Running a business effectively is about organisation, focus and process as a massive 55% of businesses don’t make it to their fifth birthday. The experts offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy happens so often and to so many individuals with different experience, education and skill.
The first reason is insufficient market understanding.
No foresight. For example Individuals have the idea, create the product and then expect the market to flock and buy. In information age there is no excuse for lack of investigation before wasting any time and money on designing a product until you have solid confirmed there is a market.
The second reason is lack of understanding of the basics of business.
A significant proportion of folks starting a business know their trade, how to offer a service or build a product, but not how to run a business. Being able to understand and follow the balances in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is not very often imparted well by the business publications, internet resources and those with the knowledge such as CPAs and bookkeepers. This subject is further complicated by software companies and their partners peddling small business accounting software at fledgling businesses.
Small business accounting software isnt a complete answer.
Large enterprises way back figured out that all of their systems should be fused together to give them a complete picture of the business and then along came ERP software solutions and packages. One vendor NetSuite had the foresight to see the opening in the market and began selling its small business ERP software. NetSuite pricing has since increased and put their solution out of the economic reach of small companies.
The final reason businesses don’t survive is because of a dirth of process and procedures that put in place the essential disciplines and consistency a business must have to work efficiently.
