Why do business plans fail?
Table of Contents
Bad product ideas
Poor partnerships , a lack of detail , unrealistic financial planning , how a simple app can help improve your business plan.
Unfortunately, not every business will be a success. The failure of businesses is usually due to some issue in their business plan, and there are hundreds of different issues a business plan could have.
This article will describe some of the most common reasons a business plan might fail and how you can avoid them. We’ll look at common pitfalls such as:
- Poor partnerships
- A lack of detail
- Unrealistic financial planning
Sometimes, a business plan fails simply because it focuses on bad product ideas. A bad product idea means that the product or service your business specialises in does not sell well, and the lack of sales leads to an income problem for your business.
Business plans containing bad product ideas usually come about due to a misunderstanding of the term ‘ unique selling point ’. A unique selling point is what makes your product stand out from the products of the competition. It’s a feature that makes the product better as well as being unique.
Many bad product ideas come from individuals that focus too much on the ‘unique’ part of the term unique selling point. While it is important to have a different product from anything else on the market, make sure you also know what your customers want from a product .
While it’s nice to have help running your business, it’s important to find the right person for the job before you write a contract for a business partnership . If you create a business plan as a partnership and your partner fails to fulfil their responsibilities, your business will struggle to succeed.
There are three things you may want to consider if you’re trying to avoid poor partnerships. The first is your partner’s skill set: look for someone with talents related to your business idea as well as talents you don’t possess. It’s helpful to have a diverse collection of skills within your business.
Secondly, make sure your potential partner is as passionate about the business as you are. If they aren’t, you may find that you end up doing most of the work or that they leave the business as soon as things become difficult. While measuring passion and emotional investment is challenging, finding a business partner that matches your feelings regarding your business plan is vital.
Finally, create an exit strategy. While you may have found a perfect business partner, you never know what difficulties you’ll encounter in the future. So make sure you know what to do if there is an internal conflict in your company that you can’t resolve peacefully.
When you write a business plan , you need to make sure that you plan for almost anything. One of the biggest reasons business plans fail is because they don’t account for certain situations.
It’s impossible to plan for truly unexpected problems, but a detailed business plan will account for most situations by listing off your company’s weaknesses during a SWOT analysis . SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s a standard part of most business plans.
By using SWOT to list weaknesses in your business plan and potential threats to your success, you can start planning ways to deal with problems. For instance, you might identify a lack of sales as a potential threat. To account for this, you could invest in marketing or reduce your prices. If your business plan doesn’t account for these sorts of situations, it increases its chances of failure.
Another reason for lack of detail in a business plan is low-quality research or not performing research at all. Without researching the market and industry you operate in, you’ll struggle to learn about your competitors or understand your customers’ needs. Thorough research is an essential part of avoiding business plan failure.
Financial planning is essential in business. You might not know the future of your business, but with a decent financial plan, you’ll be able to avoid most obstacles to success. If your financial plan is poorly thought-out or unrealistic, though, it might not be as valuable.
Financial plans are all about mapping out your company’s growth. If you’re too optimistic about this growth, it can cause serious problems. Unrealistic expectations can cause unprepared businesses to go bankrupt very quickly.
For example, say you expect to be making £1,000 a week in sales revenue by your second week of business. Your financial plan relies on this for you to pay rent and buy supplies. If it gets to that week and you’re only making £500, you’ll not be able to pay the bills that allow your business to operate.
To avoid these problems, try lowering your expectations. Even if you think you have a fantastic product idea, it’s better to prepare for the worst than plan for the best and run into trouble. If you create a conservative financial plan that expects some success but accounts for things like low sales, your business plan is much less likely to fail.
One of the biggest parts of your business plan is the financial aspect. To create a business plan that’s unlikely to fail, you’ll need to make sure you have a good understanding of accounting and a way to track how you’re spending your money.
The Countingup app offers built-in accounting software with its business account so that you can manage all your financial data in one place.
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1. Lack of Alignment Between Strategy, Objectives, Vision and KPIs
“Some businesses develop Visions, Strategy, Objectives and KPIs independently of each other, not understanding that they should be linked. Even though they may focus on each area, the fact that they are not aligned results in lack of focus, direction and impact. The idea is to fix on a vision first, then identify a strategy that will get the business there. Once the strategy has been agreed, 5/6 Key Business Objectives for the next 12-18 months can be agreed, and with them the measurements that will measure the progress (or otherwise) towards the achievement of the objective.”
