Learn from Why Businesses Fail

Most small business owners are frustrated. Why? Because…. Need to change Constantly blindsided Problems with their cash flow, people, sales, etc. Too much time on the job They aren’t having Fun anymore

Most small business owners are frustrated. Why? Because….

Need to change

Constantly blindsided

Problems with their cash flow, people, sales, etc.

Too much time on the job

They aren’t having Fun anymore

“ To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of disciplines .” Steve Jobs - CEO of Apple Computers and Pixar Media

98% of all businesses in the industrial world are micro-businesses (25 employees or less). 87% of micro-businesses fail every year. U.S. Small Business Administration Statistics on Business Failures

98% of all businesses in the industrial world are micro-businesses (25 employees or less).

87% of micro-businesses fail every year.

U.S. Small Business Administration Statistics on Business Failures Old: 50% of businesses fail in first year 95% of businesses fail in five years New: 33% of businesses fail in two years 52% of businesses fail in four years

National Small Business Association 2007 Survey of Small & Mid-Sized Businesses Concerns: Economic Uncertainty 42% Cost of Health Benefits 39% Lack of Available Capital 31% Lack of Qualified Workers 23%

If you were to “ G o o g l e ” the phrase, “Why businesses fail”, you would get…. Pages and pages of lists. The Top 10 Reasons, the Top 7 Reasons, the Top 25 Reasons, etc. Lists full of cash flow problems, people problems, operations problems, debt problems, etc. But…..They’re really all just Symptoms of the problems

So…..What are the real reasons that businesses fail? The Business Owners lack in Business Skills Business Experience Business Planning

So…..What are the real reasons that businesses fail?

The Business Owners lack in

Business Skills

Business Experience

Business Planning

“ You can't know it all . No matter how smart you are, no matter how comprehensive your education, no matter how wide ranging your experience, there is simply no way to acquire all the wisdom you need to make your business thrive .” Donald Trump - Real Estate mogul and star of The Apprentice In other words….. You can’t know everything!

Most Business Owners used to have a job and a set of skills to do that job. They, at some point, decided that they wanted to “be their own Boss” and be self-employed. So, they built a business based on their old job . Over time, they learn that there’s a BIG difference between being “Self Employed” and actually RUNNING A BUSINESS!

In Michael Gerber’s book, “The E Myth Revisited”, he states that everyone who owns a business is actually three people in one

Technician Manager Entrepreneur Do the Business Manage the Business Drive the Business 90% 3% 7%

Technician Manager Entrepreneur Do the Business Manage the Business Drive the Business To be Successful, they must be balanced

“ I wanted to be an editor or a journalist, I wasn't really interested in being an entrepreneur, but I soon found I had to become an entrepreneur in order to keep my magazine going .” Richard Branson - British entrepreneur and Founder of Virgin Music.

Most Business Owners lack Business Skills A computer technician opens a computer shop, a musician opens a music store, a hair dresser opens a salon 90% of their capabilities involve fixing computers or playing music They may actually start off successfully and hire a few people, but Where did they get the training to handle those people, to manage their cash flow, to market to new customers, to get financing? ...... To Run a Business?

Most Business Owners lack Business Skills

A computer technician opens a computer shop, a musician opens a music store, a hair dresser opens a salon

90% of their capabilities involve fixing computers or playing music

They may actually start off successfully and hire a few people, but

Where did they get the training to handle those people, to manage their cash flow, to market to new customers, to get financing? ......

To Run a Business?

