“Beware of little expenses. A small leak will sink a great ship”.
BENJAMIN FRANKLIN
will take about 3 minutes to read….
🇦🇺 The Australian Bureau of Statistics in its release tells us that after 4 years of operating 40% of non-employing businesses will not survive whilst employing businesses have a slightly higher chance of survival.
🇺🇸 The US Bureau of Labor Statistics paints a similar picture with 40% of businesses in the USA failing after 4 years of operating.
🇬🇧 The Office for National Statistics in the United Kingdom publishes an even more grim outlook. A whopping 60% of business will fail after 4 years.
Top 4 Reasons Why Businesses Fail
In an article published by ASIC (Australian Securities & Investments Commission) it nominates the following top four reasons as causes of failure:
1. Inadequate Cash Flow or high cash use
2. Poor Strategic Management of Business
3. Trading Losses
4. Poor Financial Control, including lack of records
That’s like, seriously OMG!
The majority of these are easy-to-fix issues.
Follow these simple methods – they work!
Let’s take a look at these one at a time.
1 of 4 : Inadequate Cash flow or high cash use
The first reason why small businesses fail is lack of cash flow or high cash use. In simple terms, not having available funds to pay your expenses.
Click here for more information on cash flow
2 of 4: Poor Strategic Management of Business
The second reason why small businesses fail is poor strategic management of business. In simple terms, no business planning at all, no goals or objectives, no targets and no measurements of success. Just going with the flow.
Click here for more information on strategies & business planning
3 of 4: Trading Losses
The third reason why small businesses fail is Trading Losses.
In simple terms, your business is not making enough money to cover your expenses.
Click here for more information on trading losses
4 of 4: Poor Financial Control, Including Lack of Records
The fourth reason why small businesses fail is poor financial control, including lack of records. In simple terms not knowing what’s happening in your business financially such as what money is coming in and going out and not having any records.
Click here for more information on financial control & record keeping
Finances & Strategic Management is step two in my 5 basic step guide on how to run a successful business. These include all those 4 key areas above such as strategic management, cash flow, financial control and record keeping.
Let’s check out the other 4 steps below and see more information on each:
It’s essential to understand these 5 steps and their content as they are the foundation of running a successful business. Practical real-business life information that every business owner needs to know.
I also have a bonus step on how to sell your business. I have included this as this can form part of your exit strategy as it did mine.
