How to Prevent your Business from Falling into a Crumpled Heap?
John Grisham once revealed in a Newsweek interview that the big difference between his first and second novel was that he stumbled upon a set of rules for writing suspense novels. He went from literally giving away his first book to earning $10 million for his second. Same guy, same ideas, same knowledge base and the exact same skill with words. Every year since, he has published a new novel using the same set of rules. His annual income is currently around $18 million and his net worth estimated at $600 million. And all this for doing something he loves!
Grisham’s business is writing novels and he found a framework to help him achieve consistent success. This framework was his secret skeleton in the closet. You too can take a set of rules and change your great passion into a wildly successful revenue stream. Let’s find out how.
The Extent of Small Business Failure
If you don’t have a set of rules to follow—a framework to build your business on—then you’re likely to be part of the 45% of small businesses that fail in the first two years. But wait, those stats get worse. Canadian statistics show that 80% of all non franchised businesses fail (franchised businesses by definition must have a framework). US research indicates that 90% of small businesses fail in the first 10 years of their existence. Is it likely to be any different here? How many people do you know who have started a business only to ultimately abandon it?
Now what these statistics don’t report on is the number of surviving businesses with owners who hate their jobs. They work longer hours as the business grows and soon begin to see more and more mistakes in productivity and service delivery. In short, they have become slaves to a crumbling dream.
Causes of Business Failure
Dun and Bradstreet research cites the top 5 main causes of businesses failure as:
#1 82% Poor cash flow management skills
#2 79% Starting out with insufficient capital
#3 78% Lack of a well-developed business plan and insufficient research before starting
#4 77% Improper costing and pricing
#5 73% Being overly optimistic about achievable sales
In Summary 4 of the top 5 Reasons are to do with Numbers and Finance.
In comparison, when companies do use a framework, the results are:
● 88% report improvements in operating performance
● 66% also achieve an increase in profits
So yes, it’s critical to look for a framework. It’s like having a skeleton for the body of your business; to stop it from crumbling into a heap.
I’ll leave it there for now and let you ponder on those stats for a while. But next time, we’ll look at how these mistakes can be prevented; and how you can obtain and use a business framework.
CEO and Co-Founder
neXtep Business Builder Community Pte Ltd
Singapore ACRA Business Registration Number: 201424522Z
80 Kitchener Road #09-09/10 Singapore 208539