2. Lack of Discipline
“Lack of consistency in discipline will affect the outcomes from any Strategic Development Programme. A lot of discussion, time and effort can go in to developing the strategic plan of a business. The biggest reason that they fail is that the action elements are not applied, monitored regularly or refined when required. This results in lack of focus and direction. It also results in lack of energy…if actions aren’t being completed then nothing can be achieved.”
3. Lack of Accountability
“As part of the strategic plan development, actions will have been identified. Each action will have a deadline and an owner. If the MD does not encourage accountability for completion of the actions, then people will realise that there are no consequences for lack of action and the drive to complete them will be pushed to the background when other, often immediate, challenges arise.”
4. Lack of Head Space
“When managers, leaders and team members are so busy that they cannot ‘lift their heads’ away from the immediate requirements of the business, it is difficult for them to get the head space to address the medium and long-term elements of the business. It is human nature to focus on the immediate, however, it does not help a business progress towards the completion of an objective, which makes it impossible to successfully realise a vision. It takes practice and discipline to give some time to the future, and to ensure that decisions made and actions taken will assist with getting the business to where it wants to go.”
5. Lack of Courage
“It is easier to focus on the elements of our responsibilities that we know we are good at. The natural tendency is to achieve NOW. It can be more difficult to spend some of our time focusing on the future – that may be uncertain, may have risk and may be uncharted territory. We all need to be courageous to challenge what we are doing now, what is comfortable for us, and to adapt to changes which may be difficult in the short term, but will have greater impact in the longer term.”
50 Reasons Why Some Businesses Fail While Others Succeed
THREE-PART SERIES: Part One
George Meszaros – Cofounder – Success Harbor 50 Reasons Why Some Businesses Fail While Others Succeed
Read Part 2 here and Part 3 here .
Why is it that so many businesses fail while so few succeed ?
One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed.
Why some businesses fail while others succeed?
The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.
One thing for sure, a business almost always fails because of the entrepreneur.
“ It’s not the plan that is important, it’s the planning. ” Dr. Graeme Edwards
There are over 28 million small businesses in the United States, according to the SBA.
It’s an impressive number. The sad reality is that only about 50% of them survive. What’s worse is that only about one-third survive 10 years or more. The life of an entrepreneur is unforgiving. It is a constant challenge. There are many moving parts. Anyone of them could put you out of business.
Businesses fail for many reasons. The following list includes some of the most common reasons:
1 – Lack of planning – Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results. The right plan will include specific to-do lists with dates and deadlines. Failure to plan will damage your business.
2 – Leadership failure – Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful entrepreneurs learn, study, and reach out to mentors to improve their leadership skills.
3 – No differentiation – It is not enough to have a great product. You also have to develop a unique value proposition, without it you will get lost among the competition. What sets your business apart from the competition? What makes your business unique? It is important that you understand what your competitors do better than you. If you fail to differentiate, you will fail to build a brand.
4 – Ignoring customer needs – Every business will tell you that the customer is #1, but only a small percentage acts that way. Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products. Do they want new features? What are they saying? Are you listening? I once talked to the CEO of a training company who told me that they don’t respond to negative reviews because they are unimportant. What? Are you kidding me?
5 – Inability to learn from failure – We all know that failure is usually bad, yet it is rare that businesses learn from failure. Realistically, businesses that fail, fail for multiple reasons. Often entrepreneurs are oblivious about their mistakes. Learning from failures is difficult.
6 – Poor management – Examples of poor management are an inability to listen, micro-managing – AKA lack of trust – working without standards or systems, poor communication, and lack of feedback.
7 – Lack of capital – It can lead to the inability to attract investors. Lack of capital is an alarming sign. It shows that a business might not be able to pay its bills, loan, and other financial commitments. Lack of capital makes it difficult to grow the business and it may jeopardize day-to-day operations.
8 – Premature scaling – Scaling is a good thing if it is done at the right time. To put it simply, if you scale your business prematurely, you will destroy it. For example, you could be hiring too many people too quickly, or spend too much on marketing. Don’t scale your business unless you are ready. Pets.com failed because it tried to grow too fast. They opened nationwide warehouses too soon, and it broke them. Even the great brand equity that they had built couldn’t save them. Within a few months, their stock went from $11 to $0.19.
According to a study of about 3200 high growth internet startups done by Startup Genome, about 70% of the startups in their dataset scaled prematurely.
9 – Poor location – Poor location is a disadvantage that might be too much to overcome. If your business relies on foot traffic, location is a strategic necessity. A poor location might make your customer acquisition costs too high.
