We know two key facts about small businesses- failure rates are high, and having a strong team around you can help mitigate these risks. So where do you and your business stand?


It’s not a pretty sight out there- indications suggest that 20% of businesses fail will fail their 1st year and around 60% within the first three years, but let’s break down the root causes into something more actionable. The University of South Australia’s study of 650 CEOs of medium and small companies distilled into the following 4 areas:


#1 Management and leadership: 34% of failures can be attributed to insufficient leadership and management, poor governance structures, poor management of people, or inexperienced CEOs.


#2 Business strategy: 28% of failures were due to poor planning, wrong strategy, poor implementation/execution, or underestimating the impact of external forces or market trends


#3 Customer and Marketing: 24% of failures related to inadequate market research, marketing, sales, or product/service problems


#4 Finance: Finally, 14% of failure were attributed to poor cashflow and financial management


Takeaway activity

To minimise your exposure, let’s strategically consider the ‘who’ and the ‘how’ of your business planning, execution and management

  • The Who- clarify who’s doing what across the various functions and processes of your business by workshopping a RACI (here’s an example template if you need). Not only will this highlight gaps in Responsibilities/Accountabilities, but it will become a valuable document for onboarding new staff or restructuring the business
  • The How- If there’s one thing you can do to better management the business, it’s setting up effecting management huddles. In management-speak, this is called an operating rhythm, the drum beat or cadence that the business works to- take a look at what this might mean for you here
  • The Outcomes- with the ‘who’ and the ‘how’ in place, remember to communicate this out to the business- what’s changes, why, and how it will impact them moving forwards


Further reading