Commercial organisations need efficient process, the focus of leadership and structure that can adapt to enable the business to grow safely as a massive 55% of businesses fail in their first five years of existence. The observers offer useless ‘insight’ as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many people with different experience, education and knowledge.
The primary reason is lack of market understanding.
No foresight. For example People have the concept, build the product and then sit back and wait for the market to appear and purchase. In this connected age there is no excuse for lack of investigation before wasting any time and money on building a product until you have solid evidence there is a market.
The second reason is lack of comprehension of the basics of business.
A significant proportion of folks starting a company know their trade, how to deliver a service or make a product, but know very little about running a company. Being able to understand and follow the numbers in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted well by the business manuals, online resources and experts in the know such as accountants and bookkeepers. The problem is maginfied by greedy and short sighted technology companies such as Sage software misleading the market by providing only a portion of the functionality actually needed by small companies.
Small business accounting software is only half of the solution.
Large enterprises way back worked out that all of their Information systems should be fused together to give them a total picture of the business and then along came ERP software solutions and packages. One technology business NetSuite had the vision to see the opening in the market and began offering its small business ERP software. NetSuite pricing has since increased and put their solution out of the financial reach of small companies.
The last reason companies don’t make it is a because of the lack of practical management processes and policies to enable a cohesive fabric of disciplines and behaviours.