10 – Lack of profit – Revenue is not the same as profit. As an entrepreneur, you must keep your eyes on profitability at all times. Profit allows for growth. According to Small Business Trends, only 40% of small businesses are profitable, 30% break even, and 30% are losing money.
11 – Inadequate inventory management – Too little inventory will hurt your sales. Too much inventory will hurt your profitability.
12 – Poor financial management – Use a professional accounting software like Freshbooks. Keep records of all financial records and always make decisions based on the information you get from real data. Know where you stand all the time. If numbers are not your thing, hire a financial professional to explain and train you to understand, at least the basics.
13 – Lack of focus – Without focus, your business will lose its competitive edge. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments.
14 – Personal use of business funds – Your business is not your personal bank account.
15 – Overexpansion – It is easy to make the mistake of expanding your business into too many verticals. Before you enter new markets make sure you maximize your existing market.
16 – Macroeconomic factors – Entrepreneurs can’t control macroeconomic factors. Common macroeconomic factors are business cycles, recessions, wars, natural disasters, government debt, inflation, and business cycles. Your business can still succeed in bad times. Hyatt, Burger King, FedEx, Microsoft, CNN, MTV, Trader Joe’s, GE, HP are only a few examples of wildly successful companies that started during a tough economy.
17 – No succession plan – Future leaders should be identified in advance. Without an effective succession plan, your business is unprepared to fill openings created by retirements, unexpected departures, or death.
18 – Wrong partner – It’s no secret that it is easier to succeed in business with the right partners. The wrong business partner will, at the very least hurt, or, at worst, destroy your company.
THREE-PART SERIES: Part Two of “50 Reasons…” will appear in the next issue of the Southern Oregon Business Journal
This is a good list. And I believe there is also another reason why most businesses fail – lack of desire to make/grow it.
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The top 8 reasons business plans fail
8 reasons business plans fail that no one wants to talk about.
7 min. read
Updated October 27, 2023
As a full-time editor and academic mentor at an academic writing service, I have read hundreds of business plans over the years. To help students and startups, I have compiled a list of reasons business plans are rejected or given a low grade.
Of course, there are obvious reasons that business plans fail. For example, missing crucial deadlines for finishing the business plan, or drawing hockey stick profit projections can repel potential investors.
However, there are also less nuanced and more subtle reasons that investors and banks lose interest. These tips can help you avoid the minute and often overlooked mistakes that people make when writing a business plan. When investors and banks see hundreds of business plans every month, a small mistake can lead to a business plan being thrown in the rejection pile.
1. Bad business ideas
Nobody likes to talk about it, but the main reason why business plans fail is bad ideas. Most ideas look great on paper—but all too often, companies realize they have invested in a bad idea once it is too late.
To avoid this, smart businesses are using “user-driven development” (UDD) to build new businesses. Lots of ideas seem great until you figure out that the market doesn’t actually want your product. In order to ensure that a business idea is sound, entrepreneurs should search for product validation by reaching out to their target consumers before sinking huge amounts of time and money into the project.
At Stanford University’s d-school , the designers use UDD to develop products that are user-centered. Firms that want to innovate with a focus on customers often hold small meetings with the potential end users where they describe the project and then ask users for their opinions.
After the first round of discussion, the firm can go back to the drawing board to incorporate the helpful feedback. Second and even third rounds can enhance the final product’s popularity. For example, The Embrace Warmer was created by asking mothers with premature babies what they disliked about traditional infant incubators in hospital maternity wards.
The mothers responded that not being able to hold their baby was the worst part of the experience. By focusing on the needs of the end-user, the developers of The Embrace—who were also students at Stanford—were able to create a highly demanded and successful business plan. Avoid wasting time on a bad business plan by gauging the market sentiment toward your project before investing a significant amount of time and effort.
2. Employee compensation is not incentive compatible
Business plans can fail because employees are not compensated in a way that aligns the goal of the employee with the goals of the company. In game theory, a contract is an incentive compatible if “every participant can achieve the best outcome to him/herself just by acting according to his/her true preferences” (Nisan and Roughgarden, 2007). For example, if an employee is paid with annual or monthly bonuses then the employee will only do what is good for the company in the short run.
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In 2015, Forbes released a nice article on different salary packages for different company goals. One option is to offer tailored benefits to the employee. Startups and small businesses can offer more customized salary packages than large multinational corporations.
