Why Business Plans Fail

September 27, 2013

failEvery business advising firm or individual is going to tell you that in order to be successful, you have to have a business plan. However, simply having a plan will not guarantee that you will prosper. Thousands of businesses have plans and still fail. Why? This article is intended to outline some of the primary reasons that a business plan may not work.

A plan has to do two basic things. It has to indicate what the company is going to do and also show what the company is not going to do.  The plan has to take into account the wants and needs of the customers, and how you intend to meet them.

A plan should make the best use of resources. Most small businesses do not have a lot of working capital. Therefore, it is essential that the funds, which the business has, be allocated to the best effect. This means that money has to be spent not only on the present needs, but also on the future plans. Many companies set out the plan, but fail to make the necessary adjustments to spending.

You have to have the right people in place. Individuals are usually all fired up after a meeting, but if this only lasts a short time, you have to make changes. The people in your organization have to truly believe in the plan and be willing to do whatever it takes to follow it through. If any of your management people do not believe in the strategy 100% then you should think about getting new people.

Plans have to have a long-range target, but they also have to have smaller ones. And, these smaller goals have to be ones that can be defined and measured. You need to know exactly where you stand at all times. Having small goals will enable you to reassess and evaluate your strategy.

You have to make certain that you hold people accountable. However, before you can do this, you must ensure that you have given each person a clearly defined set of tasks. Clearly defining the roles of each person on your team allows you the chance to asses who is doing well and meeting expectations and who may be falling behind.

Many companies run into a situation where there are conflicting objectives. For example, one area may be focusing on selling a particular product whereas the manufacturing people are developing another. To be effective, whenever possible, the entire team must focus on the same goal.

You have to ensure that everyone in your employ has a clear understanding of the company’s goals. Ensuring that staff understands the company’s objectives creates a more cohesive team. Additionally, it allows people to know where and how they need to focus their energy.

As an owner you have to design a plan that is achievable. Many companies set goals, which they cannot possibly reach, in the outlined time frame. A great plan will be one that pushes your business, but is not unrealistic.

Simply having a business plan is not enough. To be successful a plan must be functional, achievable and measurable.

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