Most business owners and entrepreneurs I know don’t plan to fail in their businesses – let’s face it who wants to fail – and yet with 1 in 3 business failing in their first year this is the position many people find themselves in.
And if you have survived the first year, congratulations, but beware because only 50% of those of you who survive the first year will make it through the next four years.
Scary isn’t it.
So what is the the number one cause of this failure? According to Dun & Bradstreet, the primary cause is lack of business planning.
Yes, entrepreneurs and business owners don’t plan to fail. Rather, they fail to plan (which causes them to fail).
To my mind, there are two types of business plans. The first is the business plan you must create when you start your company. The purpose of this plan is to ensure you have fully thought through your venture.
Among other things, this plan includes significant market research. It assesses your market size to ensure the opportunity is big enough. It analyzes customer segments to confirm that customer needs match your company’s proposed product and/or service offerings. And it analyzes the competition to determine how your company will position itself and how you will most effectively compete.
From a strategic standpoint, the business plan must document your marketing plan (how you will secure customers), your human resources plan (who you will hire) and your operations plan (what key milestones you will accomplish and when).
When you’re done, your business plan will confirm your market opportunity and give you a roadmap to follow. It will also be required should you wish to gain funding from investors and lenders.
Now, once your business is up-and-running, you still need a business plan in order to succeed. I refer to this type of business plan as a “strategic plan.” I term it as such because this type of plan requires much less research (since you already know who your customers are, the market fundamentals, and lots of information about your competitors). Rather, the focus of this plan is strategy.
Specifically, this plan needs to identify precisely:
- Where you want your company to be in five years
- What you need to accomplish within the next year to progress you to that point, and
- What your strategy is to complete your key milestones in the next 12 months
It is also useful to undertake a SWOT analysis so that you are clear on your company’s strengths, and opportunities and how best leverage them.And so you are not blind sided you also need to be consciously aware of your company’s weaknesses and where the potential threats might lurk.
I like to keep this strategic plan short (often just one page) and the Growth Accelerator Orbit Plan is a great tool to use. It helps detail on one page your 3-5 year plan in all the key areas of your business. Seeing everything on one page enables you to easily understand how all the different parts integrate in order to create a Joined Up Business. Many of my clients find that armed with this information their original plan does not compute. For example they have not planned for sufficient resource to deliver the revenue targets. Clearly seeing this means that corrective action can be made now before it is too late.
If you don’t take time to do this, you become too tactical. That is, you continue to use the same tactics that have gotten you to the point you are at. And oftentimes, the strategy and tactics that got you where you are today are NOT the strategy and tactics that will get you to the next level.
Creating a business plan when you start your company, and annually creating strategic plans to grow your company is absolutely essential to your success. Research proves it. So, if you want to avoid failure, and achieve maximum success, make sure you are continuously creating, updating and following your business and strategic plans.
Currently there is funding available through Growth Accelerator to help businesses develop both their business and strategic plans, so if you are interested in finding out how I can help you access this funding and create these plans for you then please get in touch – julia@businesshorsepower.com.
Ensure your business success in 2015 by planning for it.
Julia Felton (aka The Business Wrangler) is the founder of Business HorsePower. Business leaders, entrepreneurs and executives hire her to accelerate their business performance by harnessing the energy of their people to work more collaboratively together. By aligning purpose with actions the team achieves exponential results as everyone starts pulling in the same direction.
Julia believes that business is a force for good and through designing purpose-driven businesses that leverage the laws of nature, and the herd, you can create businesses founded on the principles of connection, collaboration and community that make a significant impact in the world.
