Commercial organisations 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 experts 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 knowledge.
The primary reason is insufficient market understanding.
No foresight. For example Individuals have the idea, build the product and then expect the market to come and buy. In this connected age there is no excuse for lack of research before wasting any time and money on building a product until you have solid confirmed there is a market.
The second reason is lack of understanding of fundamental facts about business.
A significant proportion of people starting a company know their trade, how to offer a service or build a product, but know very little about running a company. Being able to read and track the balances in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is not very often imparted well by the business books, internet resources and those in the know such as accountants and bookkeepers. The problem is maginfied by greedy and short sighted vendors such as Sage software misleading the market by selling only a portion of the functionality actually needed by small companies.
Sage software and other vendors as usual are underserving small businesses.
Large enterprises way back figured out that all of their Information systems should be joined together to give them a complete view of the business and then along came ERP software solutions and packages. One software developer NetSuite had the vision to see the opening in the market and began offering its small business ERP software. NetSuite pricing has since increased and put their solution out of the economic reach of small companies.
The third reason businesses fail is because of lack of process and procedures that provide the vital disciplines and consistency a business must have to perform efficiently.
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