterprises to get access to information from an everyday business reality.

In the next part the data from both levels are put together to create meaningful results.

In the final part, the whole of the research is examined and the conclusions are drawn.

CHAPTER 2 – LITERATURE REVIEW

2.1 General and Economic Background

Historically there is difference between UK and the Czech Republic in terms of entrepreneurial freedom. Leibniz Institute for the Social Science (2002) explains that Czech citizens could freely found new entrepreneurial subjects after September 1990. Therefore, the experience of managing private companies was reduced.

The dissertation is focused on small and medium enterprises; therefore, it is suitable to define which company fits into this category. University of Strathclyde (2009) defines company with less than 50 employees as small. Medium sized company is a firm with 50 to 249 employees. There is further different distinction of SMEs in UK and in the Czech Republic.

2.1.1 SMEs in UK

There is difference between definitions of SMEs in UK and the Czech Republic. According to University of Strathclyde (2009) small company in UK has to have the turnover up to £6.5 million with total balance sheet maximally £3.26 million and medium company has to have the turnover up to £25.9 million with balance sheet maximally £12.9 million.

Figure 2.1.1 Share of enterprises, employment and turnover by size of enterprise UK private sector, start of 2007

Department for Business & Regulatory Reform (2008)

As you can see in Figure 2.1.1 Department for Business & Regulatory Reform (2008) analysed the situation in private sector in UK. The graph shows that in 2007 99.9% of all private enterprises are small and medium. Despite of this fact SME’s employment share is only 59.2%. On the other hand, there is only 0.1% share of large companies, but they employ 40.8% of all employees. Department of Business & Regulatory Reform’s (2008) statistical press release shows that the overall turnover of UK private companies was £2,794,684 millions in 2007. From this number large companies have 48.5% share.

There is also another difference between UK and the Czech Republic. Business Link’s (2009) directory shows that in UK there are many business support organisations which are established in purpose of helping SMEs.

2.1.2 SMEs in the Czech Republic

The situation in the Czech Republic is different. Czech Invest (2008) defines the criteria of turnover to distinguish between small and medium enterprises. Small enterprises have to have their turnover up to €10 million (≈ £8.6 million) and medium enterprises is defined with turnover up to €50 million (≈ £43.45 million).

10 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. For better understanding, it is important to create a graph which can be compared with Figure 2.1.1. The graph was made from the data of OECD. Stat Extracts (2009).

Figure 2.1.2 Share of enterprises and employment by size of enterprise Czech private sector, 2006 (%)

in (%)

From a comparison of Figures 2.1.1 and 2.1.2, it is possible to see that UK private sector has significantly higher employment in small enterprises (47.5% compared to 22.24%). The medium enterprises in the Czech Republic have more than double employment share than medium enterprises in UK (29.36 % compared with 11.7 %). It is also possible to see that UK large companies have the same employment share as in the Czech Republic, but with five times less quantity. Overall, it is possible to state that there is higher emphasis on small enterprises in UK and higher emphasis on medium enterprises in the Czech Republic. Unfortunately, there is no statistical data of Czech SME’s turnover; therefore, it cannot be compared.

Another difference is in the business support for SMEs. As it is possible to see at BusinessInfo.cz (2009) in the Czech Republic there are significantly less business support organisations than in case of UK Business Link (2009).

2.2 Strategic problems of SME

Carter & Jones-Evans (2006) list the common strategic problems of SMEs.

11 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 1. Lack of financial resources

2. Marketing problems and customer concentration

3. Management resources and human resources

4. Over-reliance on the entrepreneur

5. Lack of systems and controls

6. Technological skills

(p. 418-420)

The dissertation is focused on first three problems because they can be covered in pre- start-up business plan.

2.2.1 Lack of financial resources

Wickham (2006) lists the possible financial resources for start-up companies.

1. Cash in hands

2. Overdraft facilities

3. Loans

4. Outstanding debtors

5. Investment capital

6. Investment in other businesses

Bender & Ward (2009) explain that there is high business risk associated with start-up companies. Therefore, financial risk should be kept as low as possible. Thus, the most appropriate way of financing the business is through equity funding; therefore, the debt funding is not advisable. Unfortunately, start-up companies are uninteresting for many investors. However, there is small group of investors which are specialized on start-up business.

Carter & Jones-Evans (2006) show that in the reality the start-up businesses are “undercapitalized” and “inappropriately capitalized, in terms of both a high debt-equity

12 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. ratio and an over-reliance on short-term debt” (p.418). It means that instead of focusing on equity funding, small companies are using debt funding which has higher financial risk.

Recent research shows that “UK-based SMEs are facing cash flow problems after funding their businesses with personal finances” (Printing World, 2008). The research shows that 40% of all UK SMEs are “ploughing personal savings into firms”. SMEs are also using debt funding for their business investment. As you can see on Table 2.2.1 SMEs are using overdrafts in 24% and credit cards in 11%. The conclusion of the research is that there are more suitable solutions than personal wealth or overdrafts to fund the businesses.

Table 2.2.1 Use of personal finance by UK SMEs

Type of funding Percentage

SMEs ploughing personal savings into firm 40%

SMEs using overdrafts to fund big purchases 24%

SMEs using credit cards for business investment 11%

Source: Printing World (2008)

Williams (2008) states that SMEs are also facing problems with staying afloat. It contains problems such as too low price, delays in receiving payments or cash flow problems.

