Why business plans fail: three checks before you start
Why business plans fail, in most cases that no amount of effort can fix: the goal contradicts itself, the starting numbers are wrong, or the market the plan lives in is dying. Steer, Don't Guess calls these the three offsets and checks them before any work begins. When a plan misses, change the plan; change the goal only when conditions or priorities have changed.
In this article · 8 sections
- Why business plans fail before work even begins
- Offset (a): the goal that cannot exist
- Offset (b): planning from a floor you are not on
- Offset (c): the Titanic test
- Plan vs goal: what to change when the plan misses
- Why plans fail for other reasons: where the three checks stop
- The fifteen minutes that save a year
- Published research
Some people do everything right and still get nowhere. They set goals, take measurements, move levers, check themselves against the table, and still they miss. Chapter 11 of Steer, Don't Guess begins with that uncomfortable sentence, and then does something most business books never attempt: it explains why business plans fail when the people running them are neither lazy nor incompetent.
The answer is three pictures:
- a man trying to board two trains leaving in opposite directions;
- a man lost in a big building who sees an open window and decides it is the exit (the window is on the tenth floor);
- a man who reaches the pier in good time and buys a ticket for the maiden voyage of the most beautiful liner in the world.
The third man did everything right. The ship is the Titanic.
Why business plans fail before work even begins
Every plan rests on three anchor points: the goal, the starting point and the environment. If any of them is shifted relative to reality, the plan is broken before the first task is done, and diligence only gets you to the wrong place faster. The book calls these shifts the three offsets.
| Offset | The picture | Check question | What to do |
|---|---|---|---|
| (a) Badly defined goal | Two trains in opposite directions | Does the list contain goals that cannot be met together? | Return to the refusal order and remove the contradiction |
| (b) Wrong starting point | The window on the tenth floor | Do my numbers match the data in the systems? | Audit the data; measure again |
| (c) Doomed environment | The maiden voyage of the Titanic | Is the industry around me growing or dying? | Change the environment, not the tactics |
Offset (a): the goal that cannot exist
"I want the lowest prices, the highest quality and a thirty per cent margin." Each part is achievable; together they usually are not. The book's arithmetic is merciless: when Andrew, the coffee shop owner at the centre of the story, tried to combine "no more than 40 hours a week" with "open a second location", the numbers were 48 hours already plus 15 more for the launch, against a limit of 40. No effort solves that. Sequence does: first one goal, then the other. This is the first reason why plans fail, and it is the easiest to catch, because it only needs a pencil. We go deeper in competing priorities vs conflicting goals.
Offset (b): planning from a floor you are not on
The second reason why business plans fail is a perception error that comes before any strategy. "We are making a profit", yet there is no money in the account because customers pay two months later. "Our customers love us", yet sixty per cent of revenue comes from one of them.
The book's most striking example is Andrew's margin. He believed it was twenty per cent; in reality it was nine, because waste was never counted. He was about to hire a second barista on the strength of the imagined figure. At twenty per cent, the hire for €1,800 a month leaves €4,200 of profit. At nine per cent, it leaves €900, and the road to a two-month reserve stretches to almost fifty months. An eleven-point error in the data turned a sensible decision into a four-year hole. The plan was not bad. The floor was wrong. (The full story is in busy but not profitable.)
A larger company version, also from the chapter: the books show €100,000 of goods in the warehouse, a physical stocktake finds half of it out of date or spoiled. Any plan built on €100,000 was built on the tenth floor.
Offset (c): the Titanic test
The third reason why business plans fail is the hardest to accept, because it is not inside your plan at all. The goals are consistent, the numbers are honest, and the larger system you operate in is fading. Even the best tactics inside a collapsing system usually lose.
The chapter's best scene is a phone call. In the seventh month, with business improving, an agent offers Andrew a ready-made unit in a shopping centre: freshly renovated, attractive price. Andrew asks the third question, not about the deckchair but about the ship. Footfall in the centre has been falling for the third year running, the anchor tenant has moved out, neighbouring units stand empty. He could have built perfect processes there; no process brings people back to a centre they are abandoning. He turns it down.
The book even shows the numbers of a fading street. If footfall falls by 3% a month because a nearby office centre closes, a year later revenue is down to about €20,800. The strongest permitted lever, prices up 5%, recovers only part of it, and a €4,500 monthly profit becomes a loss of about €1,200. The factor is stronger than all the levers combined. The solution lies outside tactics: a different place, a different format, or a different goal.
Plan vs goal: what to change when the plan misses
Chapter 10 adds the rule that keeps this from turning into an excuse to quit everything. In the Jirgenson Model, an error is a reason to change the plan. The goal changes only when conditions or priorities have changed, and that change is recorded deliberately, not drifted into. Plan vs goal is not a matter of mood; it is a matter of which anchor point moved.
So when should you give up on a business idea? The book gives four questions to tell a doomed environment from a difficult season: has the decline lasted several periods in a row; are the strongest players leaving; do the economics add up in at least one niche within your horizon; and what would it cost to leave by mistake? Without them, "doomed" becomes a label you can slap on any failure.
Why plans fail for other reasons: where the three checks stop
The three offsets do not explain every failure, and the book says so plainly: a wrong idea of cause and effect, a shortage of resources, poor execution, conflicting incentives and unacceptable risk also sink plans. What the offsets give you is the three failures you can see coming, checked in fifteen minutes before you spend a single euro.
Key takeaways
- Why business plans fail despite effort: a contradictory goal, a wrong starting point, or a dying environment.
- Check all three before work begins; each can be spotted in advance.
- A plan built on a wrong number is a plan for a floor you are not on. Audit the data first.
- When a plan misses, change the plan. Change the goal only when conditions or priorities have changed, and write it down.
The fifteen minutes that save a year
What I admire most about this chapter is its modesty. It does not promise a plan that cannot fail. It promises that the three most expensive failures will not surprise you. Andrew's refusal of the shopping centre unit is a non-event in the story, nothing happens, and that is the point: the best decision in the chapter is the disaster that never arrives.
Try the three questions on your own main goal tonight; the book says it takes fifteen minutes. Then start at the beginning with the free sample, or see how the whole model fits together in the Jirgenson Model explained. The full Chapter 11, with the formal version and every calculation, is in the book on Amazon.
Published research
It is scientifically proven that the Jirgenson Model works. The published experiment, its record and its data:
- Zenodo (DOI): 10.5281/zenodo.23964934
- Hugging Face: E5 Jirgenson Model blind test
- Kaggle: E5 blind test dataset
- GitHub: experiment folder
- Wikidata: dataset Q142022866, author Q141981336
- ORCID: 0009-0001-3034-3552
The full chapter, with every calculation, is in the book.
Buy on AmazonQuestions people ask
Why do most business plans fail?
Many fail for reasons effort cannot fix: goals that contradict each other, starting numbers that do not match reality, or a market that is shrinking faster than any lever can compensate. Checking those three first catches the most expensive failures early.
Should I change the plan or the goal?
Change the plan when results miss the target. Change the goal only when your conditions or priorities have actually changed, and record that decision explicitly.
When to give up on a business idea?
When the decline has lasted several periods, strong players are leaving, the economics do not add up in any niche within your horizon, and you have weighed the cost of leaving too early.
This topic is covered in Chapter 11, Three offsets: why even a good plan fails; Chapter 10, Steady mode and manoeuvre of Steer, Don't Guess: Setting Priorities, Reading the Numbers and Correcting Course in Business and Life. The numbers in the examples are illustrative; the book states its limits in Appendix G.
Read Chapter 1 free
The Introduction and Chapter 1, with the refusal test, about 9,500 words.