Running 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 banal opinions as to why this happens. I continuosly observe three key reasons why this tragedy happens so often and to so many individuals with different backgrounds, qualifications and knowledge.

The primary reason is insufficient market understanding.

No foresight. For example Individuals dream up the concept, build the product and then expect the market to flock and buy. In information age there is no excuse for lack of research prior to wasting any time and cash on designing a product until you have robust evidence there is a market.

The number two reason is lack of understanding of fundamental facts about business.

A significant proportion of folks starting a business know their trade, how to offer a service or build a product, but know very little about running a company.  Being able to understand and follow the numbers in the profit and loss or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business books, online resources and those with the knowledge such as accountants and bookkeepers. This subject is further exacerbated by technology vendors and their affiliates pushing small business accounting software at fledgling businesses.

Sage software and other vendors as usual are underserving small businesses.

Until recently ERP software solutions and packages were the privilege of larger enterprises who had deduced that the back and front office systems need to be fused together to give a comprehensive picture 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 pricing has since increased and put their solution out of the financial reach of small businesses.

The final reason companies don’t survive is a because of the lack of good management processes and policies to enable a sustainable fabric of disciplines and behaviours.