Companies need efficient process, the focus of leadership and structure that can adapt to enable the company to grow safely as a massive 55% of businesses don’t survive the first five years. The observers offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy happens so often and to so many individuals with different backgrounds, qualifications and knowledge.

The primary reason is insufficient market understanding.

No foresight. For example Individuals have the concept, build the product and then sit back and wait for the market to come and buy. In networked age there is no excuse for lack of research prior to spending any time and money on building a product until you have firm evidence there is a market.

The number two reason is lack of comprehension of the basics of business.

A significant proportion of folks starting a business know their trade, how to offer a service or make a product, but not how to run a business.  Being able to read and follow the balances in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted coherently by the business publications, online resources and experts with the knowledge such as accountants and bookkeepers. The problem is made worse by greedy and short sighted vendors such as Sage software misleading the market by selling only a portion of the functionality actually needed by small companies.

Small business accounting software is only half of the solution.

Large enterprises way back figured out that all of their Information systems should be fused together to give them a total view of the business and then along came ERP software solutions and packages. One vendor NetSuite had the foresight to see the gap in the market and began offering its small business ERP software. NetSuite pricing has since increased and put their technology out of the financial reach of small businesses.

The third reason companies fail is because of a dirth of process and procedures that put in place the essential disciplines and consistency a business must have to operate efficiently.