10-May-2011 11:25

Business Failures...

Apparently up to fifty percent of new SME businesses will sadly go bust within their first two years.


Please discuss...

...& I’ll get the ball rolling with some reasons for possible failure:

1) Poor idea

2) a) Even poorer business plan & b) rotten implementation

3) Cash flow

4) Inexperience

5) Bad luck

What do you think?

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Contributed by Lydia Bates on 11-May-2011 13:38
thank you Simon.
Contributed by Simon Morice on 11-May-2011 13:37
Tudor TV, a morality play Lydia!
Could some monkish agenda have cast "Shugsy" as Justice in this reality adaption of Respublica? Could Arrogance, Testosterone, Envy and others who fail to make the grade simply be trying to improve the enterprise of their afterlife? It convinces me.

I liked your writeup.
Contributed by Ian R McAllister on 11-May-2011 13:37

The Apprentice is brilliant entertainment: pure and simple! Think of it as a themed game show, as much as though Lord Sugar would like it to be about business, to get so many viewers good producers ensure that its not.

The only one close to business reality is Junior Apprentice: producers editing to make kids look like plonkers would never give them long term career prospects

Also, thoroughly agree with Rob Killen: the Apprentice is an amazing insight into human dynamics and how poorly sales is viewed and address in most organisations. A real, real pity!
Contributed by Lydia Bates on 11-May-2011 13:36
Absolutely Simon, expect to see a number of them hoisted by their own petards over the coming weeks. The one's who succeed are (generally) the ones who can co-operate with each other and put in the work, and don't rely on their own super inflated egos.
Contributed by Alan Stevens on 11-May-2011 13:35
I agree with Lydia, and I find the show one of the most entertaining things on the box. It's a two-screen show, like Question Time and X Factor, with as much (if not more) entertainment to be gained by joining the Twitter conversation in real time.

it's pure entertainment, and very little to do with business. I erckon iot could win a comedy BAFTA.
Contributed by Rob Killen on 11-May-2011 13:35
If these people are chosen for their entertainment value - whatever that is - then they need a degree of credibility, career wise. Most of the time, their CV's check out - some don't of course.

It is though, little different from real-life search and selection.
Contributed by Andrew Crook on 11-May-2011 13:34
People are chosen for entertainment value nothing more nothing less. There is no real loss at the end of the day if the right person wasn't chosen by Lord Sugar he's got more than his moneys worth through PR, merchandise etc.
Its manufactured junk..
Contributed by Rob Killen on 11-May-2011 13:33
Yes mate - the psychology is astonishing. The talk of course, is all designed to position isn't it? 'I'm this special person', is the immediate stance of someone craving deference rather than working towards solid respect.
Contributed by Rob Killen on 11-May-2011 13:33

I don't like the show at all but it's not a load of shite.

What it is, is a brilliant demonstration of what happens when you start employing people in a sales and general business context.

I find it hard to watch because the spectre of managing people like that causes me to have severe bouts of PTSD.

It's also great for people whose faith in themselves is a little lacking because it demonstrates just what can be achieved on the fly.

Most larger organisations, who use selling as a primary means to market, are riddled with wankers like the apprentices. believe me, if you can manage a group like that to achieve, you're doing alright.
Contributed by Wayne Conyers on 11-May-2011 13:32
No arguments from me there Andrew Crook - the 10 minutes I could watch it I was shouting at the TV, a bunch of pantomime dames and villians
Contributed by Andrew Crook on 11-May-2011 13:32
The apprentice is a load of shite, sorry but it is.
Contributed by Rob Killen on 11-May-2011 13:31

Agreed Wayne. It (the show) illustrates the value of experience in a broader context.

We had this manager at Xerox, who sued to go on about it. His reckoning was that stagnancy and complacency were huge killers in business because, although you might have twenty years of experience, that experience, in isolation of the wider business world, was only 20 x1 years experience.

I've made some serious mistakes and been party to them too and I think it's only about now, that I realise how critical breadth is along with some serious cock-ups.

There again, some of the best sales people I've worked with, have had innate marketing nous by understanding exactly who they are targeting and why.

The apprentice makes me cringe, but I dare say, I was as green as those saps are, once. Probably :-)
Contributed by Rob Killen on 11-May-2011 13:31

Agreed Wayne. It (the show) illustrates the value of experience in a broader context.
Contributed by Wayne Conyers on 11-May-2011 13:30
Rob, examples of what you have just described are aplenty on the new series of apprentice I beleive :-)
Contributed by Rob Killen on 11-May-2011 09:09
There's probably a whole raft of reasons as to why failure occurs. Some of them are well described above.

From personal experience - I've consulted and or rescued/been involved in the turn round of sixty five businesses, ranging in size from £300k to £350M. In every one of them, there's been a set of consistent threads common to all problems.

