The Curse of the Federal Reserve and the Federal Debt Explained and Delineated: Part I

When heuristically discussing the dire 21st Century status, and flagrant economic and financial practices, of the federal government, the 20th Century federal practitioners of the problematic socialist doctrines of economist John Maynard Keynes almost always say that there can be no viable comparison between federal economics and financial policy before 1913, and that which inexorably came after that pivotal year. How true it is that a purely polemic discussion about the state of austere economic flux in the United States after 1913 cannot be adequately pursued with any degree of success in determining official culpability for the awful economic and financial mess that has prevailed in the country. To pursue this properly, the sordidly unconstitutional processes and policies legislated by the federal government during, and after, 1913 have to be recalled and examined, the guilty people responsible for the legislation and its implementation have to be named, and the deceit and conspiracy that caused the awful economic calamities and conditions, described by sad, though correct, history, to prevail in the first three decades of the 20th Century have to be examined and analyzed for what they exactly were.Hence, if the reasons for the abject economic and financial problems of the 21st Century federal government may be properly attributed to their root causes, what would those causes be, and from whence did they come? The distinguished economic analyst Henry Hazlitt, in his books, “Economics in One Lesson,” and “The Failure of the New Economics: An Analysis of the Keynesian Fallacies,” summed up the faults of the Keynesian socialist economics imposed after 1913 by Woodrow Wilson and Franklin Roosevelt into three basic categories, 1) unconstitutional taxation, 2) rampant socialism, and 3) egregious federal deficit spending in the making of a, basically, unpayable federal debt. He points out that from U.S. Supreme Court Chief Justice John Marshall’s 1792 affirming vote in the Supreme Court case McCullough v. Maryland, which declared Alexander Hamilton’s First Bank of the United States as constitutional, and that it could not be taxed by a State entity, came the 1913 unconstitutional Federal Reserve Act, in which the Article 1, Section 8 power of Congress to coin money and determine its value was relinquished by the Legislative branch and given illicitly to a private cartel of private bankers known as the Federal Reserve Board. Hamilton, a monarchist of British tradition had persuaded President George Washington to sign the bill into law in 1791, and that the Banking Act was necessary in order for the execution of the powers of Congress in Article 1, Section 8. This, of course, was not true and constitutional, as was clearly asserted by Thomas Jefferson and James Madison, but Washington, a soldier and not a scholar, was putty in the hands of the persuasively sophistic Alexander Hamilton.So, therefore, let’s take Hazlitt’s categories, one by one, beginning with unconstitutional taxation, and examine the prior and present taxing status of the federal government. Prior to the year 1913, the federal government was funded exclusively by excise taxes or tariffs, and it fared very well on those tariffs. Before the dubious ratification of the 16th (income tax) Amendment in February 1913, the federal government had very few essential constitutional responsibilities, and funded those essential responsibilities without the use of an income tax. Why was this so? It was because an income tax was an un-apportioned indirect tax and, therefore, blatantly unconstitutional and illegal for the federal government to impose. During the American Civil War, Abraham Lincoln, with impunity, blatantly violated the U.S. Constitution by unilaterally imposing an un-apportioned indirect income tax to fund the war of Northern aggression. Since he had already unilaterally suspended federal habeas corpus, an egregiously unconstitutional act, he presumed to have absolute power to do anything to reach his illegal end objectives. At the end of the American Civil War, Lincoln’s income tax was, however, immediately repealed, and during the subsequent peacetime, the federal government managed to operate efficiently, and entirely, on import taxes called tariffs. Congress was fully able to run the federal government on tariffs alone because federal responsibilities did not include unconstitutional welfare programs, agricultural subsidies, or social insurance programs like Social Security or Medicare. After the Civil War, though tariff revenues sometimes suffered under a protectionist policy ushered in by the Republican Party, which supplemented federal income via excises on alcohol, tobacco, and inheritances, the federal government always managed to operate efficiently with a balanced budget. During periods of war throughout early American history, prior to the American Civil War, the Founding Fathers were always able to raise additional revenue employing different methods of direct taxation authorized by the U.S. Constitution prior to the 16th Amendment. These alternative taxing methods gave the young American nation embarrassing peacetime budget surpluses that several times came close to paying off the national debt.After the pivotal year 1913, when indirect un-apportioned income taxation was quasi-legitimized by ratification of the 16th Amendment (when 98 percent of the electorate opposed an income tax), rampant federal spending ensued marked specifically by military upgrading, turning the allowably defensive pre-1913 U.S. military into an offensive means for wartime intervention. That egregious spending done by Woodrow Wilson and his cronies was the beginning of an inexorable unending rise in the federal debt. The crux of this article essay focuses upon the irresponsible borrowing of money to create fictitious congressional appropriations of federal revenue for unconstitutional purposes. As was duly recorded in federal financial history, the federal debt began in 1791 with the presidential administration of George Washington and $75,463,476.52 of accrued debt based upon the debt owed to the Dutch for the gold that was borrowed to finance the Revolutionary War. This debt fluctuated, increased, and decreased to $67,475,043.87 by the end of John Q. Adams’ administration in 1928. From 1829 to 1836, the debt decreased substantially under the two term administrations of Andrew Jackson to $37,513 in 1837. This was the greatest period of astute financial management in Presidential history when the federal debt was reduced within eight years by 1,798 percent. Never again would this happen with the application of excise tariffs and other direct taxes as the only means for generating federal revenue. In 1837, just one year after the lowest federal debt in the history of the republic, the debt increased 900 percent to $336,957. Then it 1838, the debt rose 8,900 percent to $3,308,124. From 1838 to 1862 the debt went from hundreds of thousands of dollars to millions of dollars and stayed below the hundred million mark until 1861, when it increased to $524,176,412.00. This debt amount was incurred even with the imposition of an unconstitutional indirect un-apportioned income tax. This was a drastic negative 578 percent increase in federal debt during the war to stop secession. During the years of the American Civil War the federal debt climbed to above the billion dollar mark, to $2,680,647,869.00.

