Top 10 reasons why businesses fail
1. Lack of an adequate, viable business plan .
2. Insufficient sales to sustain business
3. Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion
4. Inadequate capital, misuse of capital and poor cost control
5. Poor management skills: lack of delegation, leadership and/or control
6. Lack of experience and knowledge
7. Lack of managerial focus/commitment
8. Poor customer service
9. Inadequate human resource management
10. Failure to properly use professional advice: i.e. accounting, legal, financial, etc.
Lack of a viable business plan is an act of negligence where research, scenarios, and assumptions have not been tested. Market ignorance is not an excuse nor is the failure to know one’s customer. Death by poor marketing plan is knowledge deficiency related to product appeal, customer identification, pricing structure, and lackluster promotion. Obviously, one needs to know how to manage a company in order to be focused, let alone correctly estimate capital needs. Lack of customer service knowledge is deadly in the age of social media. Inadequate HR is an oxymoron – if it’s inadequate, it’s not a resource – human or otherwise. Finally, failure to listen to knowledgeable people is ego driven irrationality.
The financial system is not the only problem;
The innovation system (or lack of) is a crucial element. Information, knowledge and innovation, by any definition, are profoundly and inseparably connected. A failure in one kills the other two. So, just because an entrepreneur does not have the knowledge, does not mean the ‘knowledge’ fails to exist – it simply means that entrepreneur failed to find it.
So where is the knowledge?
Unfortunately, there is no public knowledge inventory – people do not know what each other knows. With social media raging all around us, there still is no way that anyone can assemble the knowledge needed to execute a business plan with a known probability of success given the information available. As such, there is no way to finance public innovation.
The emergence of Social Media technology presents an extraordinary opportunity to organize a knowledge inventory outside the construct of a corporation and marry it to the financial system, much like a corporation.
Tangibility of Knowledge
Knowledge tangibility must be the most important “innovation” in the pipeline today if we expect to meet the crushing challenges that await us. Just because we cannot predict innovation does not mean it cannot be predicted – it just means that we do not know how… yet.