The Truth About Why Small Businesses Fail
Part One of this article focused on debunking the idea that inadequate capital was a primary reason why small businesses fail. In this part we’ll look at another popular reason used to explain business failure.
Is lack of knowledge a major reason for why small businesses fail?
A culprit in failure is said to be lack of industry knowledge. That’s logical and probably true in many cases. But reasonable aptitudes and a desire to learn the business aspects of a venture can overcome that negative. We’ll use the simplest of explanation to make a point; the sandwich business.
It’s safe to assume that a person who chooses this business (as an independent and not necessarily as a franchisee) has enjoyed sandwich making before launching the venture. Friends and family look forward to sandwiches ranging from old standards to the new creations. Reading, experimenting and testing new sandwiches on others is a favorite past time. It would come as no surprise that our sandwich maker purchased a food cart and plans to work a local festival. The subject of the business is sandwich making and our entrepreneur knows the subject well. But what might be missing?
Because sandwich making has gone from a hobby to a business venture, there’s now more to the process than breads and fillings. Pricing, food costs, permits, and movable storage issues will arise. But the entrepreneur will handle those concerns in stride as part of the passion and desire for opening the business. If there was no interest in sandwiches, they’d be no drive to learn about them as a business.
All work is onerous, unless you love it
Hard work and effort are necessary to run a business, but those issues are not onerous when one loves and is attached to a venture. It’s not an effort, it’s enjoyment. It would be akin to teaching a child how to hit a baseball. The thrill of seeing the child make progress displaces the effort expended in tosses, swings and misses. Interest, love, passion or any other word describing desire is the key. The real reason why most small businesses fail is lack of interest, aptitude, love and passion. A business can be learned if there is sufficient interest. It’s that simple.
Just a word on business plans
Rarely do business plans reflect the long term reality of a venture. And very rarely does anything but the most rudimentary planning play much of a role in business success or failure. Elaborate, long range business plans have a way of evaporating when the act of DOING BUSINESS takes over.
Lack of understanding one’s entrepreneurial self is the real key to why small businesses fail
Entrepreneurship is a ‘lifestyle.’ As such, to be successful, the entrepreneur must embrace their venture as a vital, interesting part of their life. To do otherwise would be a giant step toward business failure. Entrepreneurship programs, government agencies, lawyers and accountants offer advice, but none of it holds a candle to the drive and passion brought into the mix by a person committed to fulfilling a dream. The Focus Program for Emerging Entrepreneurs takes an entirely different approach to self-employment because it deals with the entrepreneur first and the business second. It is the only philosophy or way of thinking that says PERSONAL PLANNING SHOULD ALWAYS PRECEDE BUSINESS PLANNING. Old-school approaches to self-employment have been proven woefully inadequate for decades. It’s time to face reality and see the real reason why small businesses fail.