Takiní Care of Business or Take this
Job and Shove It?
How to help your business
avoid failure and be a success. We share mistakes to
avoid and things you should do for your business.
BY JEFF REYNOLDS, REAP
The first and most important thing you need to succeed
in a small business is knowledge. According to a Dun &
Bradstreet report, ďBusinesses with fewer than 20
employees have only a 37 percent chance of surviving
four years and only a 9 percent chance of surviving 10
years.Ē Restaurants have a 20 percent chance of
surviving 2 years.
Of these failed businesses, only 10 percent close
involuntarily due to bankruptcy. The remaining 90
percent close because the business was not successful,
did not provide the level of income desired, or was too
much work for the effort.
The old adage, ďPeople donít plan to fail, they fail to
planĒ certainly holds true when it comes to small
business success. The failure rate for new businesses
seems to be around 70 to 80 percent in the first year.
Only about half of those who survive the first year will
remain in business the next five years.
While no person should start a new venture preparing for
failure, they do need a clear plan for success that
involves what to do if things go wrong. Every business
has a life span depicted by its business life cycle. A
business life cycle is normally defined by four stages:
Introduction, Growth, Maturity, and Decline.
Most business life cycles experience a slow introduction
and growth stage, a short maturity stage, and a rather
quick decline stage. Determining why most businesses
fail can be helpful in identifying the eventual decline
phase of a business.
Leading Management Mistakes
According to Dun & Bradstreet statistics, 88.7 percent
of all business failures are due to management mistakes.
The following list summarizes the 12 leading management
mistakes that lead to business failures.
Going into business for the wrong reasons.
- Advice from family and friends.
- Being in the wrong place at the wrong time.
- Entrepreneur gets worn-out and/or underestimates
the time requirements.
- Family pressure on time and money commitments.
- Lack of market awareness.
- The entrepreneur falls in love with the product or
- Lack of financial responsibility and awareness.
- Lack of a clear focus.
- Too much money.
No magic solutions will guarantee a business success.
However, the following items should assist in improving
the chances for success.
- Develop a business plan.
- Obtain accurate financial information about the
business in a timely manner.
- Profile of a target customer.
- Profile of the competition.
- Going into business for the right reasons.
- Networking with other business owners in similar
- Donít forget, someone will always have a lower
price than you.
- Realize that consumer tastes and preferences
- Become better informed of available resources.
- Work with your local REAP association and/or REAP
Proper planning is critical to the success of a new
business. While some of the best prepared and best
planned businesses still fail, an understanding of the
reasons for failure can help assess the overall success
potential of a business.
In planning against failure, be honest and objective,
know yourself and your limitations, and be prepared to
really manage the business. There are many ways to
achieve business success. Study the success of others,
identify business role models, and network with other
In the end, who truly knows what the definition of
success or failure truly is? To me, meeting the goals
that are set constitutes being successful. Does this
mean that, if we donít succeed, we are a failure? I
donít think so.
Operating a small business truly relies on many factors,
and sometimes it just isnít meant to be. The true
entrepreneur is the one who keeps on trying and
perseveres. We have the ability to help each other
through positive networking at our REAP meetings and
I challenge each of you to take advantage of the wealth
of information available at your meetings and in your
local area. Plan on discussing this article at your next
meeting and always feel free to contact your area REAP
Business Specialist. We are here for you and will do
what it takes in your quest for success!