Reasons Why Small Businesses Often Fail (No. 1) – Lack of Planning

The following is a media release issued on 17th November by Antony D. Inman of Club Red Consulting:


The black box flight recorder

The flight recorder or ‘black box’ as it is known!
Image courtesy of


You see a lot of articles these days about the secrets of success, the habits of winners, how to do this, that and the other, but you can often learn just as effectively by looking at why things went wrong.

Perth business consultant, coach and mentor, Tony Inman cited the example of the aircraft industry, where the examination of a ‘notifiable incident’, or in the worst case, a crash, leads to a focus on attention to details and a commitment to avoid repeat instances.

“When you look at the statistics of small business failures, something approaching 95% in the first two to five years, then it’s important to understand what mistakes those people made, so that you can get it right and avoid crashing in business yourself”, said Mr Inman.

“There’s an old acronym of ‘the Five P’s in management studies that goes, ‘Proper Planning Prevents Poor Performance’, he continued.

Mr Inman was reminded of a well-known saying that, ‘He (or she) who fails to plan, plans to fail’, which he said is particularly true in this context.

“I’ve been fascinated by why some businesses succeed and others fail, ever since I was completing a management course as a teenager and I had to read case studies from management theorists such as Peter Drucker and John Adair about companies like General Motors and Ford, and I began to follow the stories of people like Sir Richard Branson of Virgin fame.”

Where do I start?

Where do I start?

Mr Inman remarked that he had begun consulting and coaching after selling his tourism business of 14 years, as a result of a casual conversation with a fellow swimmer at Beatty Park Leisure Centre one day.

“This gentleman was considering setting up a business doing a lawn-mowing round and he started asking me questions about what he needed to do, how to structure it and so on. I thought they were obvious questions until I realised that the answers were obvious to me because I had been in business for years and had set up nineteen of my own, some successes and some not. The answers were not obvious to him at all because he had never run his own business and didn’t know where to start.”

Mr Inman said that it was crucial to the success of an enterprise to put together at least a basic business plan, though the more detailed, the better. As a minimum it should include:

•    Why you are tackling this business project
•    Who your target market will be
•    What problem or problems you are solving for your intended customers
•    The amount of money required to set up and start your venture and the potential return on your investment
•    Whether you have the skills or experience to succeed in your chosen market
•    Some notion of the eventual exit strategy (selling the business, licensing or franchising the concept etc)

Mr Inman added there would be many more facets of the business that would have to be considered in the areas of: marketing; financial controls; personnel planning; administration and operational systems; and the development of products and services.


Fail to plan = Plan to Fail

He expanded that not only must you consider and develop your strategies in each of these areas, you also need to bind the whole thing together by establishing the key areas of values, purpose, vision and mission for the business, so that you can be clear on your objectives and build a business culture for you and your team.

Mr Inman added that, “I never cease to be amazed at how many businesses just don’t do this, even those that have been trading for a few years sometimes. One of my maxims has always been that ‘Unless you’re moving forwards, you’re slipping backwards’, so it’s important to revisit your plan, at least on an annual basis, because nothing stands still for long in today’s fast changing business world.”

He concluded that you should also research, “Who’s doing it well, and who has failed and why?”, so you can learn from other peoples’ experiences, good and bad, which may save you costly mistakes.

Mr Inman’s company, Club Red consults to, and coaches business owners to be more effective, so that they can lead more fulfilling, less stressed and ultimately happier lives. Information is available from or by calling (08) 9328 2203.

Tony Inman is an entrepreneur, presenter and author with over 33 years of management experience, mostly in retail, tourism, transport and cleaning, of which over 18 have been spent running his own businesses here in Perth. He is also a registered business mentor at Curtin University’s Centre for Entrepreneurship.

by Tony Inman

TONY INMAN is the CEO of Club Red Inspiration. An entrepreneur who has set up over 20 businesses, Tony is a business, life and mindset coach, consultant, mentor, presenter and trainer. A former mentor at Curtin University’s Centre for Entrepreneur-ship, he has coached hundreds of business owners and executives across the globe. Tony is the author of several books including ‘If Life’s Worth Doing, It’s Worth Doing Well.’ He is passionate about helping people to fulfil their potential and follow their dreams.