For example, instead of offering a standard salary package of retirement plans, child-care assistance, savings program, determine what the employee wants the most. For example, elderly employees may not be motivated by child-care assistance, so don’t focus on that in their package. Secondly, instead of offering an upfront payment of 2 percent of the company’s stock, offer a salary that pays that 2 percent over several years to ensure that the employee stays committed in the long-run.
3. No exit strategy for firing lazy co-founders
Anyone who has started a company knows that team conflicts are inevitable. A good business plan should have a step-by-step procedure for handling internal disputes. First of all, each co-founder should have a specific set of responsibilities with deadlines and consequences for failing to meet those deadlines.
Choosing the right co-founder is as important as choosing the right spouse. During the first few years, you may end up spending more time with the co-founder than anyone else. First, you have to know what are your own strengths and weaknesses. Try to find a partner that diversifies your skill set. Also, ask for references. Try to find out who they worked for previously, how they got along with their coworkers, and why they left.
Another way to help alleviate this problem is by delineating roles and delegating tasks. However, if a team member just does not have the time or the competence to achieve the goals specific to their role, then the company should have a polite but quick method for ending the relationship. Mentioning how these types of situations will be handled in the business plan is important because hurt feelings and vindictive ex-owners can damage the firm’s reputation and profitability.
4. The team is not balanced
Another problem that I often notice on business plans is that the team is not balanced.
Company culture is an often underestimated challenge. I have read several business plans that present a compelling argument for a new product; however, the majority of plans fail to put together a team that has the competencies required to actually execute the business plan.
For example, I recently read a tech business plan that was making a health application for smartphones. However, the team did not have a single developer or IT specialist involved. If the business idea requires 80 percent of the labor hours to be performed by a software programmer, then the team needs at least one developer onboard. It is important to keep in mind that venture capitalists sometimes refuse to fund companies that only have one founder or have unbalanced teams.
5. Detailed financial projections are missing
The majority of business plans that I have been asked to edit have conveniently left out the balance sheet, cash flow statement, profit and loss statement, and income statement . The “numbers” are actually the most interesting part of the entire document for most investors. Break-even and return-on-investment (ROI) calculations are also parts of a good business plan.
My favorite tool for ensuring that I have decent estimations and great charts are the business calculators here on Bplans . Make sure to consider how legal costs and taxes will deduct from the bottom line.
Do not forget to factor in future expenses. For example, if the company needs to purchase new office equipment every three years, then the discounted value of those expenses should be included in the forecasted financial projections. Of course, the figures are only estimates, but they are important benchmarks that can be used to measure the company’s progress toward achieving their goals.
6. Spelling and grammar mistakes
Every time that I read a new business plan, my first step is to read each sentence out loud. In order to stop my mind from automatically filling in the correct spelling and grammar, I start by reading the last sentence on the page and working my way backward to the first sentence on the page. If you want to be 100 percent certain that there are no spelling errors, then consider hiring a professional editor to review your business plan.
Although some people think hiring a professional editor is “over the top,” the reality is that the most competitive firms have a professional editor review all of their documents for accuracy. If a bank or investor reads a business plan with typos, they will start to wonder if the entrepreneur is competent enough to run a successful business.
7. False assumptions
One of the final mistakes that students and startups make is falsely assuming the values of their investors and the values of their end-users, with some of the most common false assumptions being about their political or religious affiliation. This can be game over for successful companies, so startups should be especially careful.
Several examples exist of people that falsely assumed that their opinions were not controversial or were held by the majority. For example, Matt Harrigan, CEO of the startup Packetsled, stepped down after his comments about President Trump .
One piece of advice that my dad gave me can be helpful for writing business plans: “Opinions are like armpits. Everybody’s got them, and they all stink.”
The main point is that entrepreneurs and students who are writing a business plan should do their own research about the background of their potential investors and lenders. This ensures that you will have as much information as possible before pitching or handing over a business plan.
8. Failure to improve business plan after receiving feedback
Once you have finished writing your business plan, it is a good idea to send it out to at least three people before showing it to potential investors.
Think of these three people as your board of advisors. Ask them to read the plan and look for logical gaps in the content. If one advisor recommends a change that you disagree with, do not ignore his advice. Instead, ask the other advisors for their opinions and then make a decision. Edit your plan according to their constructive criticism, and thank them for their help.
See why 1.2 million entrepreneurs have written their business plans with LivePlan
Danielle Hendricks is an academic mentor at ACAD WRITE . In her free time, she is known for writing outgoing and funky pieces about the startup scene in Santa Fe, New Mexico.
