Why Business Plans Fail

How to maintain focus when everything is changing

A key element of many successful companies is they have a business plan in place.

A thorough plan has all the details someone would need to understand the business, its objectives, potential challenges and the risks to stakeholders. There are many templates available suggesting the details that need to be in the plan. And there are firms who are willing to help gather the data and assimilate it, ensuring all aspects of tax, legal, market, economic, and industry specific aspects are covered.

From a broader view, such a plan would be all any owner would need to operate their business. Especially if flexibility and periodic revisions were part of the plan. Ask any business consultant, banker, or attorney and they would advise you to have a business plan in place and to follow it.

But most business plans prove to be ineffective.

Elements of a good business plan

Before discussing why most business plans are ineffective, let’s look at the essentials of a good business plan.

Business plans vary depending on the industry, size of company, where they are in their life cycle, and many other variables. The objective of the plan is to describe where the company is now, where it is to go, how it will get there, and challenges it will have along the way. The plan needs to provide the information an investor, bank or other stakeholder would want to know before doing business with the company.

• Executive Summary – An overview of the vision and mission of the company, goals, and what makes the company unique
• Description of the business – The company’s structure, ownership, industry, and the problems it intends to solve
• Market Analysis – Statistics on the target market, what compels customers to buy, market size, competition, and potential market threats
• Organization and Management – Organization chart of all key functions and hierarchies of management, roles and responsibilities, and specific skills or trades to deliver the products or services
• Products or Services – A clear description of what the company sells, the benefits to the customer, price points, how customer needs are met distinct from competitors
• Marketing and Sales Strategy – Plan for attracting, converting, and retaining customers with branding objectives, distribution channels, and promotion tactics
• Operations Plan -Product/service delivery, logistics, technology, supply chain, and staffing requirements to fulfill customer demands
• Financial Plan – Projected revenue and expenses under best and worst scenarios, cash flow, projected profit, and the funding sources needed
• Appendices of Sources – Supporting documentation of the market, competition, leadership credentials, legal agreements, and support for claims made in the plan

This information would be vital to a business owner to run and manage their business. And it’s a lot of information to pull together, taking a lot of time and research. It is not uncommon for a fully developed business plan for a small company to be 30 or more pages in length. There is so much information for a business owner to grasp that it can be overwhelming. Therein lies our problem. Being able to follow the business plan once it has been established.

Here’s the problem

Day-to-day challenges distract many business owners from organizing the tasks, people and resources needed to implement the plan details. The plan ends up getting tucked away and never viewed again. It’s a shame that all the work, the research and discovery put into its development often gets filed away and forgotten. Forgotten that is, until an urgent need comes up.

And even then, following a plan does not guarantee success. It is unrealistic to believe that a plan can prepare a company for the many challenges it may face.

I am not suggesting that you forgo putting a detailed business plan together. I too agree with other advisors that a plan is essential for a business to stay on track and achieve desired results. A well thought out plan provides decision makers with a strategic road map of where the company has been, where it is today, and where it is going.

The Solution – The Working Plan

The strategy of the Working Plan is to break up the business plan into smaller, manageable pieces. The Working Plan defines realistic objectives and the strategies to implement them in a short period of time.

And here is the beauty of using a Working Plan. You don’t need a formal business plan from which to start. You can implement this tool immediately and use it to solve problems, implement new systems, and get those things done that have been on the To-Do list for far too long.

The first step is to identify a part of your business that needs immediate attention. Perhaps it is lead generation. Or production issues, delivering orders on time within the customers’ expectations, or quality control. It is for you, the business owner, to decide what needs improvement, and identify the tasks that will solve the problem.

The duration of the plan is short-term. It is suggested to work a plan monthly or quarterly. The duration depends on how long you can expect to see results from your efforts. At the end of the period, you will assess the effectiveness of the plan and then adjust the plan for the next iteration.

Design this plan to suit your needs. There is no right way or wrong way to do this. The intention is to have a simple guide to help maintain your focus on the changes that are necessary to move forward. And keep it brief. This should be a one or two page document, something you can keep handy and refer to often.

Here are some suggestions of what to put into your Working Plan.

The Company Mission

The purpose of including the company mission in the Working Plan is to be clear on what the company is doing, who it serves, the values it abides by, and the results delivered to the customers.

A very simple template to create a mission is to answer the following prompts

• We help (the ideal client)
• To (a solution to a problem they have and don’t want)
• Such that (the results are in alignment with our values and standards)

Goals and Objectives

The goals and objectives in the Working plan are short-term, at least 30 days and no more than 3 months. They need to be specific and measurable. To simply say that you want to increase sales is not enough. By how much do you want to increase sales, expressed either as a dollar amount or percentage? What type of product or service do you want to increase? What type of customers do you want to attract?

The goals and objectives can be more than increasing sales or reducing expenses. They can be improvements in operations, milestones to achieve, training, or tools to implement. The key is to have a metric by which to measure progress, such that you can determine whether it has been achieved at the end of the period.

Strategy

For each of the goals and objectives listed in the Working Plan, identify a strategy you are going to use to accomplish it. Answer the question, “How is going to be done?” Keep it clear and simple, “set aside one hour per week to work on social media posts,” or “complete certification training and test by the end of the month.”

The purpose of the strategy is to remind you it needs to get done with the time and resources you have available today.

Obstacles

What are some of the obstacles that could distract you from the plan? For each of your goals and objectives, list some of the things you know could get in the way. Examples are economic fluctuations, competitors, staffing issues, to name a few. One that is often overlooked is your own self-habits or mind-set.

Once you have identified the possible obstacles, think of a strategy you could use to overcome them, should they occur. What is helpful in the Working Plan is to periodically review it and see what is working and what is not. For those things that are not working, list the obstacles in this section, and the possible solutions to those problems.

Accountability

A key component to the Working Plan is to have accountability in place, which is critical in keeping the Working Plan moving forward.

• Who are you reporting to? If you’re working with a team, implement the Working Plan within the group. If you are alone in decision making and integration, look for a colleague or a business coach who you can meet with periodically.
• What are you reporting? Identify the metrics you are using to measure progress. Share them with the accountability partner(s) so they can help you stay on track.
• When, how often do you report? It’s good to review progress on the Working Plan weekly. A standard agenda for a status meeting is to answer three questions. What did you accomplish last week? What are you working on now? What are obstacles that are in your way?
• How do you report? It is best to have the meetings in person. The second best option is to meet with video conferencing or a phone call. If time and calendar coordination is an issue with the accountability partner(s), set a deadline to report via email.

To sum it up

A business plan can be vital to your organization. It sets the overall map your company is going to take, knowing where it is today and where it is going tomorrow. It is usually developed out of the need to attract an investor or to secure financing from a lender. It can be a good navigation tool for the decision-makers in the organization. However, the level of detail can be overwhelming.

The strategy here, is to break the business plan into smaller chunks. Identify the chunks that need immediate attention. Come up with a Working Plan to get them completed and then go on to the next chunk.

The Working Plan offers a practical, flexible approach to business improvement by focusing on short-term goals tailored to immediate needs. Its strength lies in simplicity. A one or two page quick reference to break down complex objectives into manageable tasks. This can be related to a formal business plan or used whenever the need arises.

With clear strategies, awareness of potential obstacles, and accountability structures in place, the Working Plan serves as a focused tool to drive results and keep business owners aligned with their mission and priorities.

For more information on developing a Working Plan, and to get a complimentary template that will guide you, feel free to contact us.