
Businesses need effective process, the focus of leadership and structure that can stretch to enable the company to grow safely as a massive 55% of businesses don’t make it to their fifth birthday. The observers offer shallow explanations as to why this happens. I continuosly observe three key reasons why this tragedy happens so often and to so many individuals with different backgrounds, qualifications and skill.
The primary reason is insufficient market understanding.
No foresight. For example People dream up the concept, build the product and then expect the market to flock and buy. In this connected age there is no excuse for lack of investigation before wasting any time and money on creating a product until you have solid evidence there is a market.
The second reason is lack of comprehension 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 know very little about running a company. Having the ability to read and follow the balances in the profit and loss or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted well by the business books, online resources and experts with the knowledge such as accountants and bookkeepers. Vendors such as Sage software and Intuit aggressively fool business managers with their messaging that their packages are the cure for all ills.
Sage software and other vendors as usual are underserving small businesses.
Until recently ERP software solutions and packages were only affordable by corporations who had figured out that the back and front office systems need to be fused together to give a comprehensive picture of the business. One software developer 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 companies don’t make it is a because of the absence of good management processes and policies to enable a sustainable fabric of disciplines and behaviours.