The fiscal year 1881 began with a federal debt of $2,069,013,569.00, which was decreased during that year with the juggling of excise taxes to $1,918,312,994.00 during the Garfield/Arthur presidential administrations. From 1882 until 1899, the debt fluctuated between $1.98 billion and 1.54 billion, its lowest point occurring in 1893. In 1900, the federal debt rose to the $2.13 billion dollar mark. Finally, in 1912, just before the income tax amendment, the federal debt was $2.87 billion. After 1913, even with the application of the revenue collected from graduated income taxation of all U.S. citizens, corporations, and company businesses, there was a sizable increase until 1920. From 1920 until the beginning of the Great Depression, in 1930, the federal debt decreased from $25.9 billion to $16.9 billion due to efforts by the Harding, Coolidge, and Hoover administrations to use a significant percentage of the collected income tax revenue to apply to the standing debt. From 1929 to 1931, the debt hovered between $16.2 and $16.9 billion, with several years of increase and decrease. From 1932-on, the debt only increased until the post-World War II years of 1947-48, when, as a result of war debts partially paid by several European nations, the debt decreased by $11 billion during the first Truman administration. Therefore, shooting forward 33 years to 1981, the cumulative federal debt from 1913 until 1981 increased from $2.9 billion to a record high of $997.9 billion. With the incoming Ronald Reagan administration, the debt increased to $1.14 trillion dollars. From 1982 until the present year, 2017, there was an inexorably staggering debt increase of over 1,900 percent. Therefore, between 1913 and 2017, or one-hundred four years, the general federal debt increase was a staggering 6,899 percent. Yet, this percentage of increase is valueless in meaning unless the devaluation of the American dollar is taken into consideration during this timeframe. One has to properly determine the decrease of value, due to political inflation imposed by the Federal Reserve, of the American dollar during this timeframe. This factor goes to show the actual value of the federal debt and its ever-increasing interest, for interest is compounded 24 hours per day, seven days per week. In 1912, the U.S. one dollar silver certificate was worth 95 percent of its intrinsic value based upon a determined amount of precious metal, silver. So 95 percent of each dollar paid to the federal debt went to pay merely the interest on the debt, while not decreasing the principal amount.This is why the debt only increased from 1932 until the present day in 2017, with only five instances of minor decrease, 1947, 1948, 1951, 1956, and 1957, as an exclusive result of several nations paying portions of their war debts to the USA. This payment, made in gold, was applied to the debt directly with little effect on the principal owed. Therefore, if the federal debt has increased at such a staggering rate with the value of the American dollar steadily decreasing as a result of Federal Reserve devaluation, the real amount of money that has actually been paid on the federal debt, to date, is much less than is purported by official federal finance records. The mythical figure appears as an illusory projection of federal solvency. A simplified practical example of this is as follows. A nation-state borrows $50,000 from another nation-state and negotiates a schedule for repayment at an established interest rate of 25 percent, compounded quarterly. The borrowing state begins making quarterly payments with a medium of exchange called a “dollar,” but which has an intrinsic buying value of 50 percent less than the unit of exchange that made up the $50,000 sum that was originally borrowed. The $50,000 sum borrowed was worth 98 percent of its intrinsic value based upon a standard amount of precious metal, gold. Yet, the borrower expects to repay the debt with a unit of currency worth 50 percent less than the basic unit of currency that was borrowed, a currency which is not backed-up by precious metal. Hence, the terms of the negotiated debt cannot ever be met by the borrower with the money that he is using to repay the debt. In effect, the borrower will never pay-off the loan debt, which will keep increasing as the interest compounds quarterly.According to the famed economist Milton Friedman, President Ronald Reagan’s chief economist during the 1980s, the Federal Reserve, between the years 1926 and 1929, deliberately and covertly withdrew one-third of the currency and coin from national circulation, which became the primary cause for the run on the banks that occurred in 1929, which put in motion the Great Depression. Since the Federal Reserve is a private banking cartel, controlled by private socialist bankers who endorse Keynesian socialist economics, the reason for this deliberate action might be self-explanatory. The Great Depression resulted in the severe redistribution of American wealth and the creation of an American middle-class, one of the objectives of the Marxian communist manifesto. As is reflected by its sad history, the Federal Reserve, established by the Federal Reserve Act of 1913, has languished miserably in its total unwillingness (not inability) to abide by its congressional mandate to forestall the numerous imminent financial disasters (recessions and depressions) with which the republic continually suffers. That Franklin D. Roosevelt, as an active component of the Federal Reserve, in New York City, had a hand in this clandestine process is a matter of fact. In 1932, the one dollar silver certificate was at 75 percent of its face value, based upon the value of silver during that particular year, when the Great Depression and national unemployment was at its highest point. This is why the federal debt began its unending rise from 1932-on, which gave FDR his motivation to introduce illusionary socialist Keynesian economics to the people, with when he began his bid for the presidency in 1933 (using collected income tax money as salaries for unemployed workers to build unnecessary federal projects). As Wilson’s entry into World War I had caused the debt to increase 300 percent from 1917 to 1918, FDR’s New Deal and manipulated entry into World War II caused the federal debt to increase 500 percent, from $43 billion to $269 billion, as