Business Planning: Succeed by Planning to Fail

Strategic planning is often used to plan for the growth and success of a business.  This is a worthy endeavor.  The main goal of being in business is to make a profit.

When someone starts a business they don’t do so in order to fail. However, the numbers show that approximately half of all new small businesses fail in the first five years.

This statistic seems discouraging, but there is much that can be learned from failure.  According to an article from Forbes, the top five reasons for a business to fail in the first five years are the following:

1. No Market Need
2. Not enough Capital
3. Not the Right Team
4. Pricing 
5. Competition

Failure can be a good thing if it teaches a lesson.  As the old saying goes, what doesn’t kill us makes us stronger.  We learn much more from our trials than our successes.  Award-winning author Daniel Handler purposefully writes books that end unhappily.  Why?  Daniel Handler books illustrate that even if you are good and work hard, you aren’t necessarily rewarded.  There isn’t always a happy ending. Life, like a business, doesn’t always turn out for the best even if you work hard.  That is why planning for the worst is so valuable.

Knowing where a business may fail can also increase its chances for success.  By anticipating possible problems and accounting for them, it is easier to find the right path for a business.  Good managers plan for their succession from day one, a good succession plan is also important for a business as a whole.  Knowing where you want to end up is the first step in reaching your destination.

Another thing that can really bump up the possibility of a business’s success is to bring on an experienced and already successful advisor.  Bringing on the right advisors can help business owners and managers by presenting different perspectives.  A third party can often be more objective and see the big picture.

If this article has inspired you to revisit your own business strategic planning, The U.S. Small Business Administration (SBA) website contains some excellent free resources.