Managing a business efficiently is about organisation, focus and process as a massive 55% of businesses fail in their first five years of existence. The experts 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 insufficient market understanding.
Refusal to look at the water ahead. For example Individuals have the concept, build the product and then sit back and wait for the market to appear and buy. In information age there is no excuse for lack of research prior to spending any time and money on building a product until you have robust evidence there is a market.
The second reason is lack of comprehension of the basics of business.
The majority of people starting a business know their trade, how to offer a service or make a product, but not how to run a business. Having the ability to read and track the balances in the P&L or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business books, online resources and experts in the know such as accountants and bookkeepers. The problem is made worse by greedy and short sighted vendors such as Sage software misleading the market by selling only a portion of the functionality actually needed by small businesses.
Sage software and other vendors as usual are underserving small businesses.
Large enterprises years ago worked out that all of their Information systems should be joined together to give them a total view of the business and then along came ERP software solutions and packages. One vendor NetSuite had the vision to see the opening in the market and started offering its small business ERP software. NetSuite competitors have since emerged.
The last reason businesses don’t make it is a because of the absence of practical management processes and policies to enable a sustainable fabric of disciplines and behaviours.
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