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Why some business plans fail.
There are approximately 5.9 million SMEs operating in the UK, but making your business successful in the long-term is difficult. Recent ONS data shows that only 42.4% of businesses founded in 2013 were still active in 2018 .
So, how can you improve your chances of success? Something all business owners need to do is create a business plan . A good business plan is integral to the success of your business as it:
- Helps to clarify the direction of your business
- Can highlight problem areas that don’t make sense or need more work.
Many business owners will use their plan to persuade investors or lenders to fund their idea, but a business plan is not just something you write for external funders and then put away in a drawer when you think you no longer need it.
A good business plan should be an invaluable asset and guide to running your business, and should be something you constantly review and update as necessary .
But why do some business plans fail? For some people, it’s simply a matter of not investing enough time and effort into creating it. However, there are some common problems that can prevent a business plan from becoming successful. Here are seven areas where you might be going wrong.
1. Pursuing a bad idea
It can be hard to admit this, but sometimes business plans fail because the idea isn’t feasible. However much time you dedicate to creating a detailed plan, you first need to make sure your business idea is viable.
For example, you should make sure there is a market for your product or service. Conducting market research is vital for understanding the industry and your potential customer base, and will help you to create a business plan that is less likely to fail.
As well as having a good idea, you will need to research the competition. You could have a great business plan, but it won’t work out if it’s essentially a copy of an already successful and established business. You should consider how your business is different from anything else out there and why you are unique. It’s especially important to highlight this in your plan if you are looking for funding, as investors and lenders will need to be convinced of your idea’s potential for success.
2. Not having the expertise
When creating a business plan, you need to know what you are talking about! So, it’s crucial that you (or a business partner) have the relevant expertise and experience to be able to write a workable business plan, and then put your idea into practice.
3. Not being realistic
If you’re writing a plan for your new business venture, it is easy to get carried away and be over-optimistic about how much money you will make. However, this could be a fatal mistake and could cause your business plan to fail.
Business plans should be realistic about future growth and profits. Over-estimating your income is likely to cause problems further down the line, as you could reach a point where your expenditure is more than the money coming in. Being realistic from the beginning will help you to plan your budget accordingly and give your business plan a greater chance of success.
Don’t be afraid to set high targets in your business plan, with both short-term and long-term goals, but make sure they are achievable.
4. Assuming everything will go smoothly
Focusing on the strengths of your business plan and assuming everything will go perfectly is a mistake of many businesses. If your plan doesn’t factor in any potential future issues, then when you do hit a problem it will be much harder to overcome.
Good business plans will address the challenges your business may face, and then lay out strategies on how to minimise these risks and prepare for any unexpected events .
5. Neglecting the finances
Every successful business plan needs to include detailed financial projections.
Business owners will need to look at costs, trends, and their competitors to come up with realistic and achievable figures for their income and expenditure, which will give direction and structure to their business operations
It is very likely that these figures will change, but it is important to have some benchmarks to aim for. The figures will also highlight any major flaws with your business model (i.e. if you are spending more money than you make), so you can make any necessary changes to your budget.
If you want to use your plan to try to get funding, you will need to show how much money you require and what the funds would be used for.
6. Not checking the spelling and grammar
This may not seem as crucial as the other points but, especially if you’re looking to impress investors or lenders, your business plan should be accurate and without any mistakes.
An error-free business plan will make you appear professional, so make sure you review it and double check (and triple check) for any typos or mistakes.
7. Not believing in the plan
Finally, you need to be determined and fully believe in your business plan. You could have the best business plan in the world, but if you don’t put the time and work in to bring it to fruition then it will be destined for failure.
Creating a good business plan and not giving up when problems occur will give you a better chance of making your business plan a success!
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The significant role HR technology plays in building sustainable global enterprises
ESG has dominated the minds of HR leaders and the wider corporate world for over a decade, with many recognising the business case for integrating environmental, social, and corporate governance (ESG) objectives into their strategies. A recent McKinsey study showed that companies who integrate ESG into their growth strategies tend to outperform their peers. The allure of becoming a “triple bottom line” business — one that balances the needs of the people, the planet and profit — has never been more important than it is now. As talks of ESG legislation in the EU and UK becomes more concrete and shareholder activism is on the rise, corporations face higher scrutiny for greenwashing.
