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Why Business Plans Fail

The lack of a business plan is frequently cited as the leading cause of small business failure. I would suggest that a business plan could also be a contributing factor to failure. Most business plans are detailed and present clear goals and a defined path to reach those goals. Unfortunately, many business plans are written in a vacuum and are based upon assumptions and unquestioned research. For a business plan to be a driver of success, those assumptions need to be tested and validated. This is where a business model can make the difference between success and failure.

In process improvement and automation the common refrain is “fix before automating.” The warning inherent in the phrase is that if you simply improve or automate the wrong process, you can get to the wrong destination faster businessmantalk.com . Business plans are commonly written without considering the ramifications of the “fix before automating” rule.

Great amounts of time are poured into creating beautiful plans, but much less time is applied to ensuring that plans are “true.” Most plans are full of hypotheses, but the hypotheses aren’t validated or tested until the business launches. In this case, a considerable amount of capital can be expended trying to execute a flawed plan and this can spell doom for some businesses.

How do you avoid falling into this trap? The most effective way to write a business plan is to begin by building a business model. The exercise of building a business model and testing the assumptions in the model are powerful tools that will help build a business plan that will drive success.

After careful investigation and research here are some of the top traits or characteristics noted in most of the business leaders today. Good leaders must be able to keep a clear head and tolerate frustration and stress well. A business leader today must be able to stay calm under adversity and be able to process a clear vision of the actions that need to be taken to accomplish their ultimate goal. One trait of a successful business leader is emotional stability also known as locus of control.

The next trait would have to be self-esteem. When you are a business leader you are constantly being analyzed and many decisions are made quickly. A leader has to know that they will guide the business in the right direction and be confident in their choices. This in turn, can often inspire others in the organization to believe in the same goal or vision.

Drive or need to achieve is often looked at as common trait in business leaders today. If the leader is just satisfied with average results he or she will not continue to push the envelope and often productivity or profits can lack. The drive or need to achieve is rarely filled in a true business leader. They are always looking for the next challenge and create ways to get around obstacles.

Filtering information quickly is also a trait that is held by most business leaders today. Another term used to define this is business acumen. Ted Prince notes “Before the Great Recession, leadership development was essentially a boom-time phenomenon. It could afford to focus on traditional leadership competencies such as interpersonal skills, emotional intelligence and decision making. To some extent, leadership development had atrophied into the study of leadership when things are going well.

Today, we are in a very different place. Business acumen is all about showing how our behaviors directly impact and improve business outcomes, measured in financial and market value terms. Business acumen development aims to fill the chasm in traditional leadership development programs, which involves the behavioral skills that lead to increases in profitability and market value. Business acumen is defined as the capability to bring about positive business outcomes” (Prince).

Optimism is a trait that will be found in every successful business leader. The leader often views problems as a challenge and looks at setbacks as a possible new direction. They are constantly focused on the main goal at hand and will not let many things deter their mindset that the goals will be achieved. If they do not get a sale that day they will still believe they are going to get the sale in the future. Their sense of optimism can often be a motor to keep them driving to their ultimate goals.

Tolerance to ambiguity refers to a person’s tolerance to uncertainty and risk. Business Leaders will face this on a day to day basis and have to also possess this trait to be successful in business today. Art Petty writes in his blog that “top performers fight the routine. High performance individuals in all areas of life, from leaders to athletes to great individual contributors work hard everyday to fight the gravitational pull of getting stuck in the proverbial rut. High performance teams and organizations find their comfort not in sameness or routine, but in embracing the ambiguity of the world and the constancy of change and the constant need to change. Many of the best leaders go out of their way to push themselves and their teams to constantly do things different to keep their senses sharp, their individual and collective minds expanding and their ideas fresh” (Petty).

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