Unfortunately, business failure is common: About 20% of small businesses fail in their first year, only half make it through their fifth year and a staggering 70% of businesses don’t make it past 10-years. As for the remaining, it does not necessarily mean they succeed – it means that they’ve survived.
So why do businesses fail?
According to Dun & Bradstreet, “the primary cause is lack of business planning. Entrepreneurs and business owners don’t plan to fail. Rather, they fail to plan (which causes them to fail)”. Tony Robbins, 14 reasons why businesses fail: #1: Not having an effective business plan.
Your plan has to go deeper than what you sell and who you sell to. As you work through this, use your team to gain a different perspective, to ensure alignment and to vet assumptions from all angles of your business. Keep revisiting what is unique about your offerings. How you can measure your performance, for continual improvement, what innovations, new offerings, or different ways of delivering can enhance your business. To stay profitable, there is continual learning, evaluating, and discovering. What has changed; what do you need to change; where can you make improvement to that bottom line?
Your plan is far more than financial forecasts. Consider simple metrics that will give you timely insights. Make these as clear as the gauges in your car. I always wanted to know: the value of sales leads and probability of close, along with estimated installation timelines, value of business in the pipeline mapped out with probable install dates by discipline. In my earlier years, knowing my stats also led to more creative practices that would address potential downtimes for my team while waiting for job sites. It fed innovation. We started to pre-rack, pre-programme and test, so that we had the capacity to control more of the process. Today, likely a given, but 20-30 yrs ago, it was innovative.
We wanted to ensure we were on target, to know when we might get bogged down with too much or too little for the team. We wanted to identify shifts in the market and, though we didn’t do this enough, to monitor the customer’s use of and appreciation for our services. We would train when we had unanticipated downtimes, which we typically identified ahead. All of this was based on business knowledge, tracking dynamically and knowing our metrics. It was the discipline to both plan and monitor that kept the business connected to our processes and to learn where we could improve.
In one of Tony Robbins videos he notes: “The process of creating a business map goes deeper than a business action plan. Not only does it address growth possibilities, sales and other surface issues, but it delves into what your business does, who’s responsible for what and what standards need to be met to determine success”. Find a way to make your plan a living document, so you can easily adjust it for the many inevitable changes that occur in both the short and long term. Business operating software is key as well. The right software will capture the right details to inform. Take the time to explore business software.
Your plan is a living document, you’ll want to easily adjust it for the many inevitable changes that occur in both the short and long term. Explore forecasting models. Have fun, take a spin on the net and play with the many different ways to capture and play with options for your business plan. Over the years I’ve migrated from a traditional, multi page plan, that frankly burned me out, to a one page strat plan, to mindmaps and a business canvas. You can use them interchangeably. I found mindmaps a really fast way of exploring options. It helped me isolate various possible outcomes, quickly and visually. Click on each term above to get examples.