wartime employment and war production mitigated his socialist programs to an insolvent end. The debt that was created during FDR’s sixteen years as U.S. President was $179 billion. Hence the actual amount of money that was used between 1912 and 1945 to pay on the federal debt was devalued almost 30 percent from its 95 percent value in 1912, which caused what was collected in taxation from the States (individual wage earners, corporations, and business interests) to be reduced in value 30 percent and paid only on the accruing interest of the federal debt. War production in the USA, from 1941-45, predominately armaments, caused the federal debt to increase by $209,720,743,874 as tax rate for individuals and businesses was actually increase nearly 30 percent. The money needed to operate the significantly smaller federal government from 1941-45 was borrowed money.Simply put, rampant socialism using income tax money began in the USA as a result of rampant taxation of individuals, corporations, and businesses by the federal government for that particular purpose. From the year 1913-on, most of the money collected by the federal government from un-apportioned income taxation immediately went to pay on the existing federal debt, while most uninformed Americans actually believed that their money, collected as taxes, would be used to operate the federal government. Very little of the actual tangible collected revenue was left to fund the operation of an expanded federal government; especially after 1934, when the unconstitutional New Deal and FDR’s unconstitutional administrative agencies were finally declared constitutional by U.S. Supreme Court justices nominated by FDR and confirmed by a Democrat-controlled U.S. Senate for that express illegal purpose. Yet, when the actual revenue used to support FDR’s rampant socialism was derived from purely borrowed money from 1934 to 1941, the federal debt increased horrendously. The last decrease, from one year to a succeeding year, in the amount of the federal debt was in 1956 under the administration of Dwight Eisenhower, when the total debt decreased by $1,623,409,153.30, from $274,374,222,802.62 to $272,750,813,649.32. From 1956 until the present day, the debt has only increased.Presently, in the second decade of the 21st Century, the federal debt is $20,244,900,016,053.51, and is increasing exponentially. That is $20.2 trillion dollars, in units, or dollars that are 95 percent less in value than the U.S. silver certificate dollar of 1912! Compared to a 1912 dollar, the 2017 Federal Reserve note is worth less than five cents. The great majority of the American electorate (the voting age U.S. population) is ignorant of the issues of federal finance, and don’t realize the staggering amount, and consequence, of this debt. Since 1981, when the federal debt first exceeded one trillion dollars, the total amount of annually collected income tax money, excise tax money, and all other forms of un-apportioned taxation collected by the IRS has been routinely paid entirely on, only, the compounded interest of the multi-trillion dollar debt. Moreover, the Federal Reserve note dollar is merely paper and is not based on any precious metal, but only on a specious void of debt, and has no value in and of itself; and while the compounded yearly interest accruing on the current $20.2 trillion federal debt exceeds the total amount of income and excise taxation collected every fiscal year by the federal government, the reasonable person wonders from where the yearly money required for the operation of the federal government is derived. This is a menacing question that no one, especially socialist economists, likes to answer; but the awful answer is, nonetheless, borrowed money, $2 million dollars per day, 365 days per year.For even though the Federal Reserve one-dollar, five-dollar, ten-dollar, twenty-dollar, fifty-dollar, and hundred-dollar paper bills can be “exchanged” for food, clothing, and other merchandise as, supposedly, legal tender (as stated on the paper money), they are, in and of themselves, worthless, and can be made to have “any” value that the Federal Reserve places on them at any time. As will be subsequently shown, Federal Reserve notes are not legal tender, per the requirements set by the U.S. Constitution. Take, for example, a simple Hershey candy bar, which costs today, in some stores, one-dollar-or-more. In the year 1912, that Hershey bar cost five-cents or less (based upon a standard of silver) in any store, and remained five-cents or less until around 1968; and when someone pulled a dime from their pocket to buy one Hershey bar, the dime was made of pure silver and possessed the full 100 percent value of ten-cents. Since there are still twenty nickels in a dollar, the price of an ordinary Hershey bar, which hasn’t increased in size or quality since it was created over a hundred years ago, has ” politically (not economically) inflated” in price since 1968 over 2,000 percent. From 1968 until 1970 it increased in price to ten-cents; from 1970 until 1974 it increased to twenty-five cents; from 1974 to 1982 it increased to fifty-cents; from 1982 until the present day it has increased another fifty cents when the dollar that is used to buy it is worth less than a 1912 dime. When the price of a Hershey remained stable for over eighty years, why did this inexorable inflation have to occur, as every other bit of merchandise manufactured in, or out, of the USA has, likewise, increased exorbitantly in price? The reason that it was politically inflated in price is because the medium of exchange, the dollar, which was used to buy it, became worthless in terms of its basic value, because it ceased to be based upon a standard unit of precious metal, gold or silver.The following is a presentation from the Internet Website “What Does the Constitution Say About Gold and Silver Money?”"The U.S. Constitution is a set of instructions, a rulebook for what the federal government may do, with ALL ELSE being DENIED to it by default. Therefore, when the Constitution is lacking of specific authorization for anything, it simply means that the federal government is denied/prohibited from that thing by default.Amendments 9 & 10 are probably the clearest examples to draw upon when determining that point:AMENDMENT IX
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.AMENDMENT X