Most Business Owners lack Business Skills Marketing Concepts and Media Selection Sales Techniques and Compensation HIPPA, COBRA, FMLA, ADA, FACTA, MMA Tax Compliance and Regulatory Issues Corporate Structure and Legal Issues Accounting/Cost Accounting Procedures Manufacturing Productivity Measures Systems’ Software & Hardware Configuration Purchasing Practices Product Engineering Processes Cash versus Accrual Financial Reporting Personnel Development and Training

Most Business Owners lack Business Skills

Marketing Concepts and Media Selection

Sales Techniques and Compensation

HIPPA, COBRA, FMLA, ADA, FACTA, MMA

Tax Compliance and Regulatory Issues

Corporate Structure and Legal Issues

Accounting/Cost Accounting Procedures

Manufacturing Productivity Measures

Systems’ Software & Hardware Configuration

Purchasing Practices

Product Engineering Processes

Cash versus Accrual Financial Reporting

Personnel Development and Training

A small manufacturer of widgets that sells to boutique retail stores, finally makes a sale to Wal Mart. Suddenly, Orders go up by a factor of 20. Inventory goes up by a factor of 30. Accounts receivable go from 30 days to 120 days. Cash Flow dries up & Suppliers want payment. Why didn’t they anticipate this major upswing in operations and drain on cash flow? Must Experience be so painful? Most Business Owners lack Business Experience

Most Business Owners lack Business Experience Historic Business Cycles Traditional Industry Cycles Fluctuating Interest Rates Volatile Stock Market Activity Acquisitions of Customers or Suppliers Losing/Gaining Key Customers or Suppliers Changing Customer Preferences Manufacturing or Sales Seasonality New Government Regulations New, Non-traditional Competitors Key Resources or Materials Dry Up

Historic Business Cycles

Traditional Industry Cycles

Fluctuating Interest Rates

Volatile Stock Market Activity

Acquisitions of Customers or Suppliers

Losing/Gaining Key Customers or Suppliers

Changing Customer Preferences

Manufacturing or Sales Seasonality

New Government Regulations

New, Non-traditional Competitors

Key Resources or Materials Dry Up

Most Business Owners lack Business Planning A small arts and crafts retailer has a relatively successful store. She wants to expand and open another store or two. However, She can’t make any headway, because she always putting out fires. The bank won’t lend her any more money. She can’t explain where the business is going to her employees, suppliers or customers. She thinks she has a plan, but it’s in her head. How does she know where she’s going? You can’t see your future, and every decision is made in a vacuum.

You need a Business Plan, no matter how long you’ve been in business. Why? It will challenge what you’re trying to accomplish. You’ll be able to convince financial institutions to lend you money. It will provide you with a road map to future success. Most Business Owners lack Business Planning

You need a Business Plan, no matter how long you’ve been in business. Why?

It will challenge what you’re trying to accomplish.

You’ll be able to convince financial institutions to lend you money.

It will provide you with a road map to future success.

So…..How does a Business Owner make up for their lack of Business Skills Business Experience Business Planning and Avoid Failure!

So…..How does a Business Owner make up for their lack of

Business Skills

Business Experience

Business Planning

and Avoid Failure!

D o I t Y ourself works for….. Gardening Home Repair Home Decorating Car Maintenance

D o I t Y ourself Doesn’t Work…. Running a Business

So, Go Get Some Help!

Business Advice and Support – Most FREE Virginia Tech Corporate Research Center Vinton Area Chamber of Commerce

Call on a Professional Specialist CPA Lawyer Systems Tech Staffing Agency Ad Agency Graphic Designer Insurance Agent Networking Groups

Call on a Professional Specialist

CPA

Lawyer

Systems Tech

Staffing Agency

Ad Agency

Graphic Designer

Insurance Agent

Networking Groups

Take on a Business Advisor who can act as your Board of Directors Business Friend Confidant Business Guide Extra Set of Hands Member of Your Team

Take on a Business Advisor who can act as your

Board of Directors

Business Friend

Confidant

Business Guide

Extra Set of Hands

Member of Your Team

Take on a Business Consultant to handle a project in Marketing/Sales Human Resources Operations Systems Product Development

Take on a Business Consultant to handle a project in

Marketing/Sales

Human Resources

Operations

Systems

Product Development

Technician Manager Entrepreneur Get the help to reach LONG TERM SUCCESS & AVOID FAILURE

“ You can't know it all . No matter how smart you are, no matter how comprehensive your education, no matter how wide ranging your experience, there is simply no way to acquire all the wisdom you need to make your business thrive .” Donald Trump - Real Estate mogul and star of The Apprentice

Questions?