Let me start with a somewhat Sad story;
The story of the Employee who is great at getting the work done – let’s call them “Technically good”. This employee constantly gets frustrated and fed-up with the Boss and one day has an idea that they can do it better than the boss so they go out and set up their own business.
They now become a “Business owner”, with great Technical know how but no real idea about all the other pieces in running a successful business. The Sad part of the story is that for many of these business owners this becomes their Fatal Assumption.
The Fatal Assumption that is made is
if you understand the technical work of a business then you also understand the business that does the technical work.
And more often than not this is not the case.
Now for the shocking news
The Australian Bureau of Statistics found that if you open a small business your chances of still being in business after 3 years is only 50%.
This means that of almost 300,000 businesses that opened their doors in 2011 in Australia 150,000 or less were still in business in 2014
THAT’S HALF GONE IN 3 YEARS
This Fatal Assumption isn’t even a recent development.
You may have heard of a man named Michael Gerber – In 1995 Gerber published a best-selling business book called The E-Myth: Why Most Businesses Don’t Work and What to Do About It.
In researching for his book, Gerber found that too many businesses are started by technicians (the ones that are great at getting the work done) who haven’t learned the basic skills or knowledge, or still assume that business acumen is the minor part of owing and running a business.
Again The Fatal Assumption rears it’s ugly head
What’s interesting about Michael Gerber’s findings, and the studies since, is that we have seen no evidence that the percentage of new business successes have improved over the last 20 odd years.
Now that’s surprising given where we are with technology and the masses of information that is available to us with internet and the like.
To me this just means we keep repeating the same mistakes.
In a related study, the Australian Securities and Investments Commission found that new Australian businesses fail for the following reasons:
- 44 per cent failed because of a lack of strategic management
- 40 per cent failed because they were unable to manage their cash and
- 33 per cent failed because they just could not make any profits.
Depressingly, these numbers aren’t surprising. After all only about 4% of small businesses started in Australia even bother to prepare a business plan.
Again and again, The Fatal Assumption is made.
