Why small businesses fail
What is failure and why do so many business startups fail? Failure could be classified as not achieving goals such as working more hours than planned, lack of enjoyment and satisfaction, too much travel - however in vast majority of cases failure of a business is due to financial reasons. That is not making enough money to cover costs.
Why does this occur and so freqently? I have met a lot of entrepreneurs, both who have succeeded and failed in business (some many times over), and the one thing they have in common is intelligence and drive. So if this is what you think you need to have to succeed then think again. The difference between success and failure is decision making. The basis of decision making is information and insight and I believe the two go hand-in-hand in ensuring the most appropriate decision is made.
Thus failure in business is due to poor decision making because there was incorrect, lack of or inappropriate information used and that the insight of the entrepreneur was wrong. Insight itself is a cognitive process and basically a interpretation of external stimuli - so in fact decision making, both directly and indirectly, is correlated to the quality of information received.
Failure is due to making a wrong decision many times over because no effort is made to assess the decision making process. Working with a performance coach or psychologist is useful in understanding the basis for decisions made and making changes in your decision making process. If you fail once and don't assess the process for making decisions then the chances of making the goals or targets you have set are very low. You cannot assume you know how to make a right decision and the warning signs should not be ignored. Thinking you know how to make a right decision is one of those as you will not be open for change.
Small business also fails because the entrepreneur in charge of the business is not made out to work in such as environment. Making a decision to start a business is the first important decision you have to make and one of the most critical. If you get this wrong then your business may already be on the path to failure.
Why does this occur and so freqently? I have met a lot of entrepreneurs, both who have succeeded and failed in business (some many times over), and the one thing they have in common is intelligence and drive. So if this is what you think you need to have to succeed then think again. The difference between success and failure is decision making. The basis of decision making is information and insight and I believe the two go hand-in-hand in ensuring the most appropriate decision is made.
Thus failure in business is due to poor decision making because there was incorrect, lack of or inappropriate information used and that the insight of the entrepreneur was wrong. Insight itself is a cognitive process and basically a interpretation of external stimuli - so in fact decision making, both directly and indirectly, is correlated to the quality of information received.
Failure is due to making a wrong decision many times over because no effort is made to assess the decision making process. Working with a performance coach or psychologist is useful in understanding the basis for decisions made and making changes in your decision making process. If you fail once and don't assess the process for making decisions then the chances of making the goals or targets you have set are very low. You cannot assume you know how to make a right decision and the warning signs should not be ignored. Thinking you know how to make a right decision is one of those as you will not be open for change.
Small business also fails because the entrepreneur in charge of the business is not made out to work in such as environment. Making a decision to start a business is the first important decision you have to make and one of the most critical. If you get this wrong then your business may already be on the path to failure.
Labels: business strategy, decision making, entrepreneurs, performance management
posted by Daryl Close at
5:44 AM
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