2.2.2 Marketing problems and customer concentration

Carter & Jones-Evans (2006) explain that small companies tend to engage in little marketing activity. Moreover, managers have lack of marketing skills and they tend to spend more time on activities, which are more familiar to them. Burns (2007) add that one of the problems is that entrepreneurs “tend to focus on the product not on the market”. But the fact is that market demand is important for the product and for the company. Burns (2007) and Carter & Jones-Evans (2006) agree that entrepreneurs have

13 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. problem with their product’s differentiation. Burns (2007) gives three ways where company’s products could be oriented.

- Low price

- High differentiation

- Customer focus

Moreover, small companies tend to be too much dependent on one customer. Carter & Jones-Evans (2006) state that “research evidence suggests that as many as one-third of all small businesses are dependent on one customer for 25% or greater of their sales” (p.419). This evidently creates high risk of business failure.

Finally, entrepreneurs usually do not have sufficient skills and information about possibility of export markets. (Carter & Jones-Evans, 2006)

2.2.3 Management resources and human resources

Wickham (2006) introduces the problem with explanation that entrepreneurs must see themselves as first and most valuable resource. Moreover, they have to treat themselves as resource; therefore, they learn how to use them effectively. Carter & Jones-Evans (2006) continues that most small companies are owner-managed. This owner-manager has to solve all the areas of business such as operations, marketing, staff and finance. Evidently, no one is expert in everything. Therefore, many start-up companies suffer under lack of appropriate skills.

In addition, skilled and experienced employees do not attract many start-up and small companies. It is because small companies usually do not have enough resources to hire high-skilled labour. Moreover, many potential employees do not see a career future and development in SMEs. However, there are some exceptions. According to People Management (2008) some top talent employees could be attracted by flexible work hours. It is a privilege which is not easily provided by large companies.

Williams (2008) extends the problem with statement that entrepreneurs may suffer under the pressure of “getting rid of an unsuitable employee, which can unnerve the toughest of businessmen and business woman and unsettle other employees” (p.210).

2.3 Business Plan

2.3.1 Business plan and its role to business

When the common strategic problems of SMEs are explained it is necessary to discuss the other side of the issue.

Wickham (2006) defines a business plan as “an essential tool for the entrepreneur” (p.374). Williams (2008) adds that “there is nothing like writing something down to help clarify your mind and reveal your uncertainties and weaknesses” (p.64). Despite of the optimistic introduction, according to Wickham (2006) many entrepreneurs are asking themselves why to spend time and money on business plan and not on “pushing the venture forward”.

Williams (2008) explains that business plan has two main roles. Firstly “to show to outsiders to help to raise money” and secondly “to use within the business to keep yourself on your planned course or to alert you to things that are not going according to your strategy”.

Wickham (2006) agrees but he expanded the idea to four main roles of business plan.

1. As a tool for analysis: Business plan contains information that has to be collected and analyzed. Those processes helps business to clarify its business vision

2. As a tool for synthesis: Business plan helps to identify company’s strategy.

3. As a tool for communication: Business plan is mostly used for communication between business and internal and external stakeholders.

4. As a call to action: The business plan provides a “detailed list of the activities that must be undertaken, the tasks that must be performed and the outcomes that must be archived”. (p.376)

The simplified diagram of different roles of the business plan is possible to see in Figure 2.3.1

Figure 2.3.1 Planning: analysis, communication, synthesis and action

Source: Wickham (2006)

Next question is whether business plan has direct impact on further business success. Many researches agreed that there is no correlation between business plan and business success (Henricks, 2008). However, this issue is more comprehensive; therefore, it will be discussed separately in another section.

2.3.2 Writing down the business plan

Henricks (2008) explains the historical development of the business plan. In the past, the format of a business plan contained 20-40 pages with many financial forecasts and analysis. However, nowadays there is more emphasis on the action. The business plan should consist of four pages and there should be used colourful presentation slides. The advantage of recent style is that it is easier to read and easier to spread (for example via email).

There are many templates available for making a business plan. Most of the authors such as Williams (2008) or Wickham (2006) provide instructions how to write a business plan and what it should consists of. It is also possible to find many manuals

17 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. and templates on the internet. For example, the website www.bplans.co.uk provides huge database of business plan templates.

Wickham (2006) lists the segments of common business plan.

1. Mission

2. Overview to key objectives

3. The market environment

4. Strategy

5. Financial forecast

6. Activity

7. People

Chapter 2.2 of this dissertation shows common SME’s business problems. Those issues are possible to cover in a business plan. Therefore, the related parts of a business plan will be examined closely.

Financial information

Burns (2007) argues that “the adequate provision of finance is vital small firms are to grow and make the most of their potential” (p.348). There are many difficulties about raising money. Every entrepreneur needs money for future growth but in the same time, he does not want to lose control of the company. Entrepreneurs should think where he is going to secure the capital. It is not easy task to do. Burns (2007) explains that not every source of money is available for small firms.

Williams (2008) lists 4 forms of money

1. Overdrafts

2. Longer-term loans

3. Selling shares

4. Taking partners

18 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Burns (2007) adds family and friend’s loans.

All of these types of sources of money have their advantages and disadvantages and entrepreneur should carefully think which one he is going to use. Appendix 1 shows these advantages and disadvantages in detail.