As HR leaders look to address these concerns, many businesses have begun to look to HR technology as the first step in creating a responsible and sustainable business. The “S” or the “social” aspect of ESG is most typically seen as the area where HR tech can bring the most value. However, businesses want to ensure that the technology they invest in can help them incorporate the other significant pillars, i.e. environmental and governance. Recently,
Atlas, a HR tech firm, recently published its 2023 Global HR Study revealing insights from over 500 HR leaders across five markets: the US, UK, Australia, Singapore and UAE. The study showed that over half of the leaders (58%) saw finding the right technology as the main barrier to adoption. Despite this, the appetite for HR tech is at an all-time high as the study found that 9 in 10 companies, with a value of $189 billion in global turnover, are looking to increase their investment in HR tech over the next 12 months.
A possible solution for businesses looking to HR tech to help them incorporate ESG principles is an Employer of Record (EOR). An EOR is a third-party organisation that enables companies to legally engage with workers internationally without needing to set up legal entities or risk violating local laws. Additionally, an EOR will undertake the responsibility to pay and manage permanent or temporary employees on behalf of another company.
An EOR is uniquely suited to helping enterprises implement ESG principles and can help businesses grow sustainable global employment strategies.
Environmental – contributing to the ‘green office’
EORs enable businesses to hire the most qualified employees across the globe, meaning employees can work and reside in a completely different region than where the company is based. As such, the primary way EORs address this pillar is by reducing enterprises’ environmental impact and implementing sustainable practices. By endorsing remote work and virtual gatherings, EORs contribute to lowering office energy consumption and the need for office space. There are no carbon emissions from work commutes, and office waste is minimised as EORs promote the use of digital documentation and other communication methods which curbs the use of traditional materials such as paper.
Social – fostering inclusive and diverse work environments
Using an EOR provides various benefits in supporting the social pillar, particularly by promoting fair labour practices, fostering diversity, equity and inclusion practices (DEI), aiding in social mobility, supporting well-being and more. Most notably, EORs help level the playing field for both employees and employers by enabling companies to access a global workforce with specific skills and ensuring a consistent supply of talent and a diverse workforce. Furthermore, EORs help to establish a standardised compensation structure based on skills and responsibilities rather than demographics. This structure assists in eliminating wage gaps and ensures fair remuneration where all employees are valued equally.
Governance – keeping compliant in every jurisdiction
EORs can also help companies adhere to the governance pillar, as it is the EOR’s responsibility to remain abreast of local laws, regulations and compliance rules imposed on a company in a new jurisdiction. By its nature, EOR firms help organisations manage risks associated with workforce management and safeguard them from legal and reputational challenges. According to the same Atlas survey, over three in five (63%) HR decision-makers find that keeping track of changing regulations across multiple jurisdictions to be particularly challenging. EORs can help address this issue as it can provide customers with detailed reports and insights into the varying legislation to help the company tailor bespoke strategies.
Overall, with an increasing number of companies looking to make greater investment in HR tech coupled with the need of businesses to build more sustainable workforce, an EOR can play a significant role. By using an EOR partner, organisations can reduce their ecological footprint, build diverse and fair workplaces and seamlessly navigate governance and compliance hurdles.
How the Nature of Work Is Changing
By Omri Hayner, General Manager, WEM, NICE
The nature of work is changing, and there’s no going back. New generations have entered the workforce, fundamentally altering how employees behave and what they expect from their employers. Add in the lingering effects of the pandemic on consumer and employee behavior and a renewed emphasis on business resiliency, and you have a perfect storm of challenges.
Nowhere is the impact felt more than in the contact centre, which is known for historically high levels of turnover and a workforce of shift workers. The choices financial leaders make today in response to these changes will shape operational norms and processes, employee engagement, and customer service for years to come.
Here’s what you need to know about the changing nature of work in the post-pandemic era:
- Employees and consumers are tech-savvier than ever: Just as the pandemic catalysed digital transformation, it also made the workforce more tech-savvy. Today, the use of newer communications modes has become cross-generational, with employees of all ages comfortable using non-voice, asynchronous communication methods like Slack, SharePoint, or ASANA as part of their day-to-day interactions at work.
This workday familiarity with new methods of communication has spilled over into employees’ personal lives as well, and this is shaping consumers’ experience with their financial institutions. Boomers and Gen X have historically relied on voice and synchronous communications, which take place in real time and require an immediate response, but they now increasingly use non-voice, asynchronous interactions like text or email when they communicate with businesses. In fact, Boomers are now the fastest-growing demographic on social media, and they’re using it more than ever before for customer service.
