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Why do small businesses fail?

By Brian Phillips

According to the Small Business Administration, more than 90% of the businesses starting today will not make it to their 5th anniversary. Of those that survive 5 years, another 90% will fail within another 5 years. After 10 years, less than 1 out of 100 small businesses remain open. Why do so many businesses start with high hopes and end up as another statistic?

The reason most businesses fail is because the owner does not develop business systems. He gets what Michael Gerber (author of The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It) calls “entrepreneurial seizure”. A skilled technician decides he is tired of working for someone else and hangs out his shingle–now he’ll make the big bucks. But there is much more to owning a business than having your name on the sign.

I know because I have been there and done that. For years my business wasn’t producing the results that I wanted. I suffered all the common complaints of small business owners: unmotivated employees, too few leads, low-priced competition. And then I changed my business and my life–I developed systems.

Business success is not always a matter of working harder. You must also work smarter. Working smarter means identifying the results you want, the specific actions that create those results, and then taking those actions consistently. Developing systems and procedures for your small business provides the structure and guidelines that will consistently produce the results you desire.

My e-book, Systems Development for Small Business, will help you identify the results that you want and how to take the necessary actions on a consistent basis.

One comment - (Comments are closed)   Biz Systemz   , ,  

Silence can be golden

By Brian Phillips

It is often said that in negotiations “he who speaks first, loses.” The idea is that once you give away your position, the other party can begin to chip away at it and get more concessions. For example, if you are asking $100 for your product, the buyer can ask for a lower price. However, if you let the buyer make an offer, he may offer $110.

This adage isn’t literally and always true. Good negotiating skills, as well as a clear idea of your goals, can make speaking first beneficial. For example, if you want $100 for your product, but initially ask for $110, you have “wiggle” room to offer concessions and still get what you want.

Sales is as much about listening as it is about talking, and perhaps more so. While our goal is to sell our product or service, we should also be trying to create win-win situations. This requires listening to the other party to understand their goals and desires. It means understanding their motivations and the results they are seeking.

While we all want to tout our product or service, sometimes the best way to do this is to keep our mouth shut. Sometimes, if we do more listening than talking we will wind up with the gold.

Comments are closed   Sales/Marketing   ,  

An E-Myth Lesson

By Brian Phillips

In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It Michael Gerber tells a humorous but informative story that demonstrates how systems solve problems.

Years ago his company regularly used white boards for meetings. At the end of each meeting the leader of the meeting was responsible for cleaning the white board. In their haste to get on to more pleasant tasks, the employee would invariable hit the wall with the eraser, leaving blue marks on the wall. Despite a series of memos, meetings, signs, and other exhortations, the problem continued.

In short, the company had a conflict. Color standards dictated white walls and white boards. Cleanliness standards dictated that the white boards be cleaned promptly. But the result–blue streaks on the walls–was not acceptable. Thus was born a new system within the business.

The story demonstrates how to use systems (no surprise there). When you experience a problem or frustration (bottlenecks) within your business, rather than plead with employees to act differently, develop a system to address the bottleneck. The system will change their behavior without you becoming an ogre who is constantly complaining.

Comments are closed   Biz Systemz   ,  
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