Another part of the financial section of business plan should be a cash flow forecast. Burns (2007) explains that “cash flow is the lifeblood of a business”. Williams (2008) adds that monthly cash flow forecast should be made “for at least one, preferably two years ahead”. It is important to make realistic assumptions about receivables and payments. Cash flow forecast should include monthly sales, receipts and payments. The cash balance is calculated using this information. Appendix 2 shows one of possible template of monthly cash flow forecast.

Next component of financial forecast is profit and loss forecast. Finch (2006) argues that profit and loss forecast is simple and straightforward and it is essential in terms of business success. Williams (2008) adds that profit and loss forecast is different from cash flow forecast because it is not based on a cash basis. Appendix 3 shows the template of profit and loss forecast.

Markets and customers

Many authors agree that customers are essential for every company. Wickham (2006) explains that it is “rare that a business can serve the needs of entire market” (p.460). Wickham (2006) continues that costumers “have many, and complex, needs and wants” and that “no single business could hope to serve them all” (p.461). Therefore, it is important to know who the customers are and what their needs are.

Williams (2008) lists three key questions about company’s potential customers.

Who will buy?

Why will they buy?

How much will they buy?

Burns (2007) exploits those three questions into many more.

19 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Who is going to buy the product or service? Name names and describe the customers

Why will they buy it?

What needs do they want the product or service to meet?

Is the market for the product or service new or mature?

Is the market growing or declining?

How big is the market?

Are there competitors? If so, why should customers buy your product or service rather than that of the competitor?

Is the product or service unique in any way?

According to Burns (2007) by answering these questions, the entrepreneurs will receive the clearer view how to proceed about their product. Wickham (2006) adds that closer understanding of company’s customers can help to focus on their needs.

People

Wickham (2006) introduces the topic with a statement that it is people who make the difference in the business. Moreover, small businesses have limited resources in terms of hiring new employees. Entrepreneurs must pay attention to their employees. The important issues are for example, an efficient staff level or an employee’s motivation. Williams (2008) adds that the best time for increasing the staff is when it would generate some extra sales to cover the costs. She also points out that timing does not necessarily lead to the success. Another problem is to find the right person and it can take several months to do so.

Therefore, many authors recommend adding labour management part into a pre-start-up business plan.

20 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 2.4 Relevancy the business plan

Many researchers are trying to answer the question as to whether the pre-start-up business plan has any connection with the business success. Classical literature such as Wickham (2006) states that correlation between writing a business plan and a business performance tends to be weak. But they still recommend preparing a business plan before the company’s start-up.

The recent research made by Lange et al (2007) examined 116 new ventures trying to find the connection between writing a business plan and business performance. However, the conclusion of the research is that “the analysis revealed there was no difference between the performance of a new business launched with or without written business plan”. Moreover, this research study made some radical recommendations such as “forget about business plan”. The study recommends focusing on business implementation rather than “intellectual exercise”. The research recommends preserving only one thing from a business plan. Entrepreneurs should make financial planning before they start their businesses. These recommendations are very different from classical literature and in many ways are contradictory.

2.5 The summary of the literature review

Context

There are many economical and political differences between UK and the Czech Republic. UK has significantly longer entrepreneurial history than the Czech Republic. The distribution of employment is also different. In the UK there is a stronger emphasis on small companies. In the Czech Republic there is stronger emphasis on medium enterprises.

What are the common strategic problems of SME’s?

1. Lack of financial resources

2. Marketing problems and customer concentration

3. Management resources and human resources

21 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. What is the role of a business plan?

Many authors explain that business plan is an essential tool for the business. On the other hand, in reality, many start-up entrepreneurs are not always convinced as to the reasons why they should spend their time and money on writing a formal business plan. Basically there are two main roles for a business plan. Firstly, to persuade outsiders or external investors to invest money into the business and secondly, to have a formal document for the company’s strategy which management or other stakeholders can refer to. Wickham (2006) expanded these two roles into four - as a tool for analysis, as a tool for synthesis, as a tool for communication and as a call to action.

There are many ways how to write a business plan. During time the layout and content of a business plan changed. It is common now to find that entrepreneurs are writing many different business plans for different audiences.

The content of the business plan is not strictly set. The study is focused on three important parts – Financial information, Markets and customers and People.

There are also many discussions about the relevancy of the business plan. Many studies conclude that there is no link between preparing the business plan and a company’s success. Even some studies recommend not doing any business plan at all, because the data used are mostly imaginary; therefore, they are not accurate.

2.6 The link between literature review and the research

The aim of the research is not to proof or deny whether business plan can bring company a success, such as many other studies. The aim of the research is to find whether the preparation of a business plan can help company in solving or avoiding any of the common strategic problems of SME’s. In other words, whether a business plan can be helpful and useful in the problem solving process.

Another part of a study will be to compare the situation in two different countries – UK and the Czech Republic. The focus will be on which support start-up companies can obtain in a particular country and what the view of specialists are from both countries on business plan issues.

22 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. The study will also examine whether the results are same or similar with recent literature sources.

CHAPTER 3 METHODOLOGY

According to the literature review and dissertation title, two key research questions were prepared.

1. What differences are there between UK and Czech entrepreneurs in terms of their adoption and use of business plans?

2. Could a business plan help in avoiding or solving problems which entrepreneurs are facing?

The first question is trying to examine the difference between the preparation of formal pre-start-up business plan using the data from UK and Czech entrepreneurs and using the information from interviews from specialists from both countries.

