COAST RIVER BUSINESS JOURNAL
BUSINESS COMMENT
AUGUST 2021 • 13
New businesses: Want to avoid the 50% failure rate?
A business plan can help
By Jessica Newhall
Clatsop Community College
Small Business Development Center
You wouldn’t build your dream house
without a blueprint, construction sched-
ule and budget, right? Why is your busi-
ness any diff erent? A report by Con-
vergehub reported that a staggering
50% of all small businesses fail in their
fi rst year. Imagine if 50% of all houses
that got started never ended up getting
completed!
So, why is the failure rate for busi-
nesses so high? CBInsights, a leading
market intelligence fi rm, found that the
top reasons for failure were lack of a
sound fi nancial plan (ran out of money),
there was no market need for the product or
service, the business got out-competed, or it
had a fl awed business model.
So, how does an entrepreneur improve
their chances of success? That’s where
business planning comes into play. Whether
you are starting a new business or have an
existing enterprise, a business plan is an
essential tool that ensures you have done
the proper research necessary to iden-
tify and understand the market, competi-
tion (existing and emerging) and customer
and that you have a sound business model,
operational plan and fi nancial forecast out-
lined to ensure stability and growth.
If you do a quick search on the inter-
net for business plan templates you will
fi nd dozens, if not hundreds, of options to
choose from — from the traditional long-
form narrative business plan to a more con-
temporary “lean” or one-page startup plan.
There is no one-size-fi ts-all in business
planning and it is important to pick a format
that fi ts your style, complexity, type and
stage of business, and keep in mind who
else may need to see your plan. For exam-
ple, if you are pitching investors or a bank
for startup funding, a one-page business
plan may seem a bit too simple, and you
may need to produce supplemental infor-
mation to support the summary.
As the CBInsights report pointed out,
ensuring market demand exists is critical
to business success. Many business own-
ers start their business from a place of pas-
sion or desire: passion for creating a prod-
uct or delivering a service — or a desire
to be one’s own boss and follow ones’
dreams. These can provide the tenacity to
get through the complex times of being a
Jessica Newhall
business owner, however, if nobody wants
to, or can aff ord to, buy what you are selling
the likelihood of success is slim. So, before
you pick a company name, choose a loca-
tion, build a prototype, or design a logo, do
some thorough research, including:
• Industry research: What trends exist
in the industry you are entering? Is it a
growing industry or shrinking? What
challenges and opportunities exist in the
industry? BizStats.com or IBIS World
(the SBDC can provide no-cost access)
are good places to get started.
• Market sizing: How many potential
customers are out there for my product
or service? This is particularly import-
ant in a rural and distributed region like
the North Coast or where seasonality can
impact the market size. Helpful places to
start are talking to organizations such as
economic development organizations,
the Small Business Development Center,
chamber of commerce, visitor’s bureau
or even the department of transportation
can help you understand traffi c volumes.
• Financial analysis: How do other
businesses in this industry perform
fi nancially? Bizminer.com is a very
helpful tool that analyzes the company
fi nancial data of companies by industry.
You can contact your SBDC for access
to this tool.
• Customer surveys: What do people
think about your off ering? Would they
buy it at the price point you plan to set?
How often would they buy it? Sending
out a survey or hosting a focus group of
people that look like your target market
can seem uncomfortable or awkward,
but the insight you will gain will help
you ensure that what you are planning to
sell will meet an actual need.
• Competition: Who will I compete
with once I enter the market? What solu-
tions exist out there that solve the prob-
lem that I am intending to solve? Per-
forming a thorough competitor analysis
can help you understand whether there
is a gap in the market that your solu-
tion will serve. It also will provide valu-
able insight into how much marketing
resources you will need to gain traction.
Once you have done your research,
refi ned your product or service and have
confi dence rooted in data supporting there
is adequate demand for your off ering, you
are now able to move forward in devel-
oping the remainder of your business plan
including:
• Defi ning the business model and how
your business will function
• Outlining an operational plan, includ-
ing resourcing and staffi ng
• What marketing strategy and tactics
you will use to reach your target market
• What kind of fi nancial resources your
business will need to get started
• Developing a forecast that outlines
how your company will perform fi nan-
cially and when you can expect to turn
a profi t.
This plan then becomes a roadmap for
how you will operate and grow your busi-
ness. Will it be easier to get started with-
out doing all the work to write a plan? Sure,
but as Nina and James Whiddon, winners of
the top $1,000 prize at the Clatsop SBDC’s
Business Plan Competition event recently
commented, “Few people enjoy writing a
business plan. It makes you address hard
questions that you might otherwise put off .
Once you have answered all of the hard
questions, you will have more confi dence
in your idea and that will be supported by
your plan.”
If you are ready to get a business started,
need help doing market research or have
an existing one that seems to be struggling
without a plan — the team at the Clatsop
SBDC can help at sbdc@clatsopcc.edu.
Jessica Newhall is the associate direc-
tor and Small Business Management pro-
gram manager for the Clatsop Community
College Small Business Development Cen-
ter. She can be reached at jnewhall@clat-
sopcc.edu.
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