Financial services organisations have responded by improving their digital capabilities to meet increased demand. This includes new or enhanced digital platforms, mobile apps, and online customer service, all of which continue to be a priority in the industry. And, with customers using self-service apps to handle routine issues themselves, agents are increasingly handling more complex, nuanced customer issues; as a result, the skills required of agents are shifting as well.
- The customer is in the driver’s seat : The pandemic also caused many people to reevaluate their habits and priorities, including who they do business with, and how quickly. Customers now expect faster, more efficient digital services, where and when they want them; the customer—not the business—now has power over when and where (what channel) interactions occur. This has increased the need for financial services firms to put the customer at the centre of operations and decision-making.
- The remote work revolution transformed how (and where) work is done: The pandemic forced companies and employees to adapt overnight to working in a fully remote environment, and some financial institutions reduced the number of physical branches and office space as remote customer support and digital services increased.
These shifts upended everything we thought about managing a workforce, managing contacts, and connecting with others. Agents who used to be charged with completing a piece of work (e.g., answering a customer call) while in the office are now participants in a work stream with many activities underway (for example, emailing a customer whose interaction began the day before with another agent on chat).
This has prompted businesses to rethink the design of their workspaces, creating flexible, activity-based environments that adapt to employees’ needs, mirroring the comfort and functionality of home settings, and ensuring that agents have easy access to the people and resources needed to solve a customer’s problem.
- Amid economic uncertainty, flexibility has emerged as a key enabler of resiliency: Banks and other financial services firms have historically operated with fairly structured policies for contact centre agents, with intraday schedule changes and shift requests often handled manually through emails between agents and managers—a time-consuming practice that makes it hard to meet changing business needs effectively and efficiently.
But that’s all beginning to change. With economic headwinds and the threat of a recession adding an element of uncertainty to the workplace, businesses are increasingly recognising the need to give employees the capability and flexibility to thrive in a fluid business landscape. As such, scheduling flexibility has emerged as a key strategy for enabling operational resilience.
Scheduling flexibility enables businesses with shift workers to expand and contract staffing levels along with demand. This has led to a much more flexible workspace, which goes hand in hand with more flexible work assignments and more flexible planning, scheduling, and forecasting.
Consider the case of TD Bank , which was seeing vacancy rates of 40% to 50% when the pandemic hit. The bank’s contact centre leaders leaned on their workforce management solution to intelligently identify solutions to address staffing gaps, proactively manage agent communication, automatically approve schedule changes that benefit the business, and automatically adjust schedules. Real-time alerts tailored to each business unit automate the monitoring of adherence, giving valuable time back to contact centre employees as well as team managers. This allowed the bank to increase scheduling flexibility while also eliminating the intraday stress of ensuring that staffing matches customer demand.
The end result? The workplace of today looks nothing like that of just a few years ago. With four generations in the workforce, organisations must meet the expectations and communication preferences of an increasingly tech-savvy workforce and customer base, all while enabling the operational resilience required to withstand an economic downturn. The nature of work has changed for good, and businesses need to rethink how they staff, schedule, and enable teams to meet the new requirements of the increasingly multigenerational, flexible blended digital office.
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- Six reasons why business plans fail
At Cohen Arnold we can provide help with writing a business plan, based on our experience of working with business in the Golders Green area. Here are six reasons why business plans fail – and how to make them succeed…
You may well have prepared a business plan some years ago to present to your bank manager. If you revisit that plan now, you will probably be surprised by how little relationship the position of your business now bears to that predicted in the plan. The reality is that most business plans fail. Here are some of the traps to avoid:
1. A dead document
A business plan that is created for a purpose and then discarded will always become obsolete quickly. Making your business plan a living document is essential if you don't want the whole process to be a failure. Only a regularly reviewed and updated plan can be the spur to look critically at your business on a recurring basis.
Most business plans are over-optimistic, especially as regards predicted sales, often massively overestimating the size of the market. Research your market thoroughly. Too many business plans include a SWOT analysis, but concentrate on the strengths and opportunities and ignore the threats and weaknesses.
3. Ignoring the competition
Business plans commonly assume that the competition will make no competitive response or indeed, will have no new initiatives of their own. Study your competitors and try to second-guess their plans. A living document will take into account their actions.
4. New or old?
Too many business plans depend on doing something new, when what is needed is to find a better way of doing what is being done now.
5. Ignoring risk
What are the risks attached to the plan? Think through these and the costs of failure as well as the rewards of success.
6. Profit or turnover?
If expansion is planned, it should result in increased profits, not just sales. Expansion requires finance, people and other resources. Can you get them?