The second question is trying to find a connection between preparation of pre-start-up business plan and further company’s problems. As a starting point, it is used to explore the three common strategic problems that are listed in the Chapter 2. Respondents will express their opinion as to whether a business plan can help in solving or avoiding these strategic problems.

3.1 The nature of the research

Saunders et al (2007) argues that it is important to distinguish between three different types of research – Exploratory studies, descriptive studies and explanatory studies. Saunders et al (2007) defines explanatory study as a “study that establish causal relationship between variables” and as a study which put the emphasis “on studying a situation or a problem in order to explain the relationship between variables”. This definition is the one that most suits the dissertation purpose. Therefore, the research will follow this approach.

3.2 Sampling

Non-probability sampling has been employed here. UK respondents tend to be homogenous because support organizations such as York CETLE institution and Science City York have limited scope of specialization. There are some disadvantages.

24 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. One important area of consideration is that the sample could have a lack of representation.

The UK respondents were mostly chosen from clients of the organization Enterprise at York, which is specialized more at student entrepreneurs, and from clients of the organization Science City York that is specialized more with the technological and biological sectors. Despite great help from both organizations, it was necessary to address randomly several entrepreneurs, in order to obtain a reasonable sample size.

Czech respondents were chosen from random contacts. Therefore, the sample is more heterogeneous.

3.3 Questionnaire

It was decided to use a self-completion questionnaire. In particular it was used a web based and paper questionnaire. Bryman & Bell (2007) show some disadvantages of web-based questionnaires such as “loss of personal touch”, less response rate and lack of internet access to all respondents. However, the nature of my research does not allow the use of any other type of questionnaire. The research was carried out in two countries within a limited period. Therefore, it is necessary to allow respondents to answer their questions by themselves. However, the disadvantage of lack of internet access was solved by preparing a version of paper questionnaire for respondents who may not have the internet access. This version is possible to see in Appendix 4.

In the design of the questionnaire it was used for several types of questions. Category questions were used for questions with descriptive purpose (such as gender). On the other hand, open and rating questions were used for questions directly related to dissertation topic. They were used because according to Saunders et al (2007) they are able to collect “opinion data”. Moreover, open questions motivate respondents to use their imagination and it can provide new interesting information about the topic.

Saunders et al (2007) give advice up on questionnaires which are translated to another language. Researchers should pay attention to lexical meaning, idiomatic meaning, grammar and syntax and experiential meaning.

25 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Saunders et al (2007) also recommend adding all different language versions of questionnaire to appendices.

These are free of charge questionnaire services available on the internet; however, they do not meet the requirements of the research. It was needed to make two language versions, branch of inquiry and easy exportable results. Therefore, I had to use my web programming skills to create my own web based questionnaire. This approach may be more time-consuming, but on the other hand, the benefits include greater personalization.

For programming the questionnaire, it was used PHP and MySQL technology which are freely available on the internet for academic use. I also followed PHP and MySQL programming guide from Mach (2003) during the development of the questionnaire. I also dispose of web server with support of databases. The final version is possible to find at http://york.pierre.cz. Moreover, the paper copy of electronic questionnaire is situated in the Appendix 4.

Several people for possible mistakes tested the questionnaire before it went public. Between beta testers there were my supervisor, editor from newspapers (for Czech grammar check) and many other people. According to their suggestions, I made appropriate changes. The questionnaire went public on 4th of August 2009.

3.4 The interviews

Besides questionnaire, it was also chosen interview with specialists from organizations focused on support for start-up companies. It was decided because according to Barbour (2008), interviews could be considered as “gold standard” in qualitative analysis. It should bring new perspective to the topic. Moreover, there could be obtained important contacts when specialists from UK and the Czech Republic are interviewed.

Mr. Andy Gurnell was chosen as UK specialist. He is working as Delivery Services Manager in Science City York. This organization is according to their official webpage “internationally-recognized centre of excellence for research, innovation and enterprise”. The aims of the organizations are as follows:

1. Attracting, developing and supporting technology-based businesses to the area

26 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 2. Working with partners in education and industry to develop and retain a workforce with the knowledge and skills to match employment opportunities and industry needs

3. Promoting partnerships between industry and other bodies to create the infrastructure that meets the needs of the new economy

4. Promoting public understanding of science and technology to ensure everyone understands its importance in their daily lives

Source: Science City York (2009)

The situation in the Czech Republic is more problematic. It is much harder to find appropriate organization which provides services for start-up companies. It was chosen the government organization called Czech Chamber of Commerce which is official organization providing the support to entrepreneurs. According to Czech Chamber of Commerce (2009) the aim of Czech Chamber of Commerce is to improve “entrepreneurial environment and to support the trade”. The second organization’s purpose is to provide “a comprehensive range of professional services in all areas related to trade, industry and commerce”. For the interview, it was chosen Ing. Zbynek Lukavec who was working as chairman of the board of regional department of Czech Chamber of Commerce for Střední Čechy in 2008.

Saunders et al (2007) define three types of interviews – structured, semi-structured and unstructured. Every interview is suitable for another type of research. Because the nature of the research is explanatory by following Figure 3.4.1 from Saunders et al (2007) it was chosen semi-structured interview.

27 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Figure 3.4.1 Uses of different types of interview in each of the main research categories.

