Why do small businesses fail?

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.

Systems and athletics

Professional athletes spend much of their time training and practicing. Whether it is running, or lifting weights, or watching videos, or practicing plays, far more time is spent honing their skills than actually performing in competition. Their goal is to automatize the actions necessary for success. Their goal is to take consistent actions.

Consistent actions lead to consistent results, whether in athletics or in business. An athlete achieves this consistency through practice. A business achieves this consistency through systems.

Systems provide specific steps for completing a particular task. Just as a pitcher knows that a particular arm movement will produce a particular result, a business knows that a particular action will produce a particular result. When a business owner identifies the desired result and the actions that produce that result, he can more consistently achieve his goals.

Much of the work of a professional athlete is boring and routine. Away from the roaring crowds, his life is filled with monotony. He must exercise, watch his diet, and get sufficient rest. All aspects of his life are geared toward the achievement of the results he desires.

The same is true of a successful business–all of its parts must mesh and work together. This is the role of systems. They provide integration and cohesiveness. And like the training undertaken by an athlete, the process of developing systems and procedures might seem boring and routine. But the results are well worth the effort.

Golf is sorta like business

In an age of prima donna sports stars, one group of professional athletes stands head and shoulders above others. One group of professional athletes embody everything that is good about sports. That group is the men and women who play professional golf. (There are of course, some exceptions.)

Consider a two facts about professional golfers: they keep their own score and they call penalties on themselves. Can you imagine a football player calling a penalty on himself? Or a pitcher calling balls and strikes on his own pitches?

Golf is unique in that the players themselves apply the rules. Just a few weeks ago a player disqualified himself from a tournament after learning he had broken an obscure rule. Even more remarkable is that he did so the next day!

The essence of sports is the pursuit of a goal within a clearly defined set of rules. It is this pursuit that makes watching sports enjoyable. In most sports this pursuit involves a direct competition with others, and the competitors generally take actions to impose obstacles to fellow competitors.

Again, golf is unique in that the players do not directly compete with one another. The primary competition is against the course—an inanimate object that provides the same obstacles and challenges to each competitor. The secondary competition occurs within each player—he must control his emotions during the inevitable highs and lows that occur within a round.

Indeed, golf is largely a mental game. Players do not have to react quickly. They have time between shots to identify and consider their options.

The same is true of our small business. We have time to plan our shots. We have options that we must consider. We must make decisions. And then we must execute those decisions. Like golf, business combines the mental and the physical. Unlike golf, business is not a game.

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