Commercial organisations need efficient process, the focus of leadership and structure that can stretch to enable the business to grow safely as a massive 55% of businesses fail in their first five years of existence. The observers offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many individuals with different experience, qualifications and skill.
The first reason is lack of market comprehension.
Refusal to look at the water ahead. For example Individuals have the concept, create the product and then sit back and wait for the market to flock and purchase. In information age there is no excuse for lack of investigation before spending any time and cash on creating a product until you have firm confirmed there is a market.
The second reason is lack of comprehension of the basics of business.
A significant proportion of people starting a company know their trade, how to offer a service or manufacture a product, but know very little about running a company. Being able to understand and track the balances in the Income statement or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted well by the business publications, online resources and those with the knowledge such as accountants and bookkeepers. Companies such as Sage software and Intuit callously hoodwink business managers with their messaging that their packages are the cure for all ills.
Small business accounting software isnt a complete answer.
Until recently ERP software solutions and packages were the privilege of larger enterprises who had figured out that the back and front office systems need to be joined together to give a complete picture of the business. One vendor NetSuite had the foresight to see the opening in the market and started selling its small business ERP software. NetSuite competitors have since emerged.
The final reason businesses don’t survive is because of a dirth of process and procedures that provide the essential disciplines and continuity a business must have to perform effectively.