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.Emphasis addedWhen we examine the Gold and Silver as currency issue, we read the following from the Constitution:
Article I, Section 8, Clause 5: The Congress shall have Power… To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Article I, Section 10, Clause 1: No State shall… coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.So, from these articles, we can determine that:
1. The federal government is authorized to coin money.
2. The States are prohibited from coining money.
3. States do have the authority of determining what can be used as a tender in payment of debts by default, because the federal government does not have that specific authorization.
4. States are prohibited by the Constitution from making “any Thing but gold or silver coin a tender in payment of debts” (Which also proves that #3 is correct.)The face that Federal Reserve Notes are called “legal tender” and are required to be accepted is what makes them unconstitutional. They are not backed by Gold or Silver, as evidenced by the fact that there really do exist some notes out there say plainly on them that they are “payable on demand” for Gold/Silver and our modern day “notes”, say “Backed by the full faith and credit of the United States Government.”If the Federal Reserve simply removed the “Legal Tender” statement, their currency would be fine, because people could then chose not to accept it, however it is unconstitutional when referred to as legal tender, because legal tender means it must be accepted as currency with value, when it has none but the “paper it’s not printed on”, as Gerald Celente would say, and it is clearly not backed by gold or silver, as is mandated by the Constitution.”The engagingly astute student of American eco-political history must realize the true facts about the American President Woodrow Wilson, elected in 1913 as the 28th President; that he had no regard, or respect, at all for the rules of the U.S. Constitution, as written and established by the Framers; and that, because of Wilson’s disregard for the Constitution, the second decade of the 20th Century was called the first era of “progressivism,” where the active root term “progress” was tantamount to a revised pragmatic application of constitutional law and rules. While Wilson had laid his hand on the Holy Bible and swore to preserve the Constitution of the United States, in text and application, and the electorate that placed him into office had believed that he was going to abide by Constitutional law and rules, the Princeton demagogue began his first administration in 1913 with the aberrational belief that, “the separation of powers established by the Constitution prevented truly democratic government.” Affected unnaturally by the advice and opinions of his unofficial counselor, Col. Edward House, his persuasive alter-ego, he began to render government more accountable to public opinion, and held that the business of politics-namely, elections-should be separated from the administration of government, which would be overseen by nonpartisan, and therefore neutral, experts. The president, as the only nationally elected public official, best embodies the will of the people, resulting in a legislative mandate. In other words, Wilson fully believed that the legislative, executive, and judicial powers of government should be fully vested into the one tight-fist of the Executive branch. In simpler terms, Wilson wrote his own working version of the Constitution and saw and fully accepted what Count Montesquieu had defined in the 17th Century as blatant tyranny, as a better form of American government. He would have gotten along famously with Alexander Hamilton, who would have definitely preferred a monarchy over a republican form of government.His thoroughly tyrannical mindset led Wilson, a leading pragmatic proponent of a British-style national bank, to fully accept the surreptitious and clandestine efforts of the, then, Chairman of the U.S. Senate Banking Committee, Nelson Aldrich, to covertly introduce the Federal Reserve Act in 1913. Three years earlier, in 1910, Aldrich had succeeded in conspiratorially blue-printing the bill outside of Congress on John D. Rockefeller’s Jekyll Island, located off the Georgia Coast, with five of his banking cronies. Later, during the late evening of December 29, 1929, Aldrich succeeded in getting the proposed legislation introduced and passed without any deliberative debate on the floors of the Senate and House of Representatives. While the great majority of the U.S. representatives and senators were on Christmas vacation that pivotal evening, a minuscule number of them, voting as pre-arranged quorums, passed the Federal Reserve Act. Later that night, the bill was signed into law by Wilson. Though it was as unconstitutional as a golden calf set in the midst of the U.S. Senate to be worshiped, the act created a quasi-governmental banking entity that was presided over, not by the U.S. Congress, but by a cartel of pragmatic private bankers, who, like Wilson had planned, were not a part of the U.S. government. This event in 1913 was the actual beginning of the chaotic economic/financial quagmire that now, in the second decade of the 21st Century, has exacerbated to such large and unmanageable proportions over the ensuing 104 years that return to a pre-1913 economic/financial status quo-ante is seemingly impossible.Currently the Office of Management and the Budget (OMB), the Congressional Budget Office (CBO), and the many federal economists, financial analysts, and mathematicians who currently preside financially in the 2,000-plus federal Executive branch administrative agencies, administrations, and departments over this melee are not, to any degree, seeking to rectify this convoluted problem. They are, in and of themselves, significant players in the continuation of the Keynesian socialist problem, and offer no hope in the making of a viable solution. Part II of this multi-part article will deal with the actual financial processes that have caused, and continue to cause, the ever-growing federal debt to increase exorbitantly each and every fiscal year, while the value of the American dollar inexorably decreases to a nadir of utter negligibility. The conspiratorial plan for the diminution of the American republic will be thoroughly explored.