Exploratory Descriptive Explanatory

Structured  

Semi-structured  

Unstructured 

 = more frequent,  = less frequent

Source: Saunders et al (2007)

Many authors introduced their own name for the preparation of an interview. For example, Bryman & Bell (2003) present their “interview guide” and Barbour (2008) is speaking about “interview schedules”. In both cases it is explained in almost the same manner. This is followed by an “interview guide” from Bryman & Bell (2003)

The interview is focused on personal experience of the interviewee. The topic is about a business plan, its preparation and usefulness. In addition, there are questions about start- up companies in various countries. During the interview, discussion is given to the interviewee to express his ideas and opinions which are not directly related to the research questions but which can help in bringing in fresh ideas and perceptions for the preparation of the dissertation.

The schedule of the interview was as follows:

Firstly, some descriptive questions, such as interviewee’s specialization and responsibilities are asked. Then it was prepared several key questions.

1. Do you recommend to clients (start-up companies) to prepare a business plan?

2. Do you think that business plan is useful? Why and in which areas?

28 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 3. Do you think that business plan can help companies in any way?

4. Do you think that there are any link between preparing a business plan and further strategic problems?

5. Do you think that there is sufficient support for start-up companies in your country? Why?

6. Do you think that start-up companies are well prepared for the business?

7. Which problems do you think are the most common for start-up companies in your country?

Before I started the interview, I showed interviewees the key questions to aid awareness of the topic areas prior to the interview.

Because the interview is recorded by digital device; therefore, I asked interviewees for permission. The interviews took no more than 30 minutes.

ANALYSIS OF FINDINGS

4.1 Limitations and legal documents

There were several difficulties during the data gathering. Firstly, there was limited time for gathering the data from the respondents. The sample criteria were clearly set to owners of SME’s. Unfortunately, this sample is hard to connect and persuade for cooperation. Mostly I was refused because of lack of their time. Moreover, the sample was gathered from two different countries. Total sample of 18 was the maximum what was realistically possible to get.

Interviews were made without any substantial limitation. Both interviewees were willing to help and both interviews passed in an atmosphere of goodwill.

4.2 The analysis of interviews

4.2.1 An interview with Mr. Andy Gurnell

The interview took place in the building of Science City York on Friday 7th of August. Before the interview started, the interviewee was asked to talk about his opinions based on their own experience. In the beginning of the interview, Mr. Gurnell explained that his work position is that of Delivery Service Manager and that he is responsible for the clients of the organization. Mr. Gurnell strongly advocated the role of a business plan during the whole interview. He states that it is essential to prepare a business plan in case of a start-up company or even in case of an existing business. He pointed out that preparation of a business plan could help an entrepreneur to “understand what things they know, what things they don’t know and what they need to find out”. He also explained that there are many different versions of the business plan for the different purposes. There is a different version of a business plan for a bank, a different version for a venture capitalist and different version for firm’s internal purposes. However, all versions of the business plan should have same content, but influence, tone and dept would be different. Mr. Gurnell also emphasised that a business plan cannot be written once and left in a shelf. It must be kept up to date. He continued to explain that business plan should be “living and breathing document”. Business plans should be reviewed every 3 months at the worst case. It will not have value to anybody if it is more than 3

30 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. months. He gave the example that in the case of potential investor, business should posses the most recent version of the business plan. It looks more professionally than let him wait until the new version will be prepared. Mr. Gurnell summed that the benefits of preparing and keeping up to date outweigh costs.

Another question was how often UK companies prepare their business plans and whether they are comfortable with it. Mr Gurnell pointed out that there is not one answer to this. It depends on the sector where they operate. For example in technology sector, it is very common to write a business plan, because it is mostly funded by outsiders. On the other hand, in retail sector it is quite common to start without a formal business plan. Nowadays it is more common to write a business plan because it is much harder to get money for the start-up.

In the next part of the interview, Mr. Gurnell was asked what the common strategic problems of start-up companies are and whether the preparation of a business plan can help in solving or in avoiding them. He explained that it depends on stage of the business. He continued that from his experience start-up companies mostly suffer from marketing and sales problems. The rest is also important but marketing and sales is essential because start-up companies usually struggle to achieve any sales. In the business plan, entrepreneurs should always ask questions such as who is going to buy my product on both – generic and specific level. This means that entrepreneurs should find particular people within the target company who is responsible for buying products and it is also essential to find who is going to use the product, because usually these are different people. Other areas to explore include why a product is different from others or how one can bring the product mainstream. In summary, all parts of the business plan are important but the marketing and sales part is for a start-up company the most important.

In the next part, Mr. Gurnell stated that UK entrepreneurs tend to be a bit naive. He explained that many of his clients come to the office with a bright idea and expect that they will become rich in short time. Mr. Gurnell is seeks to show them that behind all success stories are hard work and dedication.

31 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. In the next part of the interview, Mr. Gurnell expressed his opinion that business planning cannot actually solve problems but it is more about clarifying the process by which you will be successful. Business planning is not just a list of possibilities but mainly a list of problems and what entrepreneurs should be doing in order to move problems by finding the solutions into a possibilities column.

In the end, Mr. Gurnell summed up that he is great believer in a business plan because this can be very useful to businesses. “But they have to be current, they have to be alive, and they have to be honest as well”.

4.2.2 The interview with Ing. Zbyněk Lukavec

Ing. Zbyněk Lukavec is former chairman of board of regional department of Czech Chamber of Commerce in Střední Čechy. He is also the owner and director of Economical high school in Poděbrady.

