What makes businesses fail may not be what you think.

Ask why small retail businesses fail and you’ll likely get as many different answers as people you ask. Some of the common answers:

1. People don’t have money to spend in a recession
2. Banks won’t loan money
3. Owners not watching their financing (or spending)
4. The business just can’t make ends meet and stay competitive with pricing
5. Walmart (or ___________) comes in and puts everyone out of business
6. The Internet comes along and puts everyone out of business
7. Etc
8. Etc
9. Etc

The list is long, but in reality, those reasons are just a symptom of a root cause that is the cause of the majority of small business failures; the business has failed to provide a product or service at a price that will be perceived as helpful and valuable to the consumer.

Most of today’s consumers want a positive experience when they purchase something. Many are willing to pay a little extra or travel a little further or search the Internet a little bit further to find that positive experience.

Ever wonder why some businesses seem to flourish while others (sometimes offering similar products) don’t make it? Most of the time, the answer is that the flourishing business has found a way to offer a unique shopping experience to their customers.

To survive in business today, you must offer something that is meaningfully unique. If you are not unique, you had better be cheap, however, see #4 above. To find your “niche” and become meaningfully unique, you need to use a process of innovation* to create a shopping or buying experience for your customers that provides a positive experience and a good value for the money they pay you.

After the innovation process, a plan needs to be developed to figure out the best (quickest and most effective) way to implement the new products and/or services that will make you unique and provide a great value to your customers.

A properly developed business plan will produce an innovation that will do well in the marketplace as well as a plan to implement; how you will market (get the word out about) your product and how much capital you will need to implement your offering.

Many business plans fall short of telling how the business will provide good value for the customers. Many businesses don’t have and never created a business plan to demonstrate how they would provide this value. They scraped up enough money to put some inventory on the shelf and hang out a sign without enough thought about why people would buy from them instead of similar options available.

Many existing businesses need to change or tweak their business models to survive. The business planning process that includes innovation is the best way to figure out what and how to change. Any existing business should develop a current business plan that includes the results of innovation to make sure their offerings are relevant and unique to their customers


For those wishing to launch a business, innovation is an essential component of the business planning process to make sure their offerings are relevant and unique to their proposed market.

The idea of heavily emphasizing innovation for retail business planning is relatively new and many of the sources of business plan help do not include it. In our Successful Entrepreneur program at Independence Community College, we’ll challenge you to”innovate” your products and services to be unique and meaningful before launching your business.

Our “Planning the Entrepreneurial Venture” online class is a 15 step process from business concept to business plan. Since it’s available online, you can take it from anywhere and complete the work on your business plan at your convenience. Enrollment periods include not only the beginning of each traditional school semester, but also start dates customized for an individual’s needs. For more information, email me at jcorrell@indycc.edu.

Small retail businesses are not the only ones that need to innovate to survive and thrive in the future. All businesses, community groups, educational institutions and governments must also learn to use innovation techniques to improve and enhance the way they offer their products and/or services. To hear more on this subject as well as an introduction to innovation as a way of doing business, please check out the Southeast Kansas Innovation summit to be held in Independence, KS on September 22 and 23, 2010. Go to www.InnovateSEK.org for more information.

*Innovation defined: The process of generating creative solutions for the marketplace and figuring out the quickest and most effective way to offer the solutions to your market.