Thirteen Elements of Effective Planning

All plans are not good plans. In fact, even good plans can fail. We cannot predict the future – we can only imagine it imperfectly. In our companies and organizations, effective planning is a social activity. Deciding on a strategic planning process as a group, rather than as an individual, adds even greater complexity to an already complex task. Collaborative and effective planning techniques, then, require 13 essential elements.

1. Effective and Strategic Planning Process

First, effective planning requires a process, and that strategic planning process should include the remaining 12 elements of good planning. In collaborative team planning, that process must be structured and disciplined in order to be efficient and thorough. Without a process, your planning techniques will be awkward, inefficient and often insufficient.

2. Effective Planning Techniques: An Envisioned Future / Objective

When we envision the future, we must describe it clearly and provide specific measurements in order to judge our success. To this end, the objective of our effective planning techniques is goal we envision attaining in the future. Objectives must be clear to all involved. They must also have a scope that is commensurate with the span of control of those involved with the effective planning process. An objective that is not achievable by those tasked with developing a plan is, obviously, doomed to failure. Objectives must also be measurable. Without measurements of success, there is no means of establishing whether or not the objective was achieved, and your strategic planning process will be flawed.

3. Dynamic, Adaptable Planning

In terms of effective planning, “dynamic” means that plans are adaptable, in two ways. First, the act of effective planning considers the current and predicted environment and adapts the plan accordingly. Second, in the strategic planning process, plans must be devised in such a way so that they are not overly detailed. Effective planning ensures that your plans can adapt to changes that occur while the plan is being executed.

4. Iterative Improvements

Effective planning at your organization will also be iterative. By “iterative,” we mean that a plan will improve continuously from one iteration, or version, to another before it is executed in the strategic planning process. The iterative nature of planning supports its adaptive or dynamic nature. Iteration can be sped up by an effective planning technique known as “Red Teaming.” In Red Teaming, a group of individuals outside the planning effort are invited to criticize the plan or expose its weaknesses, acting as a form of rapid iteration and improvement.