Remember, a good business plan is as much about the process as the final document. Creating your plan will open your eyes to the realities of your business. Keeping it updated will help you stay on the right track. For help with developing your plan, call us .
Start-ups and established businesses in the Golders Green area looking for help with writing a business plan should contact Cohen Arnold for more help and advice.
Planning and strategy
- An introduction to strategic planning
- Avoiding traps in strategic planning
- Building strategic alliances
- Finding your market niche
- How to survive when times get tough
- Innovate to grow
- Make your planning meetings count
- No business is an island
- Pricing strategies
- Six steps to an effective business plan
- Small is profitable
- Strategies for increasing revenue
- The right kind of growth
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- Not Investigating the Market
- Business Plan Problems
- Too Little Financing
- Bad Location or Marketing
- Remaining Rigid
- Expanding Too Fast
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Top 6 Reasons New Businesses Fail
It's often said that more than half of new businesses fail during the first year. According to the U.S. Bureau of Labor Statistics (BLS), this isn't necessarily true. Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s. Though the odds are better than the commonly held belief, there are still many businesses that are closing down every year in the United States.
According to the BLS, entrepreneurs started 843,320 new businesses in the year ending March 2021. From the historical data, we can expect approximately 168,664 of these businesses to fail within the first two years. With the right planning, funding, and flexibility, businesses have a better chance of succeeding. We'll go through some of the biggest mistakes that startups can make and figure out how to improve your chances of success.
Investopedia / Ellen Lindner
1. Not Investigating the Market
So you've always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that the economy is in a down housing market and the area where you want to work in is already saturated with agencies, making it very difficult to break in. This is a mistake that will result in failure from the start. You have to find an opening or unmet need within a market and then fill it rather than try and push your product or service in. It's a lot easier to satisfy a need rather than create one and convince people that they should spend money on it.
2. Business Plan Problems
A solid and realistic business plan is the basis of a successful business. In the plan, you will outline achievable goals for your business, how your business can meet those goals, and possible problems and solutions. The plan will figure out if there's a need for the business through research and surveys; it will figure out the costs and inputs needed for the business, and it will outline strategies and timelines that should be implemented and met.
Once you have the plan, you should follow it. If you start doubling your spending or changing your strategies whimsically, you are asking for failure. Unless you have found that your business plan is overwhelmingly inaccurate, stick with it. If it is inaccurate, it's best to find out what's wrong with it, fix it, and follow the new plan rather than change how you do business based on quick observations.
The more mistakes you make, the more expensive your business will become and the greater the chance of failure. You may also be called to pivot when market conditions change drastically and impact negatively the chances of success based on the initial business plan. In this case, you revisit your plan and edit it fully based on the decided pivot.
3. Too Little Financing
If you have started a company and things aren't working out, and you have little capital and a struggling business, you're not in a good position to ask for another loan . If you're realistic at the beginning, you can plan to start with enough money that will last you to the point where your business is up and running and cash is actually flowing in.
Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you'll still have a lot of cash to repay. Lean management strategy is warranted in this phase in particular but can be applied even after this phase. Try to think of multi-channels for funding and financing. Get educated about this area and be creative searching alternative sources of financing.
4. Bad Location, Internet Presence, and Marketing
A bad location is self-explanatory if your business relies on location for foot traffic . Just as dangerous, however, is a poor Internet presence. These days, your location on the internet and your social media strength can be just as important as your company's physical location in a shopping district. An online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.
This is similar to marketing . Not only must you make sure that marketing reaches people, but it must also reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service.
5. Remaining Rigid
Once you've done the planning, established your business, and gained a customer base, don't become complacent. The need that you're fulfilling may not always be there. Monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.
6. Expanding Too Fast
Now that your business is established and successful, it's time to expand, but you must treat the expansion like you're starting all over again. If you're expanding the reach of your business, make sure that you understand the areas and markets into which you'll now be reaching. If you're expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business.
When a business expands too fast and doesn't take the same care with research, strategy, and planning, the financial drain of the failing business(es) can sink the whole enterprise.
Though the rate of business failure in the first two years is around 20%, it doesn't mean that you have to fail. Through research, planning, and flexibility, you can avoid many of the pitfalls of a new business and be a part of the 25% that make it to 15 years and beyond.
U.S. Bureau of Labor Statistics. " Table 7. Survival of Private Sector Establishments by Opening Year ."
U.S. Bureau of Labor Statistics. " Table 5. Number of Private Sector Establishments by Age ."
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