It may seem like a grim outlook in the business world, but it is one that is realistic, and will ultimately benefit your company in the long run: planning to fail.
It’s best to embrace the unfortunate statistic that many businesses fail within their first 10 years of operation. There are countless ways your company can fail, and to deny that possibility would be foolish. When developing a business plan, incorporate this likelihood. This will prepare you financially and emotionally.
To begin, understand that planning for failure does not mean that you expect to fail. Such a negative mindset will only lead to a lack of confidence, and thus poor decisions being made. Planning to fail is being smart about all decisions you make on a day-to-day basis that are in your business’s best interest, but also feasible. It’s keeping an open mind and being able to adjust when faced with obstacles.
It is effective to understand what the worst-case scenario would be in any situation. For example, what if you were to lose your most valuable client? How would that affect your annual revenue, your employees’ confidence, or that of your investors? Thinking about these possibilities essentially allows you to avoid them by having a plan in place. It’s also a great way to recognize and kinks within company function and areas where you can improve.
This mindset also allows you to avoid making silly mistakes simply because this business may be your passion. While it is certainly beneficial to love your company and what you do, it’s important to not let your emotions getting in the way of making the smartest decisions. Look at your business from the customer’s perspective. Remaining objective and looking at the bigger picture is essential in the business world.
Complacency is the demise of modern business. Planning for failure also prevents you from accepting the current state of your business and refusing to grow. Knowing that at any moment something could go wrong which leads to the downfall of your company keeps you on your toes. Noting the aforementioned statistic of many businesses failing within their first 10 years, always remember that growing and becoming a successful business is rarely done in just 1. Remain dedicated and always look for ways to improve.
Lastly, if all else fails (literally), having already planned for the downfall of your business will soften the blow when that time actually comes. This allows you to move on much more quickly and begin thinking about your next business venture. It also prevents any financial holes should you have managed your revenue accordingly.
As unfortunate as it is to fail as an entrepreneur, being able to bounce back and continue your efforts is what defines a successful individual.