5. Effective Planning Requires that You Learn from Experience

A complex and rapidly changing environment demands the ability to rapidly learn from the changes in that environment. Even the most well-educated and trained organization will soon become obsolescent as changes in the environment eventually overwhelm it. Good organizational planning requires sophisticated and effective planning techniques that the organization learns continually, through interaction with its environment and the execution of its plans.

6. Means to Achieve / Course of Action

The central element of all effective planning techniques is the Course of Action (COA). These are the actual tasks that must be completed, whether in parallel, in series, or a combination of both, to achieve the goal. For the most part, in a strategic planning process, the Course of Action, for simple plans, is intuitive or even obvious. However, for most organizations, plans may require great detail. Therefore, an effective planning process must be flexible enough to handle both simple and detailed plans. Effective planning processes should have the ability to repeat the planning process at successively lower levels in the organization, while supporting the objectives of the overall plan.

7. Decentralized Effective Planning

Another effective planning technique is the decentralization of plans, closely related to the flexible and successively repeatable nature of the Course of Action. Effective planning teams should not plan beyond their scope or expertise. In other words, the executive team of a large corporation should not develop the details of a strategic planning process to replace a main server in their IT infrastructure. Such a task is both out of their scope and, most likely, their expertise.

8. Individual Accountability

The scope and detail of effective planning is concluded when each task within a Course of Action is assigned to a single individual, not a team, to complete. Without individual accountability to each task and each plan, there is a significant risk of miscommunication, misunderstanding, and ultimately, failure.

9. Effective Planning Techniques Support Initiative and Good Judgment

General George S. Patton said that plans “[...] should be made by those who are going to execute them.” Decentralization and accountability go far in supporting the success of effective planning techniques. However, when a strategic planning process is developed by the team responsible for accomplishing the plan’s objective, the overall quality and likelihood of creating a successful plan improves exponentially.

10. Consider Resources

Effective planning means not committing to or wasting resources unnecessarily. In a strategic planning process, planners must determine the appropriate targets or objectives and focus resources upon those objectives. Because resources are often limited, prioritizing and planning successive phases of implementation may be necessary.

11. Assess Risk: Leadership Responsibility

Resources are considered carefully at every level of effective planning. Furthermore, the assessment of objectives, threats and resources are critical steps in every strategic planning process that, when taken together, form the basic risk assessment for any plan. Without the necessary resources to either avoid or mitigate the threats to accomplishing an objective, the risks in undertaking that plan should be given due consideration by the leadership within the organization. Because risk is often necessary, the final decision to execute the plan is left to its leaders, not the planning team.

12. Participatory and Cognitively Diverse

Isolating planning in a single individual or a group of individuals without the benefit of field experience and a diversity of knowledge, skills, and abilities is a recipe for failure. The world we live in is increasingly complex. Problem-solving in our complex world requires teams of cognitively diverse individuals contributing their unique knowledge to form a combination of effective planning techniques. If planning is conducted by a single individual or by groups of people with similar knowledge, skills and abilities, the qualities necessary to solve complex problems and to create an innovative strategic planning process will be absent.

13. The Most Effective Plans are Simple

The more complex a design, the more likely it will fail. As Statistical Process Control and Six Sigma methodologies instruct, the greater the number of steps in a process, the greater the potential for a defect. That is why it is critical that the planning process remains simple. Simplicity is not just about minimizing the number of tasks, it’s about making sure that each task is clearly defined through answering some simple questions: “who will do what and when.”

There is a paradox at work in effective preparation. It is simply this: that our human tendency is to implement plans rigidly while the purpose of a plan, in light of the complexity and constant change in the world, is to define objectives and establish a point of departure to react to change. The paradox of the strategic planning process is that effective planning does not involve merely creating a list of sequenced tasks, but establishing a constantly evolving problem-solving process that adapts and thrives in the environment.

Four Reasons Why Small Business Fail To Plan and Why They Need To Think Again

It is so widely acknowledged that a robust business plan is one of the key ingredients in small business success, it seems remarkable that anyone serious about their business could considerable it optional. For example, Business Link say, “It is essential to have a realistic, working business plan when you’re starting up a business”. A recent survey showed that small businesses were twice as likely to be successful with a written business plan as compared with those without one. The Times in their annual round up of 100 up and coming UK businesses suggest that “poor business planning” is a key reason for failure. Indeed, it’s almost impossible to find an authority that would advocate the opposite idea, a clear signal that this idea is accepted wisdom. Despite this, a recent survey shows that two thirds of small business owners run their businesses on gut instinct alone.

