Small Business

Confront the brutal truth

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Why do most small businesses fail? There are a whole host of reasons for business failure and statistically cash flow problems always tops the list. However, the problem with these explanations is that the people who conduct these surveys know little about business.

They think businesses fail because of a cash flow crisis, financial mismanagement, new competition, failure to market properly or not being an effective manager of people and hiring the wrong staff.

And while these all can kill a business, the biggest cause of business failure is the business owner/manager not confronting the brutal truth.

When Jim Collins looked at the best US businesses between 1975 and 2000 in his best-seller — Good to Great — he underlined the importance of confronting the brutal truth.

Any business owner who ends up with a cash crisis or a financial black hole can blame only one person — himself or herself.

By showing a business owner the truth it increases the chances that some action will be taken.

When business owners are made to confront the brutal truth by a business coach, a good accountant or a business mentor, they conduct a SWOT analysis, which identifies the strengths, weaknesses, opportunities and threats to the business.

Once this is done an action plan is established to tap into the business’s strengths, plan around the opportunities, eliminate threats and to make weaknesses irrelevant.

In the past, if bookkeeping was a problem, the do-everything for themselves business owner would do a course and start using MYOB or QuickBooks. Most business advisors nowadays would question the wisdom of doing this.

Marcus Buckingham in his book Go Put Your Strengths To Work advises you get your strengths together and make your weaknesses irrelevant.

This means the small business owner who is great at plumbing and earns $150 an hour is better off paying an expert bookkeeper $40 an hour to do the books.

What needs to be done for our struggling schools, just like businesses under the threat of failure, is some money has to be spent wisely. And some outside the square thinking, Edward de Bono-style, is needed.

If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, March 28, 2012

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