Top Causes of Small Business Failure and Success – Stats Tips Rules
20th June 2016
SMB and HR: No End to Work for Small Business Owners ahead in 2017
At the end of a long day building houses, managing a busy downtown restaurant or hotel, managing a retail clothing chain, or overseeing the erratic schedule of a real estate brokerage, small business owners in the UK, USA and Canada have even more paperwork waiting for them. And as we’ll see, this daily paperwork symbolizes what’s wrong with how they’re doing business.
There seems to be less time, energy, cash and patience to run a small business. And yet these unsung heroes of our economies manage to new build enterprises in record number, wrestle paperwork, battle government red tape, and deal with issues with their own employees and unhappy customers.
This battle has a cost and that’s because they’ve used all their time, energy, and cash to manage the business now, while the future is left to fend for itself. Without time to navigate their ship’s course, small business managers and owners are never sure when their last day in business will arrive. With tasks ruling the day, SMB owners are mired in working in their business not on their business where they can plan and guide it and their employees optimally.
The haphazard way many SMB owners manage personnel, their key asset, is worrisome. In fact, they’re not managing or developing themselves that well either. And with new changes in marketing involving social media, it seems the future is disappearing over the horizon. So how do they veer off this dreadful course?
In this post on business failure and success, Staff Squared investigates failure and success factors and offers some amazing insight and tips for you into why small businesses fail and why many actually do succeed wonderfully.
Is it military like execution we need or perhaps to take better care of our staff? Let’s start with the present and then we’ll discuss business failure and success factors. You’ll have a clear route ahead to navigate your ship through tides, rocky reefs, and storms out to where the good fishing is.
The Forecast For Small Businesses in 2017: More Hard Work Ahead!
The stress of such hard work for SMB owners or managers takes a toll on personal and work relationships. Polls suggest small business owners work 50+ hours or more on average, and a majority work on weekends too. Is this your circumstance? Did you originally get into business for autonomy, freedom, and a better life, but then then discovered the work is a trap?
It’s a typical process that begins with a legitimate, achievable dream that’s brought down by the reality of competing in today’s economy. The fact is, small business people must be efficient and find better ways to do business, recruit, hire, train, communicate, and manage employees, along with dealing with paperwork and meeting government regulations.
Businesses in the UK and southern USA have felt increasing pressure due to government restrictions on hiring foreigners, and due to increasing litigation from dismissed employees. A law suit can cripple a cash-strapped business and fines can create hardship.
The pressure is felt by employees too. In 2005, the Family and Work Institute released a study that found 33% of workers feel chronically overworked and 54% felt overwhelmed by how much they had to do. Although employees are expected to know how to organise their days, and bosses knowing what they’re doing, it seems they don’t. When stress mounts, sick days and absenteeism begin to lower productivity, thus straining small businesses profit margins.
And when employees choose to leave, it’s very tough to replace their skillsets and experience, especially if unemployment rates are low. Training new inexperienced workers leaves the business open to higher costs including the cost of rework when work quality is poor. Turnover is a big problem for any sized business.
Listen in on Richard Branson’s Tips for Business Success and stories about delegation, empowerment, and persistence:
Small Businesses in the UK: Powering an Economy
2015 saw a record number of small business growth in the UK, some with employees, and some such as HR consultants, with no employees. According to the National Federation of Self Employed & Small Businesses:
- There were a record 5.4 million private sector businesses at the start of 2015 and that’s a growth of 146,000 since 2014 and 1.9 million more since 2000.
- The number of businesses with employees grew by 35,000 and non-employing businesses grew by 112,000
- Small businesses accounted for 99.3% of all private sector UK businesses at the start of 2015 and 99.9% were small or medium-sized (SMEs).
- Total employment in SMEs was 15.6 million or 60% of all private sector employment in the UK.
- The combined annual revenue of SMEs was £1.8 trillion or half of all private sector turnover in the UK.
There you have it. Small business is growing yet it’s a more competitive marketplace. What happens as these businesses go through their first 5 years? Do they grow, innovate, increase efficiency, adopt hr software technology, and how do they manage their staff or human resource functions? Will these firms be crippled by unanticipated staffing problems such as turnover, absenteeism, health problems, and law suits. Is anyone helping them avoid these potential disasters?
Are there Other Things You Could be Doing to Make Your Employees Happier and more Productive?
Increasingly, workers are asking for non-financial benefits such as flex hours, time off, and even work at home arrangements. Aside from these employers are doing more to break up the monotony of work and help staff be more innovative and creative. There’s nothing to say you and your staff can’t have more fun together.
Small Business Failure Rate Statistics US
Whether it’s in the UK, USA, Canada, or Australia, small business failure rates are similar at about 60% and it’s estimated that most new startups will fail within 5 years. An article in Forbes speaks of the problem, that because business owners are so involved in their businesses they don’t have time to do the key things such as marketing and getting their value proposition across continuously to prospects and customers.
It’s not just marketing and CRM that plagues SME’s. Poor decision making and weak management/leadership skills are also cited in small business failure reports. But are managers simply task fatigued?
Can HR Software Possibly Help with These Issues?
If time and organization and optimization of staff work is preventing small business owners from higher level strategy, management and client relationship building, then HR software may remove those issues. If you’re not familiar with HR software, let me point out its merit. It’s a versatile type of software that takes on the exact work drudgery that managers hate and which steals their time and enthusiasm.