I had a very interesting discussion about this a couple of days ago with a good friend of mine who has run several successful small businesses in which he posited the idea of a “planning gene”. He felt that the only possible explanation for the lack of proper planning in small business was genetic.

According to his theory, the majority of people are born without the “planning gene” and this explains why so many people don’t have any written business plan, despite the overwhelming evidence of a high correlation between a robust and vigorously implemented business plan and business success. The majority of us are simply not biologically and genetically wired to plan.

This is certainly one explanation, although I have to say I have a few reservations as to the validity of his theory. I talk with small business owners about planning every day. I’m part of a small business myself. I’ve owned several small businesses over the last ten years each with varying degrees of success. In all those conversations and all that experience, this was the first (semi) serious discussion I’d had about the planning gene.

If I was to aggregate the results of the conversations I have had with actual and prospective customers on this topic, four distinctive strands emerge explaining why small business owners fail to plan. Whilst I have heard a few other explanations for the lack of effective small business planning, I am treating these as outliers and focusing on the most significant.

I’m Too Busy To Plan – More often than not, the small business owners we talk to tell us that proper planning is a luxury that only big business can afford. For them, business planning, if done at all, was a one-time event that produced a document for a bank manager or investor which is now gathering dust in the furthest recesses of some rarely opened filing cabinet. There just aren’t enough hours in the day and if forced to choose, they would do the real, physical work and leave the mental work undone, which seems to be the poor relation at best, if it is even dignified with the status of work at all.

Traditional Planning Doesn’t Work – The “I’m too busy to plan” excuse is often supplemented with this one. I’ve heard the stories of the most legendary construction overrun of all time, The Sydney Opera House, originally estimated to be completed in 1963 for $7 million, and finally completed in 1973 for $102 million, more times than I can remember. Sometimes, this idea is backed up with some actual research, such as the fascinating study by several eminent psychologists of what has been called the “planning fallacy”. It seems that some small business owners genuinely believe that mental work and planning is a bit of a con with no traction on physical reality.

My Business Is Doing Fine Without Detailed Planning – A minority of small business owners we speak to are in the privileged position of being able to say they’ve done pretty well without a plan. Why should they invest time and resources into something they don’t appear to have missed?

Planning Is Futile In A Chaotic World – Every once in a while, we hear how deluded we are to believe that the world can be shaped by our hopes and actions. This philosophical objection to planning is perhaps my favourite. It takes ammunition from a serious debate about the fundamental nature of the universe and uses it to defend what almost always is either uncertainty about how to plan effectively or simple pessimism. This is different from the idea that planning doesn’t work as these business owners have never even tried to form a coherent plan, but have just decided to do the best they can and hope that they get lucky as they are knocked hither and thither like a steel ball in the pinball machine of life.

As with all of the most dangerous excuses, there is a kernel of truth in each of these ideas and I sympathise with those who have allowed themselves to be seduced into either abandoning or failing to adopt the habit of business planning. Most small business owners feel the same dread in relation to business planning as they do to visits to the dentist, so it’s unsurprising that so many simply don’t bother. However, by turning their backs completely on planning, they are in danger of throwing the baby out with the bathwater. Taking each idea outlined above in turn, I’ll attempt to show why business planning is critical, not just despite that reason but precisely because of that reason.

I’m Too Busy Not To Plan – Time is the scarcest resource we have and it is natural that we would want to spend it doing those things that we believe will have the greatest impact. Of course, we want to spend most of our time producing, but we should also invest at least some time into developing our productive capacity. As Stephen Covey pointed out in his seminal work, “The Seven Habits of Highly Effective People”, we should never be too busy sawing to sharpen a blunted saw. Planning is one of the highest leverage activities we can engage in, as when done effectively it enhances the productive capacity of small businesses, enabling them to do more with less. Nothing could be a bigger waste of precious time than to find out too late that we have been using blunt tools in pursuit of our business goals.

If we as small business owners weren’t so busy and time wasn’t so scarce, then we wouldn’t have to make choices about what we did with our time and resources. We could simply pursue every opportunity which presented itself. However, for the busy entrepreneur, the decision to do one thing always has the opportunity cost of not being able to do something else. How can we be certain that our business is going where we want it to go without pausing regularly, scanning the horizon and making sure not only that we are on track but also making sure that we still want to get to where we are heading? I believe more time is wasted in the single-minded pursuit of opportunities that are not right than is wasted by over thinking the opportunity of a lifetime.

In short, small business owners are extremely busy and their time is precious. So much so that to waste it doing the wrong things with the wrong tools would be tragic. Small business owners that cannot afford the luxury of making expensive mistakes simply must regularly sharpen the saw through continuous business planning.

