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Businesses need efficient process, the focus of leadership and structure that can stretch to enable the business to grow safely as a massive 55% of businesses don’t survive the first five years. The experts offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many individuals with different experience, education and knowledge.

The primary reason is lack of market comprehension.

No foresight. For example Individuals have the idea, build the product and then expect the market to appear and purchase. In information age there is no excuse for lack of research before wasting any time and cash on designing a product until you have robust confirmed there is a market.

The number two reason is lack of comprehension of the basics of business.

A significant proportion of people starting a company know their trade, how to deliver a service or build a product, but know very little about running a company.  Being able 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 manuals, internet resources and experts with the knowledge such as accountants and bookkeepers. The problem is worsened by greedy and short sighted technology companies such as Sage software misleading the market by providing only a portion of the functionality actually needed by small businesses.

Small business accounting software isnt a complete answer.

Until recently ERP software solutions and packages were the privilege of larger enterprises who had figured out that the back and front office systems need to be joined together to give a comprehensive view of the business. One vendor NetSuite had the foresight to see the gap in the market and started selling its small business ERP software. NetSuite pricing has since increased and put their solution out of the economic reach of small businesses.

The final reason businesses fail is because of lack of process and procedures that provide the vital behaviours and consistency a business must have to work effectively.