If you are thinking about setting up a company or other type of enterprise it will probably fail within three years, cause you a lot of stress and cost you a lot of money.
In most countries more than eighty per cent of new enterprises fail within three years with a very high proportion lasting less than one year.
The causes of failure have been studied by large numbers of academics, consultants and government employees. A lot of reports have been produced analyzing the reasons why so many enterprises fail and identifying possible lessons to learn from the survivors.
The main reason for failure is incompetence.
Just because you find something interesting does not mean other people will find it interesting.
Just because you think something has a certain value does not mean anyone else will agree with you.
If other people cannot understand just how brilliant your idea is you have not communicated your idea properly – do not blame them, you have a communications problem.
So, how do you avoid the pitfalls of incompetence and communicate in a manner that is not only understood but also motivates other people to provide assistance?
Corporate planning is a well established discipline in large organizations. It deals primarily with long-term strategic matters. It has its own methodology and is very different from normal business planning. A typical business plan considers horizons of typically three or five years. A corporate plan will often have a horizon twice that of the business plan.
The majority of small and medium sized enterprises do not carry out corporate planning and do not think strategically. The owners and directors of most small and medium size enterprises believe that the tactical planning that they carry out amounts to strategic planning. This belief is a major contributor to the very high failure rate of small and medium size enterprises during their first three years of existence.
Concentration on day to day management and tactical planning leaves the new enterprise vulnerable to changes in market conditions, reactions of competitors, delays by key customers and delays in the overall startup project.
