Karla Dunn, Alumni Manager
July 17, 2019
Most of us have heard about the importance of planning. Plans keep you on task, they are a vehicle to get what’s in your head onto paper. They are a way to track your progress to ensure that you are moving in the right direction. Years ago, before technology took over, everybody walked around with a personal planner. And you were really super organized if you had a Franklin Planner!
The use of plans is very prevalent in our culture. So, it’s no surprise that planning is essential for an organization. Organizations use strategic plans to provide a sense of direction and outline specific and measurable goals. Schools and teachers use lesson plans as a guide to map out what students need to learn and how to deliver it effectively during class time. Accountants use tax planning strategies to help people and businesses achieve their financial and business goals. And, I would be remiss if I didn’t give a nod to the Grand Poobah of all plans: the business plan; which are so important that you can’t get a bank loan without one.
It’s pretty obvious that planning is important. And whenever we plan, we generally plan to succeed. Unfortunately, when starting a business, the opposite happens with more frequency. It’s difficult to plan for everything that could befall a business startup. According to Investopedia, the four most common reasons why small businesses fail are lack of sufficient capital; poor management; inadequate business planning; overblowing marketing budgets and cash flow problems. But there are many more than four reasons why early-stage businesses don’t survive.
If we drill down a little bit more to get more insight, a CBInsights analysis of 101 startups polls the reasons why the businesses failed, and according to their founders;
- 42% of small businesses fail because there’s no market need for their services or products.
- 29% failed because they ran out of cash.
- 23% failed because they didn’t have the right team running the business.
- 19% were outcompeted.
- 18% failed because of pricing and cost issues.
- 17% failed because of a poor product offering.
- 17% failed because they lacked a business model.
- 14% failed because of poor marketing.
- 14% failed because they ignored their customers.
What’s most remarkable about this list, is there is only one mention of a lack of capital or cash flow problems! The rest of this list points mostly to planning or better said, the lack thereof. The survey answers list; poor marketing, poor product offerings, being outcompeted, no business model. But 42% failed because there was no market need for their products or services.
I think the message here is loud and clear. While we may be in love with what we want to offer the world, we must stop long enough to find out if the world wants it! Being strategic and purposeful about what type of business to open can mean the difference between being a statistic and beating the odds. Exercising due diligence and research upfront can potentially change the outcome for the business. So what’s the lesson, class?
Failing to plan is essentially planning to fail.
