Why Companies Go Bust – 10 Tips To Rescue It
Why Companies Go Bust – 10 Tips To Rescue It
*Stats 1.
50% of new companies liquidate or go out of business after 1st year of business.
*Stats 2.
90% of companies go bust within the first 5 years of operations.
*Stats 3.
95% of companies that build up a team of more than 8 staffs within the first year survive the first 5 years of starting the business.
*Conclusion:
Companies with a low start-up cost that don't have an effective business plan for expansion are likely busted.
So much for the alarming statistics. I've also made a couple of crucial observations on why so many businesses go bust. Here are some of them.
1. Understanding the Term 'Entrepreneurship'.
This topic alone can be an article of it's own but I'll kind of do a summary on it. There have been so many people misusing the term Entrepreneurship without knowing the true meaning to it. An Entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes. If you're not doing anything different, please don't call yourself an Entrepreneur. It's really an insult to the 'beautiful' word.
2. Me-Too Company.
I happen to see these Entrepreneur-Wannabes almost every other day. Most of the time these folks are plying trades that have been around for the last few decades or centuries. Let's call them the old-knobs. Most likely you see them in the shape of Auditing Firms, Management Consultants, Accounting Firms, Recruitment Firms, Web Design Firms, The-Self-Proclaimed-One-Stop-Shop That's Hardly Good at Anything...etc and the list goes on. These guys are the classic Me-Toos. You can hardly find anything different in the way they do things.
3. Not Understanding Your Unique Selling Proposition.
This is hardly the same as differentiation. It's a higher level than that. It's the ability to tell the prospect why should one use your service rather than your competitors rather than just being different. If a CEO who don't even know their USPs, do you expect their staff, their customers to know it? These companies normally go bust without knowing what hit them.
4. Not Having a Business Plan.
There's a saying, "If You Fail to Plan, You Plan to Fail". School kids these days easily know how to generate a Business Plan with Marketing Plans, Cash Flow Projections using Professional Business Plan Softwares. By having a comprehensive Business Plan, not just the SWOTs (Strength, Weakness, Opportunities, Threats), you're able to plan forward. You will be able to find your break even point, expansion point and when to do what. If you work backwards from there, you would also be able to have a grasp of what should be the budget to be allocated for your company's marketing needs.
5. Losing Touch on Technology.
I meet a lot of people but it seems that many folks who are half a century or older seemed to be embracing the fact that just because Technology has moved so fast that it is ok for them to not learn it. Bill Gates once said a few years back, "If your business is not on the Internet in the next 5-10 years, then you'll probably not have any business by then." I just can't wait to see that agony on the face of these Old Timers.
6. Business That Are Not Scalable.
You see many of these OMO (One Man Operations) who start their OMO just to realize that their business can't even afford to hire staffs to do their job. There are many such examples like that. E.g. Ex Senior Accountant at 50 years old decides to start his own Accounting Firm. Only to realize that not only has he got to canvass for business, he still has to run it and deliver the services. Now, he has no holidays, no off days, works his hats off and gets lesser returns for his effort. Yes it feels good to be called a CEO but please get the perspective correct.
7. Underestimating The Skills Required Starting A Business.
In order to start a business, you need to have the following skills. These are sequenced in priorities.
a) PHD (Passion, Hardwork, Drive)
b) Domain Expertise
c) Experience
d) Network / Customer Database
e) Branding (Companies that don't brand themselves will be Terminated)
f) Marketing (Web / Affiliate / Internet / Online Marketing)
g) Operations
h) Financial Knowledge
i) Perseverance (80% of Success is just by 'Turning Up')
8. Characteristics of Entrepreneurs.
Entrepreneurs who are successful are often charismatic and are good story tellers. More importantly, an Entrepreneur should be an extrovert. If you are an introvert, you need an extremely extrovert Sales Director or partner in order to complement you. However the danger is that you need to find somebody as reliable as Steve Ballmer. His 'profile' is supporter and though he's always fired up, he will never quit and start his own company and become your competitor. So if you're an introvert maybe Entrepreneurship might not just be your cup of tea.
9. Promoting Your Business.
Whether you have an online or offline business, you need to constantly market your services. You must not be shy to sell your services. If you are, you're not cut out to compete. You're company would probably go bust anyway. There are many ways to promote your business but I'll share a few important ones.
a) Know who are your customers.
b) Know where are your customers.
c) Know who have your customers.
d) Approach Trade Associations and Alumni.
e) If there are no Trade Associations of your trade, start one!
10. Network Your Business To Success.
In the old school of thought, they thought you, "It's not what you know, but who you know". That's really old stuff that's not applicable in the 21st Century. In the new school of thought, "It's not who you know but who knows you!" All Entrepreneurs are supposed to be hard-core sales people in their own right, whether they're selling their vision to the VCs and selling their services to the end consumers. If you're based in Singapore, I will suggest you join networking organizations such as ASME, SCCCI, ACE, MIS and BNI.
Why Companies Go Bust 10 Tips To Rescue It - To learn more about this author, visit Edmund 's Website.
