According to a recent research on small business survival rates, it has been found that only 4 in 10 new UK businesses make it to the age of five, despite 91 percent making it through the critical first year. “The UK is a great place to start a business, but the survival rates are low”, said David Swigciski, trading director at RSA. On that note, why do many small businesses fail, despite having such edges? There could be numerous hidden reasons behind such failures. However, the 3 common but important reasons for small businesses not being able to thrive are as follows:
- Failing to learn from the mistakes:
The wisdom of learning from mistakes is incontrovertible for any business. However, there are very few organizations that do it surpassingly well. Especially, most small businesses are apparently oblivious of the importance of learning from the mistakes they do. As a small business owner, you would certainly be unexposed to the nuances and the finesses required for your business to flourish. Consequently, you would commit a lot of mistakes, which are essentially meant, for you to make inferences out of them. The primary step to pull this off would be to record the mistakes and the corresponding outcomes. However, most small businesses overlook the criticality of learning from the past. “If you fail to learn from your failure, you would keep failing forever”. So, what should you do?
Make sure you document all of your mistakes (even the pettiest of all) alongside of the corresponding results. This may not refrain you from making mistakes any further, but would certainly avert repeating the mistakes. A new mistake is worth an experience while a repeated mistake is not worth a dime.
- Lack of accountability:
When people are not being accounted for what they do, there crops up hassles like bad communication, scapegoating, buck passing etc. Such issues would create an obnoxious work floor, and would take a toll on the productivity of your business. According to a study made by Siemens, small businesses spend on average, 17 hours a week in clarifying bad communication and misunderstandings. The root cause for these issues is unidentified dependencies between the employees or between the teams. When you do not track and spot such dependencies, you cannot enforce accountability on anyone and one evasive sentence which you would repeatedly hear is “Mistakes were made”. As a result, employees are less likely to get engaged with their work, which in turn leads to plummeted productivity. The workplace accountability study has amplified their findings by stating that 91% of the respondents rank accountability as one of the top developments they’d want to see in their organization.
How do you go about solving this problem without micromanaging your employees? This is when business process automation comes as a saving grace, where it bolsters information transparency and associates every task with a stakeholder, thereby holding people accountable for what they do.
- Focusing on activities and not goals:
This is slightly hazy because it can be a mistake when done for trivial processes. If you do the same for mission-critical processes, it turns out to be a pitfall. Eventually, your business would falter. It is important to bear in mind that activities or tasks are the tactics you adopt to achieve the end goals. Conversely, they are not the goals themselves. Measuring the results based on the completion of tasks is the worst way to track your progress. This no way an equivocal statement, out of which you can make a speculation that you need not take activities into account. Activities are the building blocks and the goal is the building. If you do not envisage the building, your blocks would be pointless. Hence, make sure you have certain milestones which would be the intermediary goals and one quintessential goal. Also, gauge the outcome basis the goals and not activities. To pull this off, every employee should have a goal assigned to them and the impact of the activities on the goals should be constantly monitored. This way you can leapfrog and get multiple times closer to your goals.
Businesses which commit the above mentioned mistakes would eventually crash and burn, despite having substantial cash flow and investment. Hence, it’s high time you realize that there are few things beyond the monetary aspect, that influences the success of your business.