Managing a business effectively is about organisation, focus and process as a massive 55% of businesses fail in their first five years of existence. The experts offer banal opinions as to why this happens. I consistently see three key reasons why this tragedy happens so often and to so many individuals with different backgrounds, qualifications and skill.

The first reason is insufficient market comprehension.

Refusal to look at the water ahead. For example People dream up the idea, build the product and then expect the market to come and buy. In this connected age there is no excuse for lack of investigation before wasting any time and money on designing a product until you have solid evidence there is a market.

The second reason is lack of comprehension of the basics of business.

A significant proportion of people starting a company know their trade, how to offer a service or make a product, but know very little about running a company.  Having the ability to read and follow the balances in the profit and loss or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted well by the business publications, internet resources and those with the knowledge such as accountants and bookkeepers. IT Giants such as Sage software and Intuit callously hoodwink business managers with their marketing that their applications are the holy grail.

Small business accounting software isnt a complete answer.

Large corporations years ago figured out that all of their Information systems should be wired together to give them a comprehensive picture 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 competitors have seen the opening as well and as a result lower cost easier to use solutions have appeared.

The final reason businesses don’t make it is a because of the absence of well thought through management processes and policies to enable a cohesive fabric of disciplines and behaviours.