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I've seen many people start companies not knowing what to expect. The statistics of start-ups going bust is alarming. Before you start your brick and mortar business, the following information is here to help you have a clearer idea on whether you are suitable to run your own business.
*Stats 1.
50% of new companies liquidate or go out of business after 1st year of business.
*Stats 2.
90% of companies go bust within the first 5 years of operations.
*Stats 3.
95% of companies that build up a team of more than 8 staffs within the first year survive the first 5 years of starting the business.
*Conclusion:
Companies with a low start-up cost that don't have an effective business plan for expansion are likely busted.
So much for the alarming statistics. I've also made a couple of crucial observations on why so many businesses go bust. Here are some of them.
1. Understanding the Term 'Entrepreneurship'.
This topic alone can be an article of it's own but I'll kind of do a summary on it. There have been so many people misusing the term Entrepreneurship without knowing the true meaning to it. An Entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes. If you're not doing anything different, please don't call yourself an Entrepreneur. It's really an insult to the 'beautiful' word.
2. Me-Too Company.
I happen to see these Entrepreneur-Wannabes almost every other day. Most of the time these folks are plying trades that have been around for the last few decades or centuries. Let's call them the old-knobs. Most likely you see them in the shape of Auditing Firms, Management Consultants, Accounting Firms, Recruitment Firms, Web Design Firms, The-Self-Proclaimed-One-Stop-Shop That's Hardly Good at Anything...etc and the list goes on. These guys are the classic Me-Toos. You can hardly find anything different in the way they do things.
3. Not Understanding Your Unique Selling Proposition.
This is hardly the same as differentiation. It's a higher level than that. It's the ability to tell the prospect why should one use your service rather than your competitors rather than just being different. If a CEO who don't even know their USPs, do you expect their staff, their customers to know it? These companies normally go bust without knowing what hit them.
4. Not Having a Business Plan.
There's a saying, "If You Fail to Plan, You Plan to Fail". School kids these days easily know how to generate a Business Plan with Marketing Plans, Cash Flow Projections using Professional Business Plan Softwares. By having a comprehensive Business Plan, not just the SWOTs (Strength, Weakness, Opportunities, Threats), you're able to plan forward. You will be able to find your break even point, expansion point and when to do what. If you work backwards from there, you would also be able to have a grasp of what should be the budget to be allocated for your company's marketing needs.
5. Losing Touch on Technology.
I meet a lot of people but it seems that many folks who are half a century or older seemed to be embracing the fact that just because Technology has moved so fast that it is ok for them to not learn it. Bill Gates once said a few years back, "If your business is not on the Internet in the next 5-10 years, then you'll probably not have any business by then." I just can't wait to see that agony on the face of these Old Timers.
6. Business That Are Not Scalable.
You see many of these OMO (One Man Operations) who start their OMO just to realize that their business can't even afford to hire staffs to do their job. There are many such examples like that. E.g. Ex Senior Accountant at 50 years old decides to start his own Accounting Firm. Only to realize that not only has he got to canvass for business, he still has to run it and deliver the services. Now, he has no holidays, no off days, works his hats off and gets lesser returns for his effort. Yes it feels good to be called a CEO but please get the perspective correct.
7. Underestimating The Skills Required Starting A Business.
In order to start a business, you need to have the following skills. These are sequenced in priorities.
a) PHD (Passion, Hardwork, Drive)
b) Domain Expertise
c) Experience
d) Network / Customer Database
e) Branding (Companies that don't brand themselves will be Terminated)
f) Marketing (Web / Affiliate / Internet / Online Marketing)
g) Operations
h) Financial Knowledge
i) Perseverance (80% of Success is just by 'Turning Up')
8. Characteristics of Entrepreneurs.
Entrepreneurs who are successful are often charismatic and are good story tellers. More importantly, an Entrepreneur should be an extrovert. If you are an introvert, you need an extremely extrovert Sales Director or partner in order to complement you. However the danger is that you need to find somebody as reliable as Steve Ballmer. His 'profile' is supporter and though he's always fired up, he will never quit and start his own company and become your competitor. So if you're an introvert maybe Entrepreneurship might not just be your cup of tea.
9. Promoting Your Business.
Whether you have an online or offline business, you need to constantly market your services. You must not be shy to sell your services. If you are, you're not cut out to compete. You're company would probably go bust anyway. There are many ways to promote your business but I'll share a few important ones.
a) Know who are your customers.
b) Know where are your customers.
c) Know who have your customers.
d) Approach Trade Associations and Alumni.
e) If there are no Trade Associations of your trade, start one!
10. Network Your Business To Success.
In the old school of thought, they thought you, "It's not what you know, but who you know". That's really old stuff that's not applicable in the 21st Century. In the new school of thought, "It's not who you know but who knows you!" All Entrepreneurs are supposed to be hard-core sales people in their own right, whether they're selling their vision to the VCs and selling their services to the end consumers. If you're based in Singapore, I will suggest you join networking organizations such as ASME, SCCCI, ACE, MIS and BNI.
Why Companies Go Bust 10 Tips To Rescue It - To learn more about this author, visit Edmund 's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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