Ok, today I’m going to bite the bullet and say something that may draw the wrath of every business mind on the planet. It’s something that completely contradicts pretty much all official business advice that you will get when first starting out, and it sounds like total doom and gloom.
However, my coaching style is very black and white. I say what I mean, and I mean what I say. And my advice comes from experience, both negative and positive. All I’m doing here is telling you how it is. OK, here goes…
In order for you business to succeed you must plan to fail!
Phew! Over and done with. So, moving on…
I best own up now… I don’t actually mean that you are going to fail. I simply mean that you must plan adequately for failure.
When you first set up in business, be it online, offline or both, you will more than likely sit down with your bank’s business manager to open a business account. You’ll talk through your predictions, where your revenue streams will come from, and how you will grow your business.
You will probably also seek advice from other business providers such as Business Link, who will put a huge emphasis on proper planning, as the saying goes “to prevent poor performance”. You will be told that the deeper and more intricate your plans, the better a chance of success you will have.
The truth is very different. In reality, a new business is extremely susceptible to failure within the first two years of trade. In the third year that risk marginally reduces. It’s not really until around year five that you can feel a little more comfortable.
Some of you that have been in business for a year or two are probably shaking your heads now and disagreeing beyond belief. Well, just to give an example, my first business literally flew for the first three years, and then suddenly failed dramatically out of the blue without any warning. And I have seen it happen to good friends, all experienced business people.
Bad things happen. Period.
You can not prevent bad things from happening. Look at the recent recession. No one saw it coming. Well, we front line troops did, but the government and banks were having none of it.
So you can’t prevent bad things from happening, but you can immunise your business against them, so that when these little nasties start to jump up and bite, your business is in a position to ride the storm until you hit calmer weather.
Proper planning is not just about how you avoid these obstacles that are thrown in your way, it is also about how you pick yourself back up and keep moving forward when you hit them square in the face. There is no way of predicting everything that is going to happen to your business, but you can plan for most eventualities.
Let’s take a few examples.
• If you are a retailer and your supplier goes belly up, do you have adequate resource to tide your business over at the minimum rate of sales to keep your business running, or do you have alternative backup suppliers that can jump in and save the day at a moments notice?
• If your income is based online, such as through blogging, what happens if your main business tool, such as your Laptop, is damaged, lost or stolen? Or what if your web hosting company goes to the wall… and takes your domain and website with it?
• You may have done intricate financial calculations for your rate of growth and all the rest of it, but have you forgotten the basics, such as could your business survive if your turnover dropped suddenly without warning by 50%, or if your costs suddenly increased by 50%, or worse still, if both your turnover dropped by 50% and your costs suddenly increased by 50%? And if any of these three combinations do happen and you can survive… how long can you survive for?
Planning for failure is all about understanding how your business will continue to survive if the things we take for granted are suddenly taken away from us. It’s not an easy thing to do, especially when you are a new business as you want to remain positive at all times, but it is an essential tool to ensuring your long term success.
I learned my lesson the hard way, but since then I have used that lesson to my advantage and built strong foundations for my future. So just remember…
In order for you business to succeed you must plan to fail!
photo credit: kevindooley
Phil has had many other businesses including Coaching, Marketing and PR, Graphic and Website Design, and Online Learning. His current venture is Phil Johnson Business Services, providing low-cost essential services to the newly self-employed and small and medium enterprises. Aside from this Phil runs Major-Business.net, a free source of quality help, advice, tips and tricks on many business and personal development subjects, catch Phil on Twitter
Very very great article, Phil. Just too great.
I really agree with you that one should always prepare in advance for storms and hurricanes and tsunamis in their business, that’s what every business person who wants to stay long in his business should do
.
.-= Shirley´s last blog ..A Comprehensive Guide To Keyword Research Techniques =-.
Hey SHirley, thanks for the comments! Yeah, too true… you’ve got to understand what COULD happen, and HOW you WILL deal with it.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
Hi Phil, Great post.
It’s often said that businesses don’t plan to fail, they fail to plan.
If a business is in tune with it’s leading indicators (having them would be a start) then they are much more in a position to deal with problems before they become issues.
.-= Matthew Needham: The Big Red Tomato Company´s last blog ..Wednesday Wisdom =-.
Exactly Matthew! Planning for the worst isn’t being “negative”, its being “honest with yourself”.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
Great message, Phil
There is the tendency to wear rose-coloured glasses and expect things to be always successful, but if we don’t plan for the worst-case scenario, we can get blindsided.
