It is a known fact that there is a high percentage of business that fail within their first three years of setting up. Having worked with a number of companies over the years we have put together our top 10 list of reasons that small business fail:
- Lack of management systems – systems are the key to creating a business that works… without you having to be there. This in turn will allow you to work ‘on’ the business and not “in” the business
- Lack of vision and purpose by principals – where is the business heading?
- Lack of financial planning and review – it is essential to have access to regular management information and hold regular board meetings.
- Over-dependence on specific individuals in the business – develop your business around ‘functions’, not ‘people’. If specific individuals are vital to your business, ensure that you have key man insurance in place.
- Poor market segmentation and strategy – Do you know who you want to market to (type of customer) and, how you want to portray your business in the marketplace (e.g. the cheapest or a premium product/service)?
- Lack of knowledge about the market and competition – Do you undertake market research and competitor analysis?
- Failure to establish or communicate company goals – communication is one of the keys to motivating your people.
- Absence of a standardised quality program
- Inadequate capitalisation or lack of funds – Cash flow is all-important for a business. Many profitable businesses fail due to lack of cash
- Owners concentrating on the technical, rather than strategic, work at hand – are you running a business, or are you self-employed?
If you would like further help and information from an accountant who is looking to help you succeed and thrive then contact us and we will arrange a free meeting to take you through our strategy meeting.
