When this quote was delivered to students at Stanford Business School, it received wide applause. I have also seen people posting this on LinkedIn as if it is some kind of a mantra for would be entrepreneurs.
In case you have not heard, the CEO of the company that delivered this speech has now been charged by the regulatory authorities for fraud and the company itself is in financial dire straits.
If you have been in a number of business ventures as I have, you will know that this is bullshit.
This is Why?
1.Why A Back Up Plan is Essential
The legal profession is a classic example of having backup plans. I have worked with enough lawyers to know that the best lawyers always and always plan for contingencies. The best lawyers plan steps ahead for each likely legal scenario that could emanate from every legal case.
In business, you plan for success and you plan for failure.
2. Plan for Success, Plan for Failure
More than 70% of businesses fail in the first three years. Nine out of ten startups will fail.
That is a staggering 90% failure rate!
It is easy enough to plan for success particularly when people are buying your product, your company is growing and money is just rolling in.
However, it is harder to plan for failure.
3. Questions to Ask Yourself About Your Back Up Plan
What is your backup plan if your business fails?
Did you invest your earnings into other income generating assets?
Will you still be employable or did you go into business because it would have been difficult for you to find another job within your profession?
How else can you make money?
What else can you do?
How are you going to pay your mortgage and your other expenses?
If you have a family, how are you going to take care of them?
These are hard questions that have to be answered because the financial, emotional and mental consequences of business failure are real.
Perhaps a more apt quote should then be “Always plan for success but have a backup plan, just in case…”
About the Author
Robert Reynolds heads iSapience – a Business Process Outsourcing, B2B & B2C Lead Generation and International Business Consulting Company. Since 2000, he has helped numerous Australian and international clients across many industries including: Digital, Retail, FMCG, Advertising, Wholesale, Distribution and Logistics, Gaming, International Trade, Infrastructure and Governments.