Why Business Plans Fail

by Ned Millis ; Updated September 26, 2017
Business planning is important.

A good business plan is critical to success in starting a new business. It should include adequate funding, market information, competitive knowledge, a workable time line and anticipation of contingencies. Businesses fail if the business plan is not well thought out.

Inadequate Capital

Lack of capital is a problem.

Your business plan will fail if you do not have enough money. You must have sufficient funds to operate your business until you begin to turn a profit.

Incomplete Plan

Poor planning can sink your business.

If you overlook important information, or ignore it, your plan will surely fail. Take time to think through every factor that can affect the future of your business.

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Estimating too high is dangerous.

It’s easy to think too big. Overestimating how far your funds will go or how quickly you can show a profit is another trap to be avoided.

Overextending and Overspending

Overspending is a mistake.

Trying to grow too fast is another business mistake. Steady measured growth can prevent this kind of failure. Avoid spending too much, too soon.

Insufficient Market Knowledge

Poor market knowledge can cause failure.

If you don’t know your market, your business plan cannot meet with success. Misunderstanding or underestimating competition can lead to failure.


Location is important.

Your plan must consider location carefully. More small businesses fail because of poor location than for any other reason.

About the Author

Ned Millis has been published in "Tennis Industry Magazine," "Golf Industry Magazine," "Sales Management Magazine" and other trade publications. He is a graduate of Claremont Men's College.

Photo Credits

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