Why Businesses Fail: Revisionist View

Nice post last week by Paul Brown, in the New York Times, titled How to Avoid Becoming a Failure Statistic. He pays proper homage first to the standards, like watching the cash flow indicators, and working your plan, but then goes on for some refreshing reminders.

How about this for saying it straight:

“But sometimes, the painful reality is that a business falls apart for one reason: You.” he writes. “In the end, when any company is suffering, there is a question every entrepreneur must ask when he or she looks in the mirror: Am I killing my own business?”

Then he suggests “focus, focus, and focus.” I don’t need to quote him here. I’ve certainly written the same thing on this blog often enough. Here’s his take on that:

Karyn Greenstreet, who describes herself as a self-employment expert and small-business coach, writes, “Dun & Bradstreet recently did a study and determined that ’90 percent of small businesses that fail do so because of a lack of skills and knowledge on the part of the owner’.”

She suggests a tip that could keep you in business longer.

Entrepreneurs, she points out, frequently get excited about a new idea but they are either unable to figure out if it is a true opportunity, as opposed to a momentary blip in the marketplace. And even it is something worth considering, they don’t know how they should go about trying to capitalize on it.

What to do?

“Test every new idea against your business plan and mission statement before deciding whether to undertake it or not, and then ask yourself, ‘Do I have the time and skill to implement this?’”

Well said. And then there’s this one:

Given the competitive landscape, a small-business owner needs to “understand his or her market as well as he or she understands their best friend, their spouse, or the back of their hand,” argues Shane Messer, chief executive of the Incubator Group, a private equity firm in Nashville. “So much so that they can predict movements and purchasing habits with uncanny accuracy.”

“I cannot stress this enough,” he adds. “The absolutely, positively, most important skill that you can develop, without exception, is the ability to learn your market so well that you can predict what will make people react, buy and feel satisfied. Without it, you will undoubtedly fail.”

Funny though, when you look at it well, how much of this is obvious, and how much of it can be restated in more familiar terms. Declining sales, problems collecting receivables, under capitalization … too often about not selling what people want to buy. And, as you look at this list, ask yourself: how much of this is just that?


Leave a Reply

Your email address will not be published. Required fields are marked *