A survey of entrepreneurs who started companies last year shows that

You could arrive at the right answer through elimination. The conclusion is only about whether business plans help to secure funding. So the answers which discuss how long it takes to do research, or about how profitable businesses are in the long run, are irrelevant. That rules out A, D and E, and answer B does the opposite of what we want (it also suggests that businesses with plans have less success securing funding) so C must be right.

But you can also see why C is right. The question suggests that businesses with no plan have an easier time securing funding. It's a kind of cause-effect argument. But it's possible the argument has cause and effect reversed - maybe it's the businesses that already know they can get funding easily who do not produce business plans. That's what answer C says.
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A survey of entrepreneurs who started companies last year shows that while virtually all did substantial preparatory research and planning, only half used that work to produce a formal business plan. Since, on average, the entrepreneurs without formal plans secured the capital they needed in half the time of those with plans, these survey results indicate that, in general, formal plans did not help the entrepreneurs who produced them to secure the capital they needed.

Which of the following, if true, most seriously weakens the argument?
A - Companies started by entrepreneurs who had used formal business plans to attract investment were on the whole as profitable in their first year as were companies started by entrepreneurs who had not produced such plans.
Out of context as we are talking of securing the capital and not profitability. Even if it were within the context, it may just be strengthening rather than weakening the arguement as the profitability in both cases is comparable

B - In surveys of entrepreneurs who have attempted without success to raise sufficient capital, more than half of the respondents indicate that they have produced a formal business plan.
It rather strengthens the argument , in which it says that there is an equal chance of failing even after making formal plan.

C - Among the entrepreneurs surveyed, those who did not produce formal business plans sought and received a much larger proportion of their capital from investors with whom they had a long-standing business relationship.
CORRECT... this proves that entrepreneurs who have been able to raise funds without plan were able to make up the capital due to their relationship with investors..

D - The entrepreneurs surveyed who did not produce a formal business plan spent nearly as much time doing preparatory research and planning as the entrepreneurs who produced plans.
Out of context .. we are not talking of time

E - The entrepreneurs who produced business plans generally reported later that the process of writing the plan had increased their confidence that their company would succeed.
Again out of context
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A survey of entrepreneurs who started companies last year shows that while virtually all did substantial preparatory research and planning, only half used that work to produce a formal business plan. Since, on average, the entrepreneurs without formal plans secured the capital they needed in half the time of those with plans, these survey results indicate that, in general, formal plans did not help the entrepreneurs who produced them to secure the capital they needed.

Which of the following, if true, most seriously weakens the argument?
A - Companies started by entrepreneurs who had used formal business plans to attract investment were on the whole as profitable in their first year as were companies started by entrepreneurs who had not produced such plans.

B - In surveys of entrepreneurs who have attempted without success to raise sufficient capital, more than half of the respondents indicate that they have produced a formal business plan.

C - Among the entrepreneurs surveyed, those who did not produce formal business plans sought and received a much larger proportion of their capital from investors with whom they had a long-standing business relationship.

D - The entrepreneurs surveyed who did not produce a formal business plan spent nearly as much time doing preparatory research and planning as the entrepreneurs who produced plans.

E - The entrepreneurs who produced business plans generally reported later that the process of writing the plan had increased their confidence that their company would succeed.

For such kind of questions, paraphrasing works best!

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regards
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I chose E here thinking that process of writing the plan had increased their confidence and that would have led them to go approach investors and secure capital. Too far a stretch is it?

C is preferrable to E. (is this grammatically right?)

Sent from my Redmi Note 3 using GMAT Club Forum mobile app

Conclusion: formal plans did not help the entrepreneurs who produced them to secure the capital they needed.

(A) Companies started by entrepreneurs who had used formal business plans to attract investment were on the whole as profitable in their first year as were companies started by entrepreneurs who had not produced such plans. - irrelevant to the conclusion.

(B) In surveys of entrepreneurs who have attempted without success to raise sufficient capital, more than half of the respondents indicate that they have produced a formal business plan. - this would support the argument, not weaken it.

(C) Among the entrepreneurs surveyed, those who did not produce formal business plans sought and received a much larger proportion of their capital from investors with whom they had a long-standing business relationship. - (C) explains why the entrepreneurs without formal plans secured the capital they needed in half the time of those with plans. By doing so, (C) weakens the reasoning of the argument. Hence, (C) is the right answer choice.

(D) The entrepreneurs surveyed who did not produce a formal business plan spent nearly as much time doing preparatory research and planning as the entrepreneurs who produced plans. - irrelevant.

(E) The entrepreneurs who produced business plans generally reported later that the process of writing the plan had increased their confidence that their company would succeed. - irrelevant.

BrightOutlookJenn DmitryFarber GMATNinja mcelroytutoring Although I got the question right, I don't understand why (E) is out. If the entrepreneurs who produced business plans reported that the process of writing the plan boosted their confidence that their company would succeed, then the plan might have helped them to secure capital, in the sense that their confidence may have helped them to get investments. What am I missing here? tks!

I think that D and E are strengthening the arguments. Does anyone agree with me?

Hi Bunuel, this is a Gmatprep question, please tag. Thanks!

Hello, Bunuel. Please tag this is a GMAT Prep question.

Thank you!

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Added the tag. Thank you!
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VeritasKarishma , GMATNinja , GMATGuruNY , mikemcgarry Could you please explain this question in detail ?

Premise:
The entrepreneurs without formal plans secured the capital they needed in half the time of those with plans.
Conclusion:
Formal plans did not help the entrepreneurs who produced them to secure the capital they needed.

The argument seems to suggest the following link:
not having a formal business plan --> half the time to secure funding

One way to weaken the conclusion is to suggest an ALTERNATE EXPLANATION for the faster funding.
Option C provides this explanation:
Among the entrepreneurs surveyed, those who did not produce formal business plans sought and received a much larger proportion of their capital from investors with whom they had a long-standing business relationship.
Here, the faster funding seems due to LONG-STANDING RELATIONSHIPS, weakening the blue link above and thus the conclusion that formal plans do not help with funding.


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All entrepreneurs did research and planning.
Only half used that research to make a formal business plan.
Those without formal plans secured the capital they needed in half the time of those with plans.

Conclusion: formal plans did not help the entrepreneurs who produced them to secure the capital they needed.

The flaw here is that the argument takes correlation to be causation. Just because two things appear simultaneously, it doesn't mean one causes the other. Also we can't say which one is causing the other.

The argument says that since "no formal business plan" and "less time needed to secure capital" happen together, formal business plan does not help to secure capital (obviously, having a business plan cannot lead to not being able to secure capital).
But hey, what if both happen because of a third factor. For example if relatives give capital to these people, they will not need much formal processing so time taken to get capital will be less and they may not need a formal business plan either. That could be the reason why both happen together.
Or people with an innovative idea do not feel the need to make a formal business plan because capitalists offer them capital quickly (because the idea is innovative) could be why "no formal business plan" and "less time needed to secure capital" happen together.
A formal business plan could still be helpful in obtaining capital in other cases.

Hence, (C) weakens the argument.
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