Almost anyone who has ever learned business management, or has ever been interested in building their own business, had probably come across the following:
Breakeven point
Financial reports
Cashflow
Business plan
Positioning
Market segmentation
Whilst knowing these terms is very important indeed, why is it them that so little small business owners actually practice them? Why is it that the small business owner so quickly deserts those promises they made when they set up their business? What's actually happened to this cashflow they said they'd keep an eye on, what happened to their business strategy? What is actually going on with these businesses once they are set up and set off, where do they all eventually go?
Let's unveil the mystery behind the failure of small businesses.
What happens to small businesses- here are some statistics.
Unfortunately, statistics are pretty bad, Coming to think of that, they are quite cruel and evil. If you think about it, just looking at them can potentially discourage almost anyone who has set his mind on building their own business. Who in the right mind would want to do this after reading this;
According to the NY Times, only 48.8% of small businesses actually survive the first 5 years. That is 48.8%!
Undoubtedly, this is a quite scary fact and it does actually make you think twice if not three times, no?
But, fear not, if we look straight into the eyes of the statistics monster, we can see what is actually happening to these businesses, we can see right through it and crack down what is happening on that first year of running your business, what is going on there that makes all that positive energy go to waste. And even worse, what is actually happening there that makes that business owner, lose faith, stop dreaming and even bit himself up for even trying. What makes him eventually crawl back to this life of compromise, the same life only a few months ago he wanted so much to escape from. It is actually quite sad to think how many tried to follow their dreams, failed and gave up.
So what is in fact the real reason for all those failing new businesses?
Well, there are many reasons.Some would say it is;
The fierce competition.
Bad market analysis.
Poor marketing.
Wrong product.
Low demand.
Incompetent employees.
Lack of strategic planning.
Bad economy.
Virtually, any management term you can think of, can make your business collapse quite easily. Any one of these can kill this dream of yours.
But let's start climbing a little bit. Let's try and nail the real reason for failing businesses. Let's climb to the top of the problems.
Let me tell you a secret, those reasons look good in business articles and in management magazines, a lot because they sound good and they are quite fancy management terms analysts like to use. These Business analysis and senior managers love those terms so much they keep using it in their jargon, so much so,until the small business owner feels inept,under educated and wants to run and hide on it's first crippling fear that his business is not good, and that he is a dreamer and has no business setting a business of his own.
So what is the real reason? Let's say that you have overcome your fear and you are feeling quite confident. You set up your business. So why does it eventually fail?
What is the real reason?
The real reason is lack of control over the business!
Let's climb up a little bit further, up to the top.
The real reason is-lack of time!
Let me ask you a question. As a business owner, what is your real profession? Can you give an honest answer?
What if I told you, that your real profession is in fact a firefighter?
The firefighter is quite an accurate description for a small business owner. Let's talk a little bit about firefighters.
Firefighters don't really know what their day will be like. They are in waiting position. Suddenly they get a call, they rush quickly and get on the fire engine.They turn on all the sirens and red flashing lights,drive like mad to the scene of fire, often arriving late.
Use everything they have, to try and put out that fire, and then go back to the starting point, back into this waiting position until the next fire. From one fire to the other, their energies dwindle and their level of energy and vitality drops. They carry on with their day,hoping that no new fires will start. But they can't really know for sure.
Test yourself: Are you a firefighter?
Do you:
Guess how many expenses you have
Guess what your income is
Forgets to send invoices
Late to meetings or ill-prepared for them
Don't keep deadlines
Give up well deserved on income
Your pricing is low and you compromise on the price even more
Don't do enough to get new costumers
Don't plan!
All the answers are correct