Not suitable for work: why businesses fail

Not suitable for work: why businesses fail
DAVID WILSON
May 13, 2010

Many small business owners struggle finding the right staff, says start-up strategist Jack Garson.

Everyone bungles sometimes. If you are lucky, you only make a few trivial mistakes that can easily be fixed, enabling you to regroup fast.

If not, especially in a volatile post-downturn economy, your small business might wind up in the crowded enterprise graveyard. The number that fail is pegged at between 50 and 80 per cent: proof how easy it is to lose direction, if any existed in the first place.

Often, entrepreneurs launch start-ups on a gut instinct basis, without gauging the market. Only after investing, do they realise the gravity of the mistake. Then, if the venture limps on, there are plenty more to make.

Learn about the worst and how to correct them. A cohort of experts sheds some light.

Six critical small business blunders and how to fix them

1. Blind hiring

Misfire: Assuming they are smart enough to delegate in the first place, many small business owners have trouble hiring the right person for the right role, says start-up strategist Jack Garson. Over-confident about their interviewing skills, they are disappointed by the result.

Fix: First, establish what traits beyond experience, training, and enthusiasm the role demands. Also grasp how the applicant will perform in the position - if you like with the help the Predictive Index (www.predictiveresults.com), which Garson claims raises the successful hiring ratio from 33 per cent to over 90 per cent: "a critical improvement for any company - small or large".

2. Fuzzy logic

Misfire: A fuzzy partnership can be disastrous, according to legal analyst Kim Wright (www.cuttingedgelaw.com). Wright has witnessed many entrepreneurs choose partners circumstantially then fail to hammer out an agreement. Both sides invest heavily. Then, pushed by pressure, they focus purely on work. When an issue emerges, stress and resentment kick in: "Both names are on the website and they can't sit in a room together," Wright says.

Fix: Knuckle down - nut out a set of agreements that factors in how conflicts will be resolved.

3. Slack attack

Misfire: The worst mistake is to get comfortable and coast along on cruise control, failing to challenge or continuously analyse each department, says business coach Chris Chapman.

Fix: Recruit web-based tools - for instance social networking platforms like LinkedIn. Free or cheap, they are easy to use with strong return on investment. No MBA or IT department needed.

4. Me me me

Misfire: "By far, the biggest small business mistake I see is that too frequently owners focus on what they do, what they want to do, why they're so great at what they do," says consultant Barry Maher (www.barrymaher.com).

Fix: "The way to fix this is every bit as obvious as the problem," Maher says. Businesses must become "customer-centric", focusing on the customer. "It's not about you. It's about them."

5. Marketing phobia

Misfire: Marketing is the Achilles heel of small businesses, according to business launch expert Karin Abarbanel (www.birthingtheelephant.com). Based on her interviews with entrepreneurs across a range of businesses, Abarbanel concludes that the worst mistake small business owners make is undervaluing marketing. "They take a 'build it and they will come' attitude that can seriously hamper their chances of success."

Fix: The thrust is to redefine marketing. Think of it as sharing your passion rather than selling.

6. Feast or famine

Misfire: Failure to "manage the pipeline" is the cardinal sin, according to project management expert Martin VanDerSchouw - a member of the US President's Business Advisory Council. "Many small business leaders get so wrapped up in trying to keep the business afloat today, they fail to think about tomorrow. In a tight economy, these pressures get even greater."

Fix: Look ahead. Spend an hour a day managing the business three to six months down the track.

Source: theage.com.au