Some are simply never going to make it;

Daft management processes - inadequate focus on revenue generation.

Failing to understand the difference between marketing and promotional planning.

Greed - taking large chunks of the equity without re-investment.
Senior managers or manager/owner buys an Aston Martin on tick, thus creating a gap in the revenue forecast.

Poor or low sales skills.

Failure to understand market dynamics and life cycles.

Failure to innovate.

Bounded rationality - estate agents who hire other estate agents to diversify the business and who end up acting like estate agents when what was needed was a cold, objective view of the marketplace.

Poor accounting.

Poor staff management.

Failure to stay on top of employment legislation.

Weak marketplace positioning.

A failure to understand the revenue gap algorithm leading to subsequent poor cash flow actual.


What was a great idea three years ago, is now not a great idea but hey, let's keep plugging away.

Mediocre to poor proposition - never going to succeed.

Too much emotion in the business - too much passion and not enough concept of reality.

Susceptibility to fear of failure - constantly setting themselves up to fail. Not enough focus on the joy of success.

Diabolical planning.

No access to cash - cash allows promotion and investment.

Too much reliance on self help book bullshit.

Paranoia about making important business calls.

Lack of access to expertise.

A failure to facilitate and deliver true value exchange.
Contributed by Rob Killen on 11-May-2011 09:08
Thanks Norman - I should have added that these things fall into two main camps; opportunity and people.

Every plan I've ever analysed, had a major weakness in the way that people had fully tried to understand their opportunity. Too much guess work, not enough research and a dreadful understanding of how to formulate value, which in turn leads to a poor strategy.

The second part - people - a lack of experience, expertise, skill, insight, knowledge and pedigree.
Contributed by Norman Feiner on 11-May-2011 09:08
Terrific Rob - thanks N
Contributed by Andrew Crook on 10-May-2011 18:59
I have always had great trouble in getting funding for start-ups especially new tech. I come to the conclusion the UK isn't a great place for startups especially if you have failed in the past and lets face it every successful business man has had "a turkey" at some point. In the US they seem to be more forgiving and realise this.
Contributed by Simon Morice on 10-May-2011 18:58

Making things is quite good fun. Business, like accountancy, is terminally dull, and a form of intellectual slavery. They tried to make it interesting with networking, but that really only put a spike in the performance of dreadful hotels with their horrid and homogenous business facilities and pretend fried Indian tapas snacks.

Nope, until we can separate the dullness of business from the fun of making things then we're hosed, and we're doomed to being professional. Professional is a word which has been hijacked by small business advisors and is used to make those of us who make things, feel inadequate.

I suppose that these SMEs, of which you speak, have got two years in which to start doing something of value. Going forward, their key metrics should avoid a tendency to trend a negative improvement in their core functionalityness.
Contributed by Shamus Doherty on 10-May-2011 15:55
Lack of quality research?
Or maybe trying to combine it with another full time job.
Contributed by Gordon Wheaton on 10-May-2011 15:18
I would have said there could be any number of things. Cash flow, bad luck, not enough contacts


Contributed by George Montgomery on 10-May-2011 15:00
Not enough marketing.
Contributed by Milton Rodrigues on 10-May-2011 14:14
(Especially in this fierce Recession )

Mind you I was told this at a recent Harrow in Business Event ...

By the Commercial Manager of Lloyds Bank. :)

Contributed by Wayne Conyers on 10-May-2011 14:12
..the old 50/50 eh?
Contributed by Steven Healey on 10-May-2011 14:12
SMEs are on the bottom rung of the food chain , if major industries catch a cold we sneeze.
Contributed by Doug Jenner on 10-May-2011 14:12
No clear understanding of brand or target market.
Contributed by May King Tsang on 10-May-2011 14:11
Lack of motivation. Some business owners from what I understand are motivated by money. If they don't have the passion for what they do and are not making money in the business, the passion soon fizzles out. That's what I've been led to believe. Lack of patience might be another reason. Building a business takes patience, planning and timing in my humble opinion.
Contributed by Mike Turner on 10-May-2011 14:11
More possible reasons…
Not spending enough time on Facebook?
Contributed by Fay Olinsky on 10-May-2011 14:09
Perhaps a mentor programme and a five year let up on tax,red tape fact I am sure if all businesses who's turnover is under £60,000 pa were allowed to make a voluntary donation to the inland revenue instead of paying a couple of grand to an accounts firm...the inland revenue would more than quadruple its income and sharp accountsnts would be more interested in helping to build up small firms as future customers with a decent turnover.
Contributed by Fay Olinsky on 10-May-2011 14:08
If inexperienced business people had ALL of the information needed and ALL of the details required about the red tape and everything else involved..there would be no entrepeneurs starting up at all.
Contributed by Demos Flouri on 10-May-2011 14:08
..and Ignorance
Contributed by Demos Flouri on 10-May-2011 14:08
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