In the beginning, Ing. Lukavec explained that in his opinion every single start-up project should have its own business plan. There are two roles of a business plan. Firstly to calculate the payback of the project and secondly for purpose of a bank or any other institution which requires the preparation of a business plan.

He mentioned that he is teaching his students to prepare experimentally a business plan in the classes. Ing. Lukavec stated that a business plan is more than just about an idea, but is also about the reality.

In the next part, Ing. Lukavec was asked which part in his opinion is the most important aspect for the start-up companies. He answered that the most important is the profit and loss account. Entrepreneurs should calculate whether he is able to repay a loan and at the same time be able to earn enough to live from the profit. He also mentioned that entrepreneurs should analyse the customer needs and demand.

Ing. Lukavec explains that with the Czech Chamber of Commerce it is a common practice to recommend to all clients that they should prepare a business plan.

He continued explaining that the business plan is not a dogma. Business plans should be adapted to current circumstances and needs.

32 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Ing. Lukavec was asked whether Czech entrepreneurs are involved in preparing the business plans. He answered that small companies and entrepreneurs do not do any kind of business plan except in cases when for example bank is requesting it to provide loan. He continued that start-up companies in the Czech Republic are going to their business more or less thoughtlessly.

The next part of the interview was about support for start-up companies in the Czech Republic. Ing. Lukavec said that in his opinion there is not sufficient support. Maybe for large companies, but for small or start-up companies the support is pitiful.

He pointed out that Czech start-up entrepreneurs are weakly informed; therefore, they are entering the business world with only intuition.

Ing. Lukavec highlighted that the most common problem of Czech SME’s is a lack of money – both capital and cash. The entrepreneurs are not able to calculate the rate of return to repay the loans; therefore, they could fall into spiral of dept.

4.3 The analysis of the results from questionnaires

All data analysis was made by using computer programmes Microsoft Excel 2007 and SPSS 16.

The data gathering proceeded from end of June 2009 until end of August 2009. There are 18 total respondents – 10 from the Czech Republic and 8 from UK. The sample was very heterogeneous. The respondents came from different business sectors – such as software, engineering, teaching, accountancy or retail. There is no respondent who started his company before year 1990. Most of the respondents are entrepreneurs who are running their company only by himself (55%).

4.3.1 UK respondents

All UK respondents have prepared their business plans and all of them are convinced that the preparation of a business plan is most useful in connection with their business. The reasons why include that it is mostly due to its role in the formalization of strategy and in helping them to obtain finance. Most of them (88%) are persuaded that the support provided for the start-up companies in UK is good. They appreciated the

33 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. amount of information available, the excellent structure of support in place and the free workshops. On the other hand, mention was made of the quality of the organizations and the variations between them. The structure of the business plan is showed in table 4.3.1. Potential customers analysis was mostly used within the UK sample (in 87% of all cases). On the other hand, analysis of source of capital and analysis of required staff was not used very often (in 25% of all cases).

Table 4.3.1 The structure of a business plan in UK sample

Analysis Percentage of use

Source of capital 25%

Cash flow forecast 75%

Profit and loss forecast 62%

Identifying potential customers 87%

Analysis of required staff 25%

4.3.2 Czech respondents

In contrast, despite one exception, all Czech respondents had not prepared their business plans at all. The reasons for not this were similar. Firstly, because they were badly informed about the preparation of a business plan; therefore, they did not know how and why to do it. Secondly, because they thought that they do not need it. Czech respondents are also very sceptical about support for entrepreneurs in the Czech Republic. With no exception, all respondents indicated that there is not sufficient support for start-up companies. The reasons are mostly absence of support organizations, poor legislation and heavy bureaucracy.

34 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. 4.3.3 Business plan and problem solving process

Firstly, the respondents were asked to state which strategic problems they had to face to.

Table 4.3.3.1 Strategic problems in SME’s

UK respondents Czech respondents Total

Lack of capital for company's 50% 70% 61% growth

Lack of available cash / cash flow 50% 40% 44%

Lack of customers 75% 50% 61%

Problems with lack of skills in 75% 50% 61% some areas

Problems with finding the right person which will work for the 0% 60% 33% company

Table 4.3.3.1 shows interesting results. The most common strategic problem in the Czech Republic is lack of capital for company’s growth. On the other hand, UK respondents mostly suffer under lack of customers and lack of skills in specialized areas. Very interestingly, there is also the difference in case of problems with finding the right employee where none of UK respondent had any problem with it. In opposite Czech respondents mentioned this problem as the second most common problem.

Respondents were asked to express whether they think that business plan can help company to solve/avoid particular strategic problems. For this purpose, the sample is divided to two groups – respondents who did a business plan and respondents who did not.

Ratio which is presented is calculated as follows. It is used scale from +1 to -1 where +1 represents strongly agree, -1 represents strongly disagree, 0.5 represents agree, -0.5 represents disagree. It was made arithmetic mean from the results. 0 which means I don’t know and unfilled answer were excluded from the calculation.

35 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Table 4.3.3.2 Business plan and strategic problems by respondents who prepared a business plan

Do you agree that preparation of Do you agree that preparation of a business plan could help to a business plan could help to solve any of these problems? avoid any of these problems?

