Managing a business effectively is about organisation, focus and process as a massive 55% of businesses don’t make it to their fifth birthday. The commentators offer shallow explanations as to why this happens. I continuosly observe three key reasons why this tragedy occurs so often and to so many individuals with different experience, education and skill.

The first reason is insufficient market comprehension.

No foresight. For example Individuals have the concept, create the product and then expect the market to come and purchase. In this connected age there is no excuse for lack of investigation prior to spending any time and money on creating a product until you have solid confirmed there is a market.

The number two reason is lack of comprehension of fundamental facts about business.

A significant proportion of folks starting a company know their trade, how to deliver a service or manufacture a product, but not how to run a business.  Having the ability to read and follow the numbers in the Income statement or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business books, online resources and experts with the knowledge such as accountants and bookkeepers. This whole area is further complicated by manufacturers and their affiliates pushing small business accounting software at fledgling businesses.

Sage software and other vendors as usual are underserving small businesses.

Large enterprises years ago figured out that all of their Information systems should be joined together to give them a total picture of the business and then along came ERP software solutions and packages. One software developer NetSuite had the foresight to see the opening in the market and began selling its small business ERP software. NetSuite competitors have since emerged.

The last reason companies don’t survive is a because of the lack of good management processes and policies to enable a cohesive fabric of disciplines and behaviours.