Reasons Why Business Plans Fail

Ask an entrepreneur or a novice business owner if he/she has engaged in prior planning and strategizing, and the answer will be in the affirmative. You cannot refute this answer, because this individual will be able to present a detailed sketch of everything, including organizational goals, actions and strategies to achieve them, etc. You find nothing wrong in this kind of behavior, for you adopt it too, when you decide to enter the world of business and trade.

The snag is that like many others, you do not take the trouble to carry out a thorough investigation with regard to buying behavior of customers, sales tactics, rivalry in the marketplace, changing factors in the business environment, and so on.

This indicates that the business plan’s creation has taken place in a kind of vacuum, where more of assumptions have come into play than any real knowledge about the existing trade scenario. In other words, you have based your plan on mere hypotheses.

Therefore, it is imperative that proper testing and validation of every assumption take place, before the actual launching of a business plan. This way, it becomes possible to expect success, and not become a sudden victim of failure. Note that you are going to invest a large sum of money on your venture. You would not like everything to go down the drain, would you?

Now, are there some tricks of the trade that you can adopt, in order to ensure that your business plan does not fail?

Fortunately, for you, there is a wonderfully efficacious way of dealing with challenges in entrepreneurship or business ownership. This way refers to the creation of a business model. You will use this model to test all your hypotheses, prior to actually implementing your business plan. It is only after using the model that you will realize what a powerful tool it is, for pushing your commercial enterprise towards success.

Now, model does not mean creating something from clay, bricks, cardboard and paper, etc, as students do in their science classes. Instead, it refers to something, which comprises of nine important components. The model also stresses on the importance of comprehending the relationships and interactions between one component and the other. Let us explore what these nine components include.

Value of your Goods/Services

There must be something unique about your products or services, or a combination of both, which will attract people to your doorstep. In other words, why would you expect them to attach any kind of value to what you are offering them? Then again, there may be several other business enterprises dealing with similar kind of products/services. Why would you expect your would-be clients to purchase the same only for you, or why should they do business with you only? You should pay keen attention to this aspect of your business venture.

Target Audiences

Obviously, you cannot expect customers from all segments of society to walk into your offline/online store and purchase your services/goods! Not everyone needs what you are offering. Therefore, you must be aware of the kind of customers that you should target.

They should be able to comprehend the value that your products/services will add to their life or lifestyle. This area is something that you will need to work on, by ‘poking’ around the marketplace, observing common buying behavior, consulting with experienced business owners, etc.


It may not be possible to remain the sole runner of your business enterprise. You will need to engage with others, even if not directly linked to your individual venture. Do you have clarity about whom you would like to have as partners in your business model? At the same time, you must also have clarity about the role that each partner will take up in this model.

Resource Materials

Even if limited in nature, you are bound to look for resources that will serve your immediate purpose. Check out all that you have within your grasp currently. At the same time, make a list of what other resources you would need. In case, you do not possess certain resources, will your partnerships deliver on your behalf, without harming your value propositions?


Every commercial enterprise needs funds. What will be the costs of launching your business and building it up? You must have great clarity about your budget, which is, balancing of expenditure and income.

Action Plans

Your proposed goods/services must reach your target audience successfully. It is imperative to have certain strategies in place for this purpose.


This refers to the various ways in which customers can order services/products, and have them delivered. Think of all the ways possible in both, the ‘real’ world and the ‘virtual’ world.

Customer Service

It is essential to remain in touch with both, loyal clients and potential customers. Towards this end, you must think of diverse ways to retain their interest in your business model. Experiment with all the diverse channels of communication that exist in the modern world.


Now that you have set up a business model, give some thought to various sources of revenue that it seems to have created. Which of them will prove most profitable?

When you have finished dealing with each component of the business model successfully, you may decide that it is time to test your hypotheses or assumptions. Towards this end, you may have to engage in some cold calling or face-to-face encounters with prospective customers.

You will need to discuss your business with potential partners, link up with focus groups, check if all the channels for delivery of goods/services are working efficiently, etc. Take note of all the knowledge and information that you gain from this exercise. When you are able to verify and validate every single hypothesis of yours, you may conclude that your business model is workable.

Your last exercise of the day is to document your business plan in alignment with what you have learnt from your business model. Your plan will demonstrate effective use of limited resources and balanced expenditure.


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