Businesses need effective process, the focus of leadership and structure that can stretch to enable the business to grow safely as a massive 55% of businesses don’t survive the first five years. The commentators offer banal opinions as to why this happens. I consistently see three key reasons why this tragedy happens so often and to so many people with different experience, education and skill.
The primary reason is lack of market comprehension.
No foresight. For example People dream up the concept, build the product and then sit back and wait for the market to flock and purchase. In this connected age there is no excuse for lack of research prior to spending any time and money on building a product until you have solid confirmed there is a market.
The number two reason is lack of comprehension of fundamental facts about business.
The majority of folks starting a business know their trade, how to deliver a service or manufacture a product, but know very little about running a company. Having the ability to understand and track the numbers in the Income statement or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business books, internet resources and experts with the knowledge such as accountants and bookkeepers. IT Giants such as Sage software and Intuit callously hoodwink business owners with their marketing that their systems are the holy grail.
Sage software and other vendors as usual are underserving small businesses.
Large enterprises years ago worked out that all of their systems should be fused together to give them a total view of the business and then along came ERP software solutions and packages. One software developer NetSuite had the vision to see the opening in the market and began offering its small business ERP software. NetSuite competitors have since emerged.
The final reason businesses don’t survive is a because of the absence of well thought through management processes and policies to enable a sustainable fabric of disciplines and behaviours.
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