Did you know having your business plan fail can be the best thing that can happen to you? Sounds crazy right? But it’s true, and here is why.

Why Plans Fail

Business plans, marketing plans, heck any kind of plan is going to fail. Some just a little and others spectacularly. It’s not for lack of work or analysis. It’s because we can’t predict the unpredictable, and when we try we aren’t very accurate. Customers and markets are fickle. Something unexpected occurs. Or we just screw up and it all wrong.

I’m sure New Coke looked great on paper. Anybody remember the Apple Lisa or the Cube?

Plan to Fail?

So if plans are going to fail, why bother with them at all? But a better approach is to don’t sweat getting your plan right the first time out since chances are it is going to fail anyway. Its more important to understand this and think about your plan B. And remember, this isn’t just for business plan, it is for any kind of plan.

Plans are worthless, but planning is everything for success

Since we know change is going to happen and things are going go wrong, why are we got off guard all the time when they do?

The most successful people recognize this happens and are prepared to adjust. And not adjust by blindly taking another, different stab and things. They have planned ahead. They look to the market and find what is working with their plan. They run with the things they got right, They see what isn’t working and adjust.

Getting to Plan B

I started to think about this after I read an interview with John Mullins who wrote a book called Getting to Plan B. In it Mullins lays out some approaches you can use to see if and how your plan is failing and how to fix it.

Make no mistake. Unfortunately this isn’t a license to be lazy and count on working it all out later. Quite the opposite. You have to do more work, but it is smarter work that gets you through failures and has its rewards in the end.

They look at what others who have succeeded did or didn’t do. Same for those who failed. They find the lessons from failures. When they do that they are able to make better decisions. Then they just do it all over again until they get it right.

The lesson is that they are always planning. It’s like the idea of the one page business plan. You still have to put in all the prep time on it. No shortcuts. But the what makes this work is that you regularly review and update your plan. You don’t just toss it aside when you are done or scrap it if you hit some problem. Fix what isn’t working. Adjust to changes and any new or missed opportunities.

This really works

This is how software gets developed only they call it the iterative approach. You don’t write a program all at once. You work through it in cycles, getting more done each time. You fix the broken parts and add new features until you are all done. Then you sell it. Unless of course you’re Microsoft. MS sells and lets us find the broken parts, but that’s a different story.

I worked with a microbusiness that wanted to do consulting on importing/exporting industrial equipment. We found there wasn’t a market for their consulting services, but we did find out there was a big need for technical translation services. Okay, we rethought the business model and changed. I worked with another small company that did custom software development. They only wanted to do work on big projects, but they found out that they were making much more money doing body shop work–putting individuals into specific contracts as consultants instead of taking on big projects as a team. Time to change directions.

Pick up almost any document on starting a business and you’ll be advised that you should promptly undertake the creation of a business plan. I am a big fan of business planning but here I’ll disagree. A better idea is to complete a feasibility study. A feasibility study and a business plan share a lot in common but the feasibility study is much shorter and can be completed in less time than a full business plan.

The whole point of the feasibility study is to determine if the business concept is feasible. There is no need to go to all of the detail required by a business plan if a general testing of market numbers indicates the idea will not work.

It is alright to use educated guesses for the numbers. You can increase accuracy and detail in the business plan to follow if your initial study indicates it is warranted. A good feasibility study should answer at least the following questions:

• What is the size of the market (units sold)?
• What market share can we expect to gain (% of market)?
• How many will we sell?
• At what price?
• What expenses will we incur?

Try to make a list of the resources you’ll need to operate the business (land, buildings, equipment, training, employees, licenses, permits & fees, inventory, interest, marketing etc.). Do your expenses resemble within reason your consumption of these resources?

Next, Test your plan on a variety of inputs. Generate a worst case, probable and best case number for each input. This will provide you with a minimum threshold below which your idea is not feasible. This will prove immensely valuable if you move on to the business plan stage. When (if) you begin additional research, you’ll focus on the most critical number in the plan. For instance, if you determine you need a market size of at least 30,000 customers meeting a specific demographic to make the plan work and you find out that there are only 20,000 then either find a plan to make it work with 20,000 or stop working the plan.

Now have a knowledgeable third party evaluate your study. Incorporate their suggestions to make your plan more realistic.

After revision, ask yourself if the anticipated profits are worth the risks you will take? Does it make sense to invest your time and money in this manner? If so, move on to the full business plan with a clear insight into where to focus your research.

If there’s one key determinate of the success of your company it’s your business plan. You need to make sure your business plan contains all of the details that you can conceive of, and that you make sure all of the pieces thoughtfully fit together properly. At the very least your business plan needs to include:

1. Summarize Your Goals for Your Business

You can’t reach a goal if you aren’t building towards it from the beginning. You want to be as specific as possible when you write down your business’ goals. All businesses need a minimum of one single clear goal, but most businesses will have a range of large goals they’re working towards. Before you do anything else you need to figure out what measurable and unambiguous goals you’ll be working towards. This is square one, the first step that all your other plans will rely on.

2. Individual Steps Leading to Your Goal

Once you have your large goal you’re going to need to break it down into as many smaller goals and steps as you can conceive of. Generally speaking the more small goals and the more steps you can include in your business plan the better, as these will provide you with a clear and unambiguous path to follow to reach those larger goals, as well as a series of small accomplishments to provide moral boosts throughout the overarching process. If there is one key to reaching an intimidating large goal, it’s reaching all of the smaller steps that lead up to it, one at a time.

3. Estimate and Project Your Finances

It’s always important to create financial projections for every single stage of the process – how much you’ll be earning, how much you’ll be spending, how much you’ll have in the bank, what your debts equal, etc. While it’s rare that your financial projections will be 100% accurate, it’s still necessary that you have some idea what condition your money will be in at all points to properly plan and time each subsequent step.

4. Remember Your Competitors

There has never been, and there never will be, a company that has no competition, that truly stands alone in its field and in all fields related to it. You may be the market leader, you may be the first to launch your product, you may have even created your field, but at some point you will begin to face a certain level of competition that will never let up, even if it lessens. Compile all the information you can about present competitors, possible future competitors, and how you plan on dealing with the threat they pose to your market share.

5. Plan for the Unexpected

Your business plan will not be foolproof in its purest form. The course of your company’s growth will regularly hit snags in the road. Maybe funding came later than you expected, maybe surprise advances crop up in your industry- there are endless contingencies that can derail your business plan. It’s important to implement plans and alternate routes to take within your business plan to deal with matters when they don’t go as you expect.

There has never been a successful business that didn’t begin with a successful business plan. While it’s certainly possible to construct a business plan on your own, you will always do better by hiring a professional business plan writing or consulting service to ensure you get started on the right foot and have the right blueprint to follow to reach the success you require.