Companies need efficient process, the focus of leadership and structure that can stretch to enable the company to grow safely as a massive 55% of businesses fail in their first five years of existence. The commentators offer banal opinions as to why this occurs. I continuosly observe three key reasons why this tragedy occurs so often and to so many people with different experience, qualifications and skill.
The primary reason is lack of market comprehension.
Refusal to look at the water ahead. For example People dream up the concept, build the product and then sit back and wait for the market to appear and purchase. In networked age there is no excuse for lack of investigation before wasting any time and cash on designing 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 folks starting a company know their trade, how to deliver a service or make a product, but not how to run a business. Being able to understand and track the numbers in the profit and loss or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business manuals, online resources and experts in the know such as accountants and bookkeepers. This domain 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 corporations years ago deduced that all of their systems should be joined 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 foresight to see the opening in the market and began offering its small business ERP software. NetSuite competitors have seen the opening as well and as a result lower cost easier to use systems have appeared.
The third reason companies don’t make it 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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