Lack of capital for company's + 0.5 + 0.3 growth

Lack of available cash / cash + 0.16 + 0.16 flow

Lack of customers - 0.5 - 0.5

Problems with lack of skills in + 0.25 +0.25 some areas

Problems with finding the right person which will work for the - 0.1 - 0.2 company

As it is possible to see in Table 4.3.3.2 the most positive ratio is in case of Lack of capital for company’s growth which means that respondents are convinced that preparation of a business plan can help them to solve this strategic problem more likely than others. The most negative ratio is in case of Lack of customers which means that preparation of business plan will not help them in solving or avoiding this strategic problem.

36 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Table 4.3.3.3 Business plan and strategic problems by respondents who did not prepared a business plan

Do you agree that preparation of Do you agree that preparation of a business plan could help to a business plan could help to solve any of these problems? avoid any of these problems?

Lack of capital for company's - 0.17 - 0.5 growth

Lack of available cash / cash - 0.36 - 0.5 flow

Lack of customers 0 - 0.25

Problems with lack of skills in - 0.21 - 0.3 some areas

Problems with finding the right person which will work for the - 0.56 - 0.56 company

In the group of respondents who did not prepare a business plan the answers are more homogenous. Mostly they are very sceptical about role of a business plan in problem solving process. They were the most pessimistic about the fact that a business plan can help company in solving or avoiding problem with finding the right employee.

4.4 Answers to the research questions

4.4.1 What differences are there between UK and Czech entrepreneurs in terms of their adoption and use of business plans?

Despite of the fact that both experts from both countries have a very similar attitude towards business plans, the situation in the UK and in the Czech Republic is very different. All UK respondents stated that they have prepared a business plan. On the other hand, only one Czech respondent had prepared his business plan. The reasons for this situation are quite clear. UK respondents are receiving huge support from different support organizations. Most of them stated that business planning was useful for their business. On the other hand, the support for the entrepreneurs in the Czech Republic is poor. Ing. Lukavec stated that in the Czech Republic, there is sufficient support only for large companies; however, small and general businesses have insufficient support. This is the reason why most of Czech respondents were sceptical about preparation of a

37 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. business plan. Many of them stated that they were poorly informed about this economical side of business; therefore, they did not know how to prepare a business plan and its analyses.

However, the situation may change. Ing. Lukavec as a director of Economical high school in Poděbrady explained that in his school all students are led to experimentally prepare a business plan. Moreover, the development of support organizations in the Czech Republic is fast and maybe in several years the situation will be different. On the other hand, it must be stated that there is still huge gap in this area in the Czech Republic.

The perception of a business plan is not the only difference between UK and Czech sample. Lack of customers and lack of skills are the most common problems in UK sample. This affirms with the statement from Mr. Gurnell who stated that SME’s in UK are mostly fighting with finding the customers and making any sales. None of UK respondent has experienced the problem of finding the right employee. There is very different situation shown in the Czech sample. The most common problem was lack of capital. This is again very similar with statement of Ing. Lukavec who explained that the most common problem of Czech enterprises is lack of money. The second most common problem was in finding the right employee for the business. On the other hand, the problem of lack of customers is the least common. The reason for this situation may vary. It would require further research. However, in my own opinion, one possible reason could be different maturity of the markets.

When we look at the UK sample in consideration of the composition of the business plans, it is possible to see that the most common area is to prepare the analysis of potential customers (Table 4.3.1). The second most common is cash flow forecast analysis. On the other hand, the least common is concerned with the analysis of required staff. This situation follows the recommendations of Mr. Gurnell who strongly advices their clients to prepare the market and sales aspects of their business plan because in his opinion it is the most essential part for start-up companies.

The specialists from both countries have similar perception about the preparation of a business plan in general terms. However, there are still several differences. Mr. Gurnell

38 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. was mainly talking about marketing side of a business. Ing. Lukavec was contrariwise speaking about financial side of business. They both gave very helpful and interesting examples from the real world, but it is possible to see the difference in the concept of advices. It is impossible to state which point of view is more correct because the situations are different on both markets. However, I am confident that their advices are truly reflecting the current situations on the particular markets.

In summary, there is huge difference between UK and Czech entrepreneurs. UK entrepreneurs are better prepared and they are more informed than Czech entrepreneurs are. This is not because Czech entrepreneurs are more reluctant towards business plan, but it is because the support for start-up companies is in UK much more comprehensive than in the Czech Republic. However, the situation in the Czech Republic is changing rapidly and the situation can be very different in several years.

4.4.2 Could a business plan help in avoiding or solving problems which entrepreneurs are facing?

The answer is ambiguous. Respondents who prepared a business plan are convinced that business planning could help them to solve/avoid problems with lack of capital for future growth. They are also persuaded that business plan could help them solve/avoid problems in terms of lack of skills in some specialized areas (such as accountancy, website etc.).

However, they are quite confident that a business plan cannot help them to solve/avoid problems in terms of lack of customers. This is strange because the potential customers analysis were the most used analysis amongst the respondents who have prepared a business plan. This links in directly with Mr. Gurnell who recommends it as essential part of a business plan. Nevertheless, most of the respondents stated that this particular analysis would not help them in solving or avoiding problems with lack of customers. This leaves us with contradictory result though is very much what it was expected after interview with Mr. Gurnell and concerning what he explained. This is the proof that the perception of entrepreneurs and experts are different. If there were more time and resources it would be interesting to explore the reasons as to why there is such strong disagreement in this area.

