So, what causes these setbacks? In this video, we’ll delve into five common reasons why plans fail and provide real-life examples of businesses that encountered unforeseen obstacles. 

Despite meticulous planning, conservative forecasts, and effective implementation, business plans can still fail due to various unpredictable factors.  

Let’s look at 5 reasons why this is so: 

1. Market conditions shift unexpectedly. 

Market dynamics can change suddenly and unpredictably, rendering even the most carefully crafted plans ineffective. These shifts might come from unexpected events, like a global pandemic, or evolving technology. 

Take Blockbuster, for example. Once a giant in the consumer entertainment industry, Blockbuster was a household name in the 2000s with its video game rentals, DVD-by-mail service, and cinema theaters. Despite their strong market presence and careful expansion strategy, they were eventually overshadowed by Netflix. 

Blockbuster failed to anticipate the rapid rise of digital streaming and struggled to adapt to this new market trend. Their well-planned strategy couldn’t compete with Netflix’s innovative streaming model, and they underestimated the impact of this digital shift. 

As a result, Blockbuster filed for bankruptcy in 2010. 

2. New competition or technology disrupts the status quo. 

We’re living in an era of constant disruption. New competitors can emerge and shake up even the most established businesses, regardless of how “future-proof” their plans might seem. 

Take Kodak, for instance. For decades, Eastman Kodak Company was a giant in the world of photography, with its film products used by renowned photographers like Ansel Adams and sponsoring the first Academy Awards. Despite its advancements in digital photography research, Kodak chose to focus on its profitable film business, underestimating the impact of technological changes. 

This oversight allowed competitors like Nikon and Canon to seize the opportunity, offering digital cameras that catered to consumers’ growing demand for instant, high-quality, and easily shareable photos. 

Kodak filed for bankruptcy in 2012. 

3. Consumer lifestyles and behaviour change. 

Consumer lifestyles and behaviors can shift quickly and unpredictably. Toys “R” Us serves as a powerful example of this phenomenon. 

For many years, Toys “R” Us thrived by providing an extensive selection of toys in spacious, dedicated stores. However, the company failed to anticipate the growing trend of online shopping and the rise of experiential retail. Parents increasingly preferred the convenience of buying toys from Amazon and other online retailers. 

As a result, Toys “R” Us in the United States filed for bankruptcy in 2017. Despite this, the brand continues to operate in Asia and Australia. 

4. Plans are poorly executed. 

You might assume that a coffee-loving market would eagerly embrace a well-known coffee brand, but that wasn’t the case for Starbucks in Australia. 

When Starbucks entered the Australian market in 2000, they quickly expanded, opening 84 stores within just a few years. Their approach, which had been successful in markets like China, India, and Southeast Asia, was similarly aggressive in Australia. 

However, this rapid expansion backfired. Starbucks didn’t allow enough time to build a loyal customer base and failed to align with Australian coffee preferences. Australians have a strong coffee culture with a preference for high-quality espresso drinks from local, independent cafes. Starbucks’ offerings were perceived as too generic and not well-suited to local tastes. 

By 2008, Starbucks had to close 61 of its 84 Australian stores, keeping only the most profitable ones in major cities. The company then shifted to a more cautious strategy, focusing on fewer, more profitable locations and targeting tourists and students. 

5. Market conditions change so extensively and rapidly. 

I previously mentioned how global events, like the pandemic, can disrupt even the best-laid business plans. Such events are external shocks—unforeseeable and beyond a business’s control. 

Before the pandemic, many small businesses had solid plans and were thriving. However, the sudden onset and subsequent lockdowns threw everyone’s plans into disarray. Despite government support and emergency measures, many businesses struggled to adapt and survive during this unprecedented time. 

This situation highlights the importance of flexibility and resilience. It also teaches us a crucial lesson about planning: we can’t always predict everything. Our plans are based on assumptions about customers, market trends, technology, and industry directions. Since we don’t have all the information to create foolproof plans, some will inevitably fail. 

However, this doesn’t mean we should abandon planning altogether. Planning provides a roadmap toward our goals. That’s why we use scenario planning—to prepare for various possibilities, not just one. The secret to success is being ready when opportunity arises. Planning helps us stay prepared.