Traditional Planning Doesn’t Work, So We Need a New Approach That Does – There are some fairly large question marks over the effectiveness of traditional business planning techniques. In an age where business models are becoming obsolete in months rather than years, a business plan projecting five years into the future cannot be viewed as gospel. Nobody has a crystal ball and if they did, they probably wouldn’t be writing business plans but using their remarkable predictive powers to some more profitable end.

Dwight D Eisenhower said “plans are useless, but planning is essential”. Whilst producing a document called a business plan is far from useless, the real value lies in the process by which the plan is created in the first place. If this process can be kept alive in a business then the dangers associated with traditional planning can be minimised or avoided all together. In an environment of continuous business planning, small businesses can be flexible and adaptive to the inevitable changes and challenges they will face. Rather than quickly becoming obsolete, their plan will simply evolve with the changing circumstances.

Accepting that the plan is a living thing that will evolve necessitates a change of approach to business planning. An effective business plan is the response to the repeated asking of the questions what, why, how, who and how much. It is not a 20 – 30 page form to fill in for the benefit of a bank manager or some venture capitalist, who will probably never fully read it. A business plan should help you, not hinder you, in doing business. If traditional business planning doesn’t work for you, it’s time to embrace the new paradigm of continuous business planning.

My Business Could Do Even Better With Effective Planning – If you are one of the lucky few whose business has thrived despite an absence of traditional business planning, then I say a sincere well done. I hope that you can say the same thing in five years time.

Business life expectancy in Britain and across Europe and indeed the world are in rapid decline. A study done at the end of the eighties and then again as we marched into the new Millennium showed that life expectancy had more than halved for British businesses in those ten years, from an average of 9.7 years to 4.1 years. Just because a company once enjoyed market leadership does not mean that its future is assured. Many high street institutions have fallen victim to the recent recession. Five years ago it was inconceivable that UK retail institutions like Clinton Cards, Game, Borders, Barratts, T J Hughes, Habitat, Focus DIY, Oddbins, Ethel Austin, Principles, Allied Carpets, Woolworths, MFI and Zavvi/Virgin Megastore would all be either out of business or teetering on the brink of oblivion in 2012. Yet that is exactly what has transpired.

Any business from the smallest to the greatest is not impervious to the winds of change. A new competitor, a technological breakthrough, new laws or simply changes in fashion and consumer preference can all re-write the future of a company regardless of how bright that future once seemed. It is precisely because these risks exist that business planning is critical. To survive in business is extremely hard, but failing to effectively plan for the future or adapt to current realities surely makes it impossible and failure inevitable.

Of course, it is not necessarily the absence of plans that did for these companies but the quality of their plans and most especially the quality of their implementation. Even a poor plan vigorously executed is preferable to the finest planning and research left to rot in a drawer. Continuous business planning is effective business planning because it emphasizes implementation and regular reviews of real results as part of what should be a continual process of improving company performance rather than simply attempting to predict the future and wringing our hands when our prophecy fails to come true. We believe, like Peter Drucker, that the best way to predict the future is to create it.

Planning Is Essential In A Chaotic World – We sometimes feel small and insignificant as we try against all odds to translate our dreams into business reality. It’s easy to feel all at sea when we consider some of the challenges we face. However, whilst it is true that we cannot control the direction of the wind, we can adjust our sails and change the direction of the rudder. Difficult and challenging circumstances may come in our lives, but we can control the outcome of these circumstances by choosing which path to take.

The truth is that we are fundamentally achievement orientated as human beings. When this is taken away, we lose much of the energy and motivation that propels us forward. There have been numerous studies carried out on life expectancy rates after retirement, which show that when clearly defined goals and daily action moving in the direction of those goals are removed from our lives, the result is literally fatal. The individuals studied who failed to replace their career goals with a new focus for their retirement simply shriveled up and died. The implications for small business owners are clear. Those business owners with clear goals who take action daily that propels them in the direction of their goals are far more likely to thrive and survive than those who take any old goal that comes along or move from day to day with no defined objective other than survival.

It seems to me that precisely because life is so chaotic and challenging that effective planning is essential. Without continuous business planning, our businesses and the small business owners that work in them may find that bit by bit they are atrophying and on their way to becoming another business failure statistic.

There undoubtedly exists an antipathy for business planning felt by many small business owners. Clearly, this cannot be fully explained by the lack of a “planning gene”, but it equally cannot be fully justified by the reasons most commonly put forward by small business owners to not engage in the business planning process. These reasons must be critically re-evaluated and a commitment made to a continual and never ending process of improving the condition of their small businesses. Without such a commitment, the future for small businesses in the UK is uncertain.