Denial Is Our Biggest Enemy

evaluate the potential profitability of the new venture. As a normal part of the business plan procedure, three business cases were analyzed: the most probable case, a potential upside case, and a potential downside case. This is all consistent with good business practice. But then, the general manager, when presenting the business plan to the board, said, "Here is the most likely scenario, a potential upside and a potential downside. However, we can ignore the downside case because it will never happen."

The company went ahead with the new venture (assuming that it couldn't lose), as the most likely and upside scenarios predicted a reasonable profit in a reasonable amount of time. Needless to say, the downside did materialize and the venture failed within two years.

Business Brains

Business Brains

To Build Your Business It Is Crucial That You Have The Correct Info And Tools And Learn How To Build A Correct Business Plan! This is one area you must pay attention to… There are many areas of a business plan that you may not know about but need to know about. For instance... you may have no idea about an executive summary.

Get My Free Ebook

Post a comment