39 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. On the other hand, amongst the respondents who did not prepare any business plan the perception is very sceptic. All ratios are negative which means that respondents are persuaded that a business plan cannot help them in solving or avoiding any strategic problems at all. The reasons can be many. Firstly, all respondents who did not prepare a business plan are from the Czech Republic; therefore, (according to previous part) they are poorly informed because of inexistence of proper support for start-up companies. Secondly, according to Ing. Lukavec, Czech entrepreneurs are used to managing their business by intuition; therefore, they could be quite sceptical about any sort of formal business plan.

In summary, it is possible to say that there simply is not just one answer to this research question. On the one hand, there are specialists from both countries who are very optimistic about the production of a business plan and uphold its usefulness for a business. Respondents who did a business plan and who are persuaded that the business plan can help them in solving or avoiding at least some strategic problems (lack of capital, lack of skills or lack of specialized skills) support them. However, they are sceptical about its usefulness in other strategic problems (lack of customers and problems with finding the right employees). On this side there are opposite opinions, which are led by respondents who did not prepare a business plan and who are persuaded that business plan cannot help in solving or avoiding strategic problems at all. Therefore, it appears that this is ambiguous answer and that it depends on situation and on context of the case.

CONCLUSIONS

This dissertation is concerned about two main questions. Firstly, are there any differences in UK and Czech entrepreneurs’ attitude towards a business plan? Secondly, is the development of a business plan able to help in solving or avoiding common strategic problems?

The answer to the first question is relatively clear. The research shows that there are huge differences between UK and Czech entrepreneurs. Not only in terms of their view on a business plan but also in terms of their strategic problems or business support available to them. UK entrepreneurs are able to receive huge and comprehensive support from both – government or private organizations. This is the reason why all respondents have prepared a business plan before they started their businesses. They also have a positive view on the usefulness of a business plan in general terms. On the other hand, Czech respondents are mostly reluctant to prepare a business plan. Czech entrepreneurs are used to managing their businesses mostly by intuition. The reason is that there is insufficient support for them available. All of these facts determine the pessimistic view of Czech entrepreneurs on the preparation of a business plan. However, the Czech free market is relatively young and things are changing very fast. Young people are now being taught how to use a business plan. In my opinion, in several years time there could be a new wave of young entrepreneurs who are trained in basic economical calculation and theory. They will change the situation significantly. Moreover, many new organizations would fill the gap in the market of start-up support for new companies.

The answer for the second question is not that clear. For many authors business plan is an essential part of every business. On the other side, there are recent studies, which concluded that there is absolutely no link between preparation a business plan and business success. Moreover, some studies proposed stopping doing a business plan completely. The aim of the dissertation was to find out whether a business plan can provide at least some help in solving strategic problems. Both of the interviewed specialists from UK and the Czech Republic are huge supporters of the preparation a

41 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. business plan in every start-up company. They are very optimistic about its role to a business. On the other hand, there is the reality from everyday business. Entrepreneurs can be divided into two groups – those who prepared and who did not prepare a business plan. The first group is persuaded that a business plan is useful for a business. They are not sure whether a business plan can actually help solving all strategic problems (especially lack of customers); however, they are convinced that for some of them it could be useful (especially lack of capital and lack of specialized skills in some areas). The second group are entrepreneurs who did not prepare a business plan (in this case all from the Czech Republic). They are very sceptical about usefulness of a business plan and in its ability to help solving strategic problems. However, this opinion is not necessarily based on their own experience because most of them stated that they did not prepare a business plan as no one explained to them why to do it. This is due to poor support for start-up companies in the Czech Republic. So in conclusion, there does not appear to be one definite answer as whether the business plan can help company to solve strategic problems; however, it is possible to state that those entrepreneurs who prepared a business plan and from their point of view, it seems to be useful.

The research also did not give a clear answer as to which part of the business plan is the most useful. Both specialists agreed that the most important is for start-up companies to prepare a market and sales analysis. According to respondents, the most commonly used part of a business plan is the market and sales analysis. However, entrepreneurs who did a business plan are persuaded that problem with lack of customers is not possible to solve or avoid by preparing a business plan. This result is contradictory, it does not seem to be valid and it would require more and comprehensive research.

According to whole research and experience, I have gained during the preparation of the dissertation; I am persuaded that a business plan is a useful tool for start-up companies to employ. In my opinion, every single start-up company should prepare its own business plan. This is in agreement with classical literature and with opinions of both specialists, but in contradiction with latest study Lange et al (2007). The thing is that it is not necessary to prepare 20 pages business plan. Nevertheless, according to experience of entrepreneurs who prepared a business plan even a short version of a business plan counts. Therefore, I think that the knowledge of business plan preparation

42 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. should be given to all people who are thinking of starting their own business. It works very well in UK, but in the Czech Republic, there is still gap. This gap could eventually be filled by new organizations focused purely on the support for start-up companies.

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APPENDIX 1 - TYPES OF FINNANCIAL SOURCES

Source: Burns (2007)

APPENDIX 2 - CASH FLOW FORECAST

48 What impact does the development and application of a business plan have in producing a positive contribution to SMEs problem solving processes? A comparative study of UK and Czech entrepreneurial approaches to business planning. Source: Burns (2007)

APPENDIX 3 - PROFIT AND LOSS FORECAST

Source: Williams (2008)

APPENDIX 4 - QUESTIONNAIRE