It’s been long said that “the best-made plans of mice and men often go awry.” When they’re dinner plans, it’s no big deal, but when they are for your business, failed plans can be catastrophic.
But don’t worry, another adage says that there’s nothing new under the sun and we’ve seen all the ways business plans fail. In this guide, we give you the insider information you need to recognize the top business plan pitfalls and give you the strategies to avoid them.
Here is what you need to know to make your plan a keystone for growth and success instead of a dust-bunny magnet.
At some point in our lives, most of us have invested time, money, or effort in something we ended up shelving. When that “something” is a luxury item or a novelty, it probably doesn’t matter too much. However, when it’s a hard-won business plan you sweated to develop, fleshed out the strategy, and devised performance measurement criteria for, it’s a different story.
If your business plan has been gathering dust and not looked at within a month after its completion, there is a reason.
Here are the top eight reasons your business plan might not be working for you and how you can avoid these pitfalls and ensure a return on your investment.
1. Lack of Clarity and Focus
It’s very difficult to get somewhere if you don’t really know where you’re going. If you don’t have a clear understanding of what you want to achieve, it’s likely your business plan is impractical and impossible to implement. Similarly, without a specific strategic focus, companies may try to achieve too many initiatives at the same time. This causes teams to become overwhelmed, dates slip, results are less than excellent, and the emphasis wanes.
How to avoid this: Begin with a clear vision for your company and what it represents. Be sure it is a vision that is inspiring. Create a values statement that customers respect and employees aspire to live up to. Develop definitive goals and objectives to accomplish the vision, set measurable outcomes, and plan the actions for achieving them to avoid being brought down by lack of clarity. Ensure your leadership and resources are up to the challenge and you have the time it will take to implement the plan.
2. Misalignment with Reality
Many ideas look great on paper, but when the time comes to implement them, owners often discover their plans are unrealistic. This leads to disappointment and partial success, at best. In a recent study on the personality traits of entrepreneurs [quotesright]Harvard Business School found that entrepreneurs make riskier decisions and overestimate their likelihood of positive returns. [/quotesright]
How to avoid this: Begin by making an in-depth and unbiased assessment of where you are now.
Planning on sand does nothing – take your business apart so you understand what you are doing well and what you are not and what the most critical areas are that need attention.
Do your market research before you start developing a business plan. Take an objective view of market trends, realities, and facts about the current situation to ensure you don’t put effort into something that’s not viable or will not be well-received.
3. Trying to Do Too Much
Focus on the top three or four important goals for the year that will make the biggest impact on the success of your business. You do not have the money, time, people, or clarity to do everything at once. Try, and you’ll descend into a quagmire where everything has equal priority, little gets accomplished, and you simply drift to the end of the year when you realize you have a dusty strategic plan and not much has changed.
Not everything is of equal importance, and you can’t do it all at once.]
How to avoid this: Break down your objectives by quarter. Again, limit them to just three or four that are realistic and then create strategies to accomplish those objectives. The deconstruction of “what to do, how we’ll do it” is essential. Doing so will steadily move you closer to accomplishing your big goals. Also, the world is dynamic – don’t pretend it’s set in stone. Be flexible in your planning in case there is a sea change and the need to re-plan – Covid anyone?
4. Insufficient Customer-Centricity
These days, the customer experience is everything, but many entrepreneurs are more product- or service-centric than focused on the customer. It’s easy to make the mistake of finding customers for your product, rather than products for your customers.
Owners become defined by the products or services they provide, which might or might not continue to meet customers’ needs.
How to avoid this: Even if product-centricity worked well for you in the past, 2022 is the time to make the shift to a customer-centered mindset. Implementing a new business plan is the ideal opportunity to refocus and make the change.
Start With a Process That Leads to Success
Kickoff your planning process with a comprehensive evaluation of your organization that probes each aspect of a successful business, identifying where things are doing well and where they aren’t. Ideally, you will use a proven assessment that efficiently gathers the information from your leadership and managers, which can be very revealing!
The best assessments give you benchmark measures from other organizations who have used the tool because it highlights problems and advantages you might not otherwise spot.
Building on an unbiased, qualitative, and quantitative foundational planning assessment is building from a solid foundation, not one of sand. Of course, this is just the jumping-off point, turning what you learn into a plan that doesn’t gather dust isn’t easy. But that’s why we’re here, you don’t need to do it alone and probably shouldn’t for best results. An outsider with difference experience and no preconceived ideas can prove invaluable.
5. Inadequate Leadership and Accountability
Without clearly defined leadership and accountability, employees won’t be encouraged to buy into a business plan. The result is uncertainty, confusion, and inaction at all levels of the organization. These gaps cause wasted time and energy and result in finger-pointing, a lack of employee support, and rejection of the new plan.
How to avoid this: Establish responsibility for each aspect of the business plan. Ultimately, every member of the company has some involvement in this, but typically the CEO and other senior executives take ownership of plan implementation and disseminating the information to lower-level employees. That said, it is important to have a process that lets the leadership give teams goals and have them define their objectives and strategies that they will use to reach them. Management can review and help the teams refine their approach but weigh-in creates buy-in.
6. Disconnected Company Culture
The importance of culture is often underestimated, especially in small- to medium-sized businesses.
Without a strong culture that promotes common values and beliefs, collaboration, and commitment among the workers, you’re unlikely to get the cooperation you need to implement a new business plan.
How to avoid this: Live up to your mission, vision, and values. Survey your employees to find out if they believe they are treated with dignity and respect. Provide opportunities for innovation and creativity. Focus on diversity and inclusion in the team and identify any issues causing general unhappiness. A strong culture will help you implement a new strategy in an effective manner.
7. Insufficient Financial Resources
If I had a dollar for every business plan whose ambition outstrips the financial resources available, I’d no longer need to work. Big ideas are exciting, but unless the funds exist to deploy them, they’re unlikely to occur.
How to avoid this: When you’re developing a business plan, be sure to consider your balance sheet, cash flow statement, and profit and loss. Look at previous trends you’ve experienced. Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of your financial circumstances and avoid making plans that are impossible to implement.
Most highly successful leaders know what to say NO to and don’t chase the latest shiny object.
Create a well-grounded plan and work the plan.
8. Competitors Aren’t Considered
Just as it’s important to consider your customers, their wants, and their needs, so it’s critical to take account of your competitors, too. When you’re developing a business plan aimed at achieving company growth, you need to know what your competitors are planning. This information might not yet be common knowledge but the last thing you want is to plan a new product or service only to find you’ve been beaten to the finish line.
How to avoid this: Conduct industry research (or pay a research consultant to do it, if necessary) and try to uncover the future direction your main competitors are planning. Look at developments in related industries or similar companies in other countries. Consider how technology is likely to be adopted in your industry and survey your top customers to find out what changes and improvements they would like to see.
We like to say, “The questions are in here, the answers are all out there.”
Use your sales team and the management team to do market research at every opportunity and look for innovation and trends so you have them on your radar early on.
A completed business plan is no better than the thinking and information that goes into developing it. It only works if the team implementing it buys into the reasoning behind the plan. Keeping your business plan on track requires putting a lot of effort into defining it and establishing criteria to measure and make course corrections.
Developing a business plan isn’t simply an exercise, and the process only holds value if you make implementing it central to your company’s future operations.
If you would like to find out how you can create a reality-based, focused, and motivating strategic plan you can follow, let’s talk. We’ll show you how we go about it from quantitatively measuring where you are to setting and monitoring goals and measuring progress all along the way so you can make changes as needed early on and stay on track.
Want to explore further? Have questions? Get in touch and let's set up a time to talk.