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Stop Feeling Sorry for Yourself!

"Your business, your responsibility" are the key words from Craven, the problem is business owners don't want to be truly accountable, he says

 

"You hold the key to your business success and you hold the key to your business failure". Here he puts a stop to self-sympathy and tells you how to thrive in a recession. I will now make myself hugely popular (not!) with people who have lost their businesses. But I believe that business failure is attributable to one key factor in 99.9% of cases - the owner-manager or the management team.

Next time you are in a pub and you overhear that inevitable conversation about business failure, listen carefully. Listen to the language. Also listen to the reasons given for business failure. You can assemble the standard list from almost any pub in the country, and it looks something like the following. Pick any five or six of the reasons given below:

• “The bank pulled the plug”
• “A key customer refused to pay”
• “The interest rate on loans/overdrafts/mortgages”
• “Increases in rent/overheads etc”
• “Couldn’t get/keep the right staff”
• “The competition were better/faster/cheaper/nicer…”
• “Couldn’t afford to invest…”
• “New products of competitors were better/faster/cheaper/nicer”
• “Couldn’t get/keep the right customers”
• “The product wouldn’t sell”

The real reason for business failure, in 99.9% of cases, is managerial incompetence. The responsibility lies in the hands of the person/people running the business. After all, it is the job of management to look after all of the above. It is no-one else’s job. Most business failures tend to blame everyone else but themselves for their misfortune. (Psychologists call this an ‘external locus’ of control.) 

On the other hand, most business successes tend to take full responsibility for the success and the failures of their business. This is called an ‘internal locus’ of control. When push comes to shove, the successful recognise that it is up to them (and no-one else) to make a success of their business. They don’t use victim language to describe their position and they don’t blame others. They look, they decide, they act. 

Research in the mid–nineties listed a depressing catalogue of reasons for failure including the usual suspects: costs, pricing, risk taking etc. The most fascinating finding was that when the directors of failed businesses were asked for the main reason for failure, they blamed operational issues (40%) and then strategic problems (24%). On the other hand, the Official Receiver (who saw all the failures come through their office) blamed operational management in 71% of the instances of business failure. In other words, the Receivers were absolutely clear that the failure was due to the incompetence of the owner. The UK Insolvency Helpline published ‘the most up-to-date and fully comprehensive list of reasons for business failure’ as at December 2008. The list of reasons for business failure was taken from the last 65 cases they had dealt with:

The list starts:

• Failure to focus on a specific market because of poor research
• Failure to control cash by carrying too much stock, paying suppliers too promptly and allowing customers too long to pay
• Failure to control costs ruthlessly
• Failure to adapt your product to meet customer needs
• Failure to carry out decent market research
• Failure to build a team that is compatible and has the skills to finance, produce sell and market
• Failure to pay crown taxes (PAYE and VAT)
• Failure of businesses' need to grow. Merely attempting stability or had even less ambitious objectives, businesses which did not try to grow didn't survive
• Failure to gain new markets
• Under-capitalisation
• Cash-flow problems

And ends…

• The business is unsure how much it owes and is owed
• The bank is calling the business to say it has exceeded its overdraft limit
• Under-pricing
• Over-trading
• Poor quality of product or service
• Bad labour relations

Four reasons why businesses fail, simple, poor business planning, poor financial planning, poor marketing, poor management. And all of the four reasons are YOUR responsibility!

What I'm trying to say is it's all about you!

Leadership is all about having the confidence and belief in yourself.

Leadership is about having the confidence and belief in your business.

Now go for it, hard!

 

About the author

 

publication details

First published in Start Your Business Magazine, Issue 32, 2009.