Worst-case Scenarios

A business plan requires that you address potential problems bluntly and honestly. In this post I’ll address the fear of failure issues in regards to worst-case scenarios.

We all know the greatest fears of any business potential business owner. They tend to creep into your conscious mind every time you shell out large amounts of money towards starting your business or commit large amounts of time to pursuing your business plans. They can hit you like a rock if you take the plunge and quit your ‘day job” to start your business. So, here are the big questions: What if no one realizes you are in business? What if no one wants your product or service? What if you get some business, but not enough to turn a profit?

These are questions that no person wants to think about when they are planning a new business. But these are questions you must ask yourself in order to complete a proper business plan and to be properly prepared for the reality of business ownership. Take some time to think about the answers to the above questions. Take out a piece of paper and write down all of the things that could go wrong. Lack of customers, potential law suits, customers not paying for products, credit card chargebacks, investors withdrawing funds, negative reviews and feedback, and anything else that may apply to your type of business must be addressed. Allow yourself to be negative about what you are planning to do and face your worst fears of failure. If you have no fears of failure, find the most negative person you know and have them tell you all the ways they think your business could fail.

When you are done with that, mope about it all for a few minutes, and have a good cry if you need to. Now, dry your eyes and take out a fresh piece of paper and think of solutions to these potential problems. Pretend your business is already up and running and treat these issues as if they are happening at various stages of your business’s life and that you haven’t thought about them up to that point. How would you react in a pinch? Now, how would you react if you had had a view into the future and knew it was going to happen? That is the point in this exercise: creating a crystal ball view into your business future.

Since you won’t have to rely on a quick reaction to stay afloat, take the time to think of positive, proactive, and logical ways you will face potentially negative issues. 

As many failure scenarios relate to customers and their spending habits, think about ways you may need to be ready to change your marketing strategy. If you don’t have the consumer base you need to stay afloat, how will you respond? Will you put more money into advertising? Offer coupons or discounts to either retain existing customers or create new ones? Back a worthwhile cause to increase your exposure to the community and gain customer loyalty and support? Write down anything you feel will help you win (or win back) customers.

Also, it is often necessary to think about the products and services you are offering. What if the market for your product or service just isn’t as large or even as existant as you think it is right now? Will you diversify or modify your product or service line? Can you change what your company is about at the drop of a pin to suit consumer demand? Would you be willing and able to “re-invent” yourself as is needed to stay in business?

The effects that other companies (aka the competition) can have on our own success needs to be addressed. For now, just think about some of the ways the competition can mess with your business strategy. I’ll leave an exercise on dealing with it in your business plan for another post.

Tags: business plan, business planning, Fear of Failure