Managing a company efficiently is about organisation, focus and process as a massive 55% of businesses don’t make it to their fifth birthday. The observers offer useless ‘insight’ as to why this occurs. I continuosly observe three key reasons why this tragedy occurs so often and to so many people with different backgrounds, education and skill.

The first reason is insufficient market understanding.

Refusal to look at the water ahead. For example Individuals have the idea, build the product and then expect the market to appear and purchase. In networked age there is no excuse for lack of research before spending any time and cash on creating a product until you have robust evidence there is a market.

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

The majority of folks starting a business know their trade, how to deliver a service or manufacture a product, but not how to run a business.  Having the ability to understand and track the balances in the Income statement or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted coherently by the business publications, online resources and those with the knowledge such as CPAs and bookkeepers. This domain is further exacerbated by technology vendors and their affiliates peddling small business accounting software at fledgling businesses.

Small business accounting software isnt a complete answer.

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 wired together to give a comprehensive view of the business. One software developer NetSuite had the vision to see the gap in the market and began offering its small business ERP software. NetSuite competitors have seen the gap as well and as a result cheaper easier to use solutions have appeared.

The final reason companies fail is because of a dirth of process and procedures that provide the vital disciplines and consistency a business must have to work effectively.

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