Why do 80% of small business owners fail?

Is it finance? Is it red tape? Is it that the competition's too tough? Is it crippling legislation?

It's none of these. The answer is a fatal assumption that the work, the technical skills of a business, and a business that does that work are one and the same thing. So the designer starts a design business. The hairdresser opens a hairdressing salon. The electrician becomes a contractor. Each believes that by understanding the technical work of the business, they are qualified to run a business that does that kind of work.


For if the designer didn't know how to create great design, he would have to learn how to get it done. He would be forced to learn how to make the business work, not do the work himself.

Instead, the designer finds that the job he knew how to do so well becomes one of a dozen others he doesn't know how to do at all. And the business that was meant to free him from working for someone else actually enslaves him.

He spends his whole time working IN the business, not ON the business. Doing it, not running it. Not recognising that to succeed he needs both strong managerial skills and viable systems that will enable the business virtually to run itself.

I have often met clients like this. They simply haven't seen that it isn't their business that's failing, it is them.

There is an easy answer: training. But in today's society, most of us refuse to admit that we need to learn anything and so repeat our mistakes over and over again.

We're also preoccupied with blaming someone or something for our own mistakes, which means we dont even acknowledge a problem, let alone solve it.

And most of us adhere to the myth that we want to be wholly self-sufficient. Hence we don't want anyone else to think we're not totally in control.

Two major studies of Australian small businesses demonstrate the danger in this kind of thinking.

The Williams Report studied 10,000 small businesses over 10 years. (It was actually 30,000 businesses over 14 years, but 20,000 of them failed before the project was completed.) It revealed a direct link between business survival rates and the number of training programs completed by owner-managers. Those who completed three, four or more training programs resulted in a survival rate of around 90%.

More significantly, the report revealed that the training itself had no relevance to the result; the cause was the owners' attitudes to training.

The Bailey Report then found that 70% of small business people have a defensively negative attitude toward training; 10% have an aggressively negative attitude; just 20% have a positive attitude and, of these, only half actually do anything about it.

The connection between the conclusions of these two reports is inescapable.

Similarly, two important UK studies found that here, too, owner-managers are under-performing significantly from lack of vital skills development.

Clearly, the sooner we open our minds to the very real benefits of learning more about working on, not just in, a business, the sooner we'll achieve the real purpose of owning a business - to enable us to do the things we want to do with our lives.

Many owner-managers dislike the word 'training.' But 'training' simply means 'learning business development skills'. So will it work?

It must be worth a try!

Val Valentine, advertising and direct mail copywriter

Copyright 2005 Val Valentine

Val Valentine is a B2C and B2B advertising and direct mail copywriter based in the Midlands, UK. With over 25 yearsí experience, she also writes commercials for TV and Radio, brochures, sales letters, articles, web content and has broad experience of strategic brand planning and development. You can reach her at +44 (0) 1684 772 021 or +44 (0 )7802 959 009. For further information, please visit www.valvalentine.co.uk

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