Success the Flip Side of Failure
(How to become successful and avoid failure)

By Mark Wheatley

Committed To Your Business Success

This isn’t a copywriting trick to put you in pain and offer you a solution.

Most people that help companies improve don’t talk about failure, many business people that have failures, won’t talk about it.

So I’m daring to be different!

The reason for writing this one for you is to highlight, where other people have gone wrong in terms of business failure, or not achieving significant growth, so that you can examine the research, observations insights, to make sure that you are not falling into any of the traps and shortcomings in your business.

After all, success is the flip side of failure.

Many business owners have failed in their businesses and started again, some people say that to become successful, you have to fail a few times, its part of business.

Let’s face it business is about taking risks.

I can remember years ago, the interviewer Alan Wicker questioning a multi millionaire about his success, in reply the millionaire said, he would never bet the company on one major investment or project.

That one stuck in my mind as sound advice, measured risk.

When a financial advisor talks to you about investments, one of the things that they have to weigh up, is your attitude to risk, High, Medium and Low. The point of this is to provide you, with an investment that meets your risk profile.

So how risky is business?

This is the scary part; I’ve managed to dig a few facts and statistics regarding this:

Only five out of ten companies make it to 5 years and only three out of every ten companies survive for 10 years in the UK, according to the government VAT registration statistics 2007.

These are established businesses, this does not take into account start up’s or companies that are not big enough for VAT registration.

More than half of Britain's small businesses collapse because of cash-flow problems (source the insolvency helpline).

So you have a 70% chance of failure at around year 10, and what’s also a major concern is a lack of growth. Back in 1999 Cranfield Management School conducted some research into a number of businesses in the UK and they found that only 4% of the companies achieved significant or high levels of growth.

Now if your aim is to build up a business to sell it, or franchise it, to walk away with a sizable sum of money, it looks like the odds are stacked against you….and while we’re at it, if you’re from the USA reading this, the position is similar.

According to a small business administration study in the USA, 60% of all new businesses fail within the first six years of operation and Dun and Bradstreet estimates 82% will go under by their 10th anniversary.

What’s the Cure?

There are two issues outright failure or slow growth, let’s deal with what stops companies growing firstly.

Turning back to the Cranfield research, they believed that the barriers to growth are:

Barrier #1: The Planning Vacuum

Essentially taking risks without a proper plan, financial, marketing, operations etc managing by ‘gut feeling.’

Barrier #2: Muddled Marketing

Diversification too early, not focusing on their core products or services, the more successful firms ‘stuck to their knitting.’

Barrier #3: Mismanaged Change

Change can be complex and the larger the project, more risk, it’s a case of strong leadership and capable management that’s required to successfully manage change.

Barrier #4: The Wrong Objectives

Pretty fundamental, not costing projects correctly, not setting financial targets or simply going in the wrong direction – a case of poor management and poor marketing.

Barrier #5: Meddling and Misspent Time

I summarise this as the management having poor delegation, time management skills and poor leadership skills.

Peter Drucker the Management guru makes the point that that successful business-building requires three types of tasks

• Managing day-to-day operations
• Improving today’s business
• Creating a new business for a new tomorrow

How do you rate yourself in these three areas?

Barrier #6: No Financial Strategy – and Poor Controls

I don’t think this requires much comment.

So these are the barriers to growth according to Canfield’s research.

Back in 1999 I was also researching the subject, when I submitted my dissertation, part of the research included barriers to growth and these were my conclusions, I have also included the table I was referring to:

‘Entrepreneurs of tend to fail to realise the potential of their ideas, because they lack the business skills they need, the Government has a part to play through the education system, it is easy to see from the growth stage theories including the Barriers to Growth developed in the Bolton Report how firms fail because of the personal characteristics of the owner-manager coupled with the managerial problems they face and the business environment that they are working in. These personal deficiencies have been researched by Larson and Clute (1979) their findings are detailed in Table 11.’

Rather than get too bogged down with this academic style I’ve attached the tables in appendix 1.

Now I hope I’ve not depressed you too much, but there is a pattern in all of this research and the last bit I want to give you, hammers the point home even further.

When considering outright failure this is what I found.

‘More than half of Britain's small businesses collapse because of cash-flow problems.’ source the insolvency helpline. They give 65 reasons why businesses fail See appendix 2 it can be summarised as:

Inadequate Marketing
Inadequate Management and Leadership
Inadequate Financial Control

Quality policies and procedures - making the operations work smoothly, I’ve included in ‘Management and Leadership.’

Many of the financial control problems can be avoided through better marketing, for example if sales are higher and payments are collected on time, cash flow will improve.

Conclusion

Since success is the flipside of failure and this article spells it out where things go wrong, your task should be to address any areas of weakness that you or your team have in relation to the findings.

So if you’re lacking in any of these areas what are you going to do about it?

As an exercise get your team together and rate your performance against the points raised, look at the 65 reasons in appendix 2 and consider if any apply, if they do how can you improve?

This article is a summary of some of the points I cover in a key note speech on the subject, where I go into detail about how you grow a more successful business.

If you have any concerns or if you want to book me to speak on the subject, you have my contact details.

I hope you’ve found this article informative and useful, any feedback would be appreciated.

If you want to know more about the subject or have any questions relating to our sales improvement programmes, you can call me on 01623 720022 during normal business hours or click this link to let me know when it’s a good time to talk.

How successful do you want to be?

Sincerely

Mark Wheatley

Mark Wheatley is a business growth and marketing expert who specialises in growing small to medium sized businesses through low risk marketing strategies and improving sales skills.