HR software actually helps employees manage everything from timesheets, work hours, absenteeism, sick days, time calendaring, expense reporting, and centralising communication and document storage. Some software is web-based freely usable from desktops, laptops, tablets and smartphones. It makes it easy for employees to participate and saves employers from form completion, checking documentation expiry dates, sick days and vacation time management, and so much more.
It’s sort of outsourcing this paperwork to employees, yet it is in a way that helps employees take ownership of their workdays and workstyle. The software also helps to identify employees at risk, whether through lack of engagement or absenteeism, or conflict with management, customers and other employees — problems which many times end up in the courts.
The proactive management of human resource functions needn’t be only for paperwork management. Instead this software helps to organize and optimize the management of employees, to generate better productivity and happier employees and customers.
And with SMB managers time freed up, they can focus on the key matters of successful business — ensuring they have the best unique value proposition and communicating that to customers frequently.
10 Top Reasons for Small Business Failure
- Customers don’t want your solution anymore — it doesn’t provide the kind of value they’re looking for or they don’t believe in you
- Overwork by SMB owner makes them narrow focused, exhausted and missing the opportunities to grow and win business that are available
- Mismanaging key skilled employees so they leave or perform poorly – doesn’t flex to get the best value out of employees
- Poor recruitment, staff onboarding, and ongoing development of staff
- Not managing time well – too busy doing tasks when customers need better value
- Not clarifying unique value proposition and making that value proposition better and more satisfying for customers
- Insufficient financing and cash flow – stay out of debt and having cash reserves ready to use
- Not maintaining competitiveness in market – competition keep improving
- Not using a business accelerator or management consultant
- Not charging enough for product/service – prices too low to support profitability
If business as usual is wearing you out, forcing you to work harder for less, stifle your imagination and vision, and your staff seem to be spinning their wheels too, then it may be time to get organized and simplify how you’re all doing your work. Going online and using HR software isn’t only about feeling good about going green and cutting paper waste and redundancy, it’s about helping you run your business more effectively so you can spend your time where it matters.
Let’s start the simplification process by trying out small business HR software right now. No downloads, just a free online experience with the most important software to come along in a long while. Enjoy your discovery of how useful software has become.
Standard Life Survey on How UK SME’s are Driving Success
A new survey, called Business and Some Report: How UK SMEs are driving success in today’s workplace by Standard Life offers some enlightenment about why businesses succeed. The report discover UK businesses are showing an evolution in working practices, company culture and innovation. Uk small business managers see flexibility and innovation as priorities in building the full potential of their staff. That is a very encouraging stat yet it begs the question of how they will implement their plan?
Standard Life summarised 6 factors for SME Success: a culture that encourages adaptability, delegating responsibility to workers, continuous learning, agile thinking in revising business goals and strategy, investment in their staff, and while making their businesses a positive element in society.
10 Factors of Small Business Success
Small to medium sized business owners need clearer guidelines and optimizable business processes to steer their ship through increasingly narrow channels. Lets take a look at the top 10 ways small businesses succeed. Successful SME’s:
- Outsource for specialised skills and work rather than forcing current staff to do something they are simply not trained for or cut out to do, including management advice
- Use software to innovate, automate or simplify workloads in order to manage time and resources better to improve customer service
- Investing in personnel development so staff can deliver more value to the business and meet future market demand
- Get feedback from customers and examine what the competition are doing so they know they’re selling the solution that their customer wants and needs
- Delegate work to staff instead of the boss handling everything themselves which keeps the bosses time free for important matters and gets better performance from staff.
- Set realistic goals and priorities for staff and supporting them in achieving them
- Communicate frequently to keep employee’s aware of the company’s goals and objectives, to praise them, and ensure they feel like they belong and that they are performing well – you encourage the behaviour you get.
- Continuously communicate the company’s unique value proposition to customers in order to maintain top of mind and that customer’s are sure they have the best solution provider
- Manage human resources professionally to minimise absenteeism and other problems, offer accurate staff evaluation, and enable workers to take ownership of their roles and performance
- Make work more fun and less stressful so they are able to forecast and adapt as necessary to esnsure their business success is sustainable
Managing and guiding a successful small to medium-sized business is never easy. Complications and challenges are endless, yet successful managers create a company framework that trains and develops its staff and then distributes work, performance and accountability to them. With staff informed, trained, and enabled, they can get to their core competency as the key employee of the company and ensure customers are satisfied.
Successful managers also work on improving themselves which is why they should be stingy with their time and maximize their business development skills and ultimately let employees run the business.
The final thought for us is that successful businesses use personnel, technology and insight to adapt their product/service offering to what customers want and need. A strong personnel system not only helps optimize staff but acts as an ideal way to get feedback about your customers and product/service performance.
Check out the features of Staff Squared HR software and how many ways a Web-based software app can help your staff succeed now and in future.
Small Business and HR
Poor hiring, high turnover, poor worker enablement, and high compliance costs add to SMBs challenge.
Is there a solution for efficiency and better productivity? Yes, hiring an HR consultant and using HR software for small businesses will improve employee selection, training, development and performance and give the manager more time to do his real work — taking care of business!
Please do check out the Score online including their business mentoring successes to a find a mentor for your business in the US (encourage them to start up in the UK and Canada:))
Good luck with managing the evolution of your staff management and improving the sustainability of your company. Success is never easy and it seems those who have the best information and guidance also have the best chance for business success. We hope you’ve enjoyed these insights into business failure and success and find the tips, stats and insights useful. Please leave a comment about your experience in small business in the UK, Canada or America.