Failure is definite in those cases.
.-= Karen´s last blog ..Major Benchmark Today – My 100th Post =-.
Exactly Karen. We are often all too engrosed in the day to day running of our businesses to be able to step back and see the bigger picture. Just because business may be good now doesn’t mean that next month you aren’t gonna get hit by a huge bombshell out of the blue.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
I’ve been moving more of my writing and blogging-related resources to “the cloud” to lessen the impact of equipment failure. One thing I need to do though is get some sort of plan in place so if I get hit by a bus or some such physical catastrophe, clients and readers are still served. Right now things would be in a sorry state of affairs if something happened to me, so I’m extremely cautious when crossing the street
.-= Jean Sarauer´s last blog ..7 Steps to Banish the Blogging Blues =-.
Fingers crossed that won’t EVER happen! BUT… by being cautious you are planning for the worst!!
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
I’m now going to go and take a complete snapshot of my site, thanks for prompting buddy!
.-= Mo “Mad Dog” Stoneskin´s last blog ..I’ve never seen a badger move so fast =-.
You are very welcome Mo.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
It makes sense to plan to fail or what I would say, “Planning for the worst case scenario” it doesn’t mean it will happen, but at least you’ll have a plan in place to get you grow the difficult patches. You definitely have to be resourceful and find creative ways to deal with potential issues.
Great post, Phil!
.-= Kiesha @ We Blog Better´s last blog ..The Olympics Guide to being a better blogger =-.
Hey Kiesha. Thanks for the comments!
You speak the truth! You can’t stop bad things from happening, but its how you deal with them that counts. And by planning for the worst you can react quicker and more effectively.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
This is actually very good advice and also makes me think about having a plan B. Looking behind the scenes and making sure you are well prepared in case something happens, which it easily could, is the way to go. Life is full of surprises and you never know what’s going to happen, or when.
.-= Eric´s last blog ..Twitter Is Powerful When Used Correctly =-.
I couldn’t agree with you more Eric. Spot on mate!
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
Other caption could have been “Is This Your Business Model?”
James, once again, thanks for keeping it “real.” Now if only I could get paid for hero worship, sewing you a new cape or lighting candles at your shrine.
.-= Leon Aldrich´s last blog ..Twitter Suspends Account for Tnavres64 =-.
You’ll give him a big head saying things like that Leon! ;] Although he does deserve it! … the praise that is, not the big head!
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
Hey guys n gals.
I think I should have replied to you all personally, but if I have missed anyone then please accept my apologies.
Thanks for all the comments and I’m glad the post has been of use to you all.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
I think a huge factor we need to consider in making plans for our failure is extra cash to spend. If our main computer fails or if we need to purchase new equipment after an unsuccessful endeavor, having sufficient money can help us get back on track.
.-= Julius´s last blog ..How Blind People Identify Color =-.
Very true. Having a “pot” that you can dip into when disaster strikes is definately one way of easing the burden when the worst really does happen.
.-= Phil Johnson´s last blog ..The Matter of the Missing Universe =-.
Here in Silicon Valley, we call it “Having an exit plan.”
And yes, every business should have one.
Fortunately, in blogging it can be quite easy: just stop posting until you get the time to get back after it. With the right content, it will sit there and gain value over time. And that’s pretty cool.
.-= Dave Doolin´s last blog ..Blogging Business – You Gotta License For That? =-.
I want so much to tell you that you are wrong!. Why? You can’t plan to fail because the words alone plant negative seeds in your subconscious. It’s like when someone says ‘I cant do that’ they have already decided before starting that its not possible…. But then I read every word of the post and I can’t see anything wrong! Damn you. You have made some really valid points and I think when you said “Planning for failure is all about understanding how your business will continue to survive if the things we take for granted are suddenly taken away from us.” you have summed up the WHY absolutely spot on. Thanks for changing the way I look at these words.
.-= Alex´s last blog ..MLM systems designed (to leave you) in tiers. =-.
good reminder to think about all of the eventualities. it reminds me I nee to back up my whole computer. now. Thanks for something to think about!
.-= Justin Matthews´s last blog ..I Stinkius… =-.
You might be surprised to learn that planning to fail is common practice in the software development industry, and standardized workflows have been created explicitly around the idea. In some corners of this industry, nobody even “believes” in heavy upfront planning anymore.
.-= Chris´s last blog ..Relax With This Karate Porn Video =-.