The Most Significant Reason Business Plans Fail

The failure rate in bringing business plans to fruition is very high. Many observers, including me, have found a number of common failure modes. First among all are the shortcomings in the planning and execution processes themselves. The failure to actually put the plan into action

A good planning process engages all of the significant stakeholders in the creation of the plan. This practice is productive because 90% or more of the facts required to create the plan are sitting in the room when all of the stakeholders are there. Creating the plan through a team effort leverages this knowledge, provides opportunities for problems and opportunities to surface and be resolved, and the resulting plan is inherently owned by everyone because they were present and involved in its creation.

A good planning process insists on ruthlessly testing every assumption. It is a common practice to conduct sessions with no holds bared brainstorming and critiques. This is most essential when planning for a transformation strategy for a mature business. Business leaders find it extremely difficult to prune away the past even when it has no future. Past successes seductively appear to forecast future success.

By far the most significant cause of failure for business plans is the inability of the management to translate the plan effectively into day to day work. Most business plans fall far short of the detailed work required to decompose strategies into tactics. No where do the list of tasks, properly sequenced, appear with clear delineation of responsibility, authority, deliverables, budgets and resources and deadlines. And, finally, there is no clear communications and feedback plan so that those in frontline positions know what to do, why, when, and what are the expected results.

More about why business plans fail over the next four postings

Leadership – “bringing people around softly” and speaking last

The other day I was talking with a business owner about her people management practices. In comparing some thoughts about how to effectively supervise people she noted that waving your finger and giving instructions was almost always a non-starter. She said that she thought that “people need to be brought around softly”. Continue reading

Why Should You Develop a Business Plan for Going Concern, How to Do It, and How Do You Convert the Plan Into Action?

Why Should You Develop a Business Plan?

For every startup the development of a business plan is a  required first step. It is so obvious – business schools have course on writing the business plan and it is impossible to get funding without one. Teams coalesce around the labor. So, every startup has a business plan.

For the going concern, the ones that are now three or so more years old, the business plan (also called strategic plan -really the same thing) is forgotten, only stumbled on when a move forces someone to pick it up and wonder, “Should I just relegate this to the dumpster?”

This is not a good situation. A business without a plan is like a boat sitting in a pond just waiting to sink to the bottom for nature to compost it. Or, if it has the fate to be afloat in a stream, it will be carried along willy-nilly until it bumps into a stone or dead branch or reaches the ocean where nature will also send it to the big composter.

Every business exists in a world that is changing and filled with opportunities and threats. Your business plan is your set of oars to provide the means to pull in the direction you want to go in, to avoid the rocks. You might even row to shore and portage around the falls, to move to an entirely new river.

But, many people, even accepting the wisdom of having a plan, find it a painful exercise, all too easily avoided. This may be driven by the idea that a business plan involves dozens of pages of writing, lots of spreadsheets with numbers they really don’t believe (sometimes don’t understand). Business plans, strategic plans, these are just the exercises one does in business schools. Or it may be the folk wisdom that business plans are not a useful part of managing and they always end up on the shelf or hidden in a file cabinet only dusted off for display when in search of a bank loan.

However, shift your thinking to view the process of building a plan as a value in and of itself, and adopt a simpler more flexible business plan model you will find that building that set of oars for your little boat is fun and productive. Continue reading

Podcast – Why and How to Develop a Business Plan for an Ongoing Firm

Why you need a business plan and how to develop one that leads to action not the dust bin.

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This podcast is 13 minutes 10 seconds long.

A transcript of the podcast is available in PDF download format here.