In a talk I recently attended Jamie Pride, he said that 92% of newly (ASX) listed businesses would fail within two years! I was astonished. I knew the data were bad, but not THAT bad.
I looked further into this and found that (according to the Australian Bureau of Statistics) 60% of new businesses fail in the first three years. Data from ASIC (Australian Securities and Investment Commission) suggests 44% of business in any one year would have a failure of strategic management, 40% would have poor cash-flow and 33% would have trading losses.
These data suggest small business owners, managers and operators may be awesome at stuff but suck at operating and managing a business.
So, if you’re business is more than three years old, you have had successive years of positive cash flow (including paying yourself) and you’re still operational – WELL DONE, you’re in the top 13% of all SMEs currently operational in Australia.
If not, or even if you are, the research suggests there are three things small business owners can do to protect themselves from failure (besides choosing a successful product/service to sell) are:
1. Get a mentor – use someone who has been through the process before you. They can be free or paid. But you need their advice, tips, tricks and pitfalls to avoid. As someone who has been through that process, I can tell you it is MUCH easier working with a mentor, than without one. The costs, are definitely outweighed by the benefits in time and money saved.
2. Plan – Plans and planning are not sufficient for success. However, they are necessary. In research conducted by Palo Alto Software group, small businesses that had (and used their) plans were twice as likely to succeed, twice as likely to grow and twice as likely to get funding/finance for their projects from external sources.
3. Act – Far too much time is spent planning relative to the amount of time we spend implementing and checking progress against our plan. So, once you have created your plan, make sure it transitions into business as usual. If not, change the plan (because it is not useful) or start implementing.
So, as your business (or research – and we know I think small business and research are very similar) heads into the summer, make sure you:
• Chat with your key critic about progress made throughout 2016
• Review your plans for their usefulness throughout 2016
• Update business as usual to reflect new processes, plans and procedures
• Schedule some planning and review time for early 2017.
Because we all know we cannot stop change, but we can plan for it.
Raven Consulting Group specialises in delivering high quality strategic advice to the education, research and government sectors. Richard is driven by the challenge of helping researchers be commercially smart. His strategic approach to collaboration and research translation has been making the impossible possible for more than seven years. His clients appreciate his cut-through approach. He knows the sector and how to turn ideas into reality. To find out more, call 0412 606 178, email (Richard.email@example.com) or subscribe to our newsletter.