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Four Ways Businesses Fail Four Ways Businesses Fail (And How Yours Will Succeed)(And How Yours Will Succeed)
Presented by:Presented by:
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ObjectivesObjectives Set the stage for understanding Introduce you to the four common
small business mistakes Explain how you can avoid these
errors to succeed
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Setting the StageSetting the Stage SBA says small companies are using
their credit cards to finance their business
Small business bankruptcies have been increasing since 1998
More than 40% of small businesses operating today will not be in business five years from now
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Setting the StageSetting the Stage Reasons sited for bankruptcy in Sullivan,
Warren and Westbrook’s report to the SBA 39% - Outside business conditions 28% - Financing 27% - Inside business conditions 20% - Tax 19% - Creditors 17% - Personal 10% - Calamities 6% - Other
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The Four Ways The Four Ways Businesses FailBusinesses Fail
F-L-O-P Financial Leadership Operations Planning
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Financial Mistakes: Financial Mistakes: Finance,Tax and CreditorsFinance,Tax and Creditors
A staggering 40% of failed small businesses cite some element of financial structure in their bankruptcy claims Failure to calculate taxes Failure to pay taxes Financing arrangements Relationships with creditors
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Leadership MistakesLeadership Mistakes Unprepared for the people, process and
technology issues in running a business Inability to find time to externally scan
for important business influencers which can hamper success
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Leadership Mistakes Leadership Mistakes (cont’d)(cont’d)
Doesn’t have expert support council Executes without a plan Sets unrealistic expectations Lacks strategic thinking skills
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Operational MistakesOperational Mistakes
People Customers
Lack of knowledge of their needs Inability to build rapport or repeat business
Employees On-the-Job training only Underestimate time and effort required to
insure satisfaction
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Operational Mistakes Operational Mistakes (cont’d)(cont’d)
Processes Inflexible No established processes to grow with company No budget to give guidance -- operate off-the-cuff No contingency plans for emergencies
Technology Not using to full potential as an enabler Think of it as a panacea
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Planning MistakesPlanning Mistakes No plans
Business Financial Operations Marketing Contingency Succession
Too busy to plan Execute ineffectively without a plan Use your plan rigidly versus fluidly
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FF-L-O-P Solutions-L-O-P Solutions
F = Financial Tax plan with a professional
Estimate your tax liability Develop a better understanding of liabilities Request quarterly alerts on due dates and
amounts
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FF-L-O-P Solutions-L-O-P Solutions
F = Financial Finance
Identify realistic minimum capital requirements Understand optimal level of capital required Audit your accounts Request a debt/equity strategy from your
financial services advisor
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FF-L-O-P Solutions-L-O-P Solutions
F = Financial Creditors and debt
Better understand the prudent use of debt Develop an understanding of what creditors
value Ask how you can enhance your
relationships with creditors
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F-F-LL-O-P Solutions-O-P Solutions
L = Leadership Find internal or external expertise to scan the
environment for potential influences Set up an objective advisory council AND listen
to them Create a flexible, actionable and
workable plan AND follow it Establish positive yet realistic
expectations
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F-F-LL-O-P Solutions-O-P Solutions
L = Leadership Practice thinking strategically
Acutely listen and observe Keep an open mind Focus View situations from multiple perspectives Assess risk Get to the bottom line
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F-L-F-L-OO-P Solutions-P Solutions
O = Operations People
Get to know what drives customer and employees Deliver what they want -- not what YOU think they want
Processes Develop them WITH the user Adjust them when needed
Technology Spend the time to learn how it can make work easier Adjust expectations about its value
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F-L-O-F-L-O-PP Solutions Solutions P = Planning
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Action StepsAction Steps
Contact your bookkeeper/accountant to find tax, finance and credit implications for your business
Set up an objective advisory council Keep your eyes peeled on the horizon or hire
someone who can Sharpen your leadership skills Think through how you can leverage people,
process and technology Plan, plan, plan
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ObjectivesObjectives
Did we set the stage for understanding?
Have we covered the common small business mistakes?
Do you better understand how to avoid these errors?
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Thank You!
Questions? Sandy Robertson
Solution Resources
Phone: 800-269-0153
Email: [email protected]
