Small business survival. This update is brought from our sister site, greyhair.guru which is connecting inexperienced businesses with experienced businessmen.
Refer to the article below, in reference to research by Xero accounting regarding the high rate of failure of SMEs. It repeats the statistics that less than 50% of small business survive until their 5th year, and this is reasonably consistent between the UK and US.
Major economies are promoting SMEs as a source of growth and therefore this is a scary statistic and one that needs improvement since it is expected that the number of small business will only increase. The impetus for the increase of start ups and SMEs is from the reduction of work-forces in traditional jobs and reductions of graduate entry jobs, as well as a healthy greying population and the increase of business start ups by the over 50s who can only go to so many spas or play so much golf and are looking for something else to do.
The Xero research and surveys conclude that there are 3 main drivers that affect the survival rate of companies past the 5 year mark :
a) Financial Factors – spending money to make money, on marketing and customer service but also (self-servingly for Xero being an accounting service and software business), on software to manage their finances and investing in tech and accounting tools
b) Service over product – it seems that product businesses fail more often than service businesses, for me not surprising as service business often do not need so much capital and will not suffer form expensive r&d or product failures in getting to market
c) Human factors – many successful businessmen cited the need for good family support and work/life balance, being a far cry from the image of a sleep-deprived start-up. But also it noted that one third of successful SME owners turned to a mentor, support group or other entity when in need of advice, compared to just 14 per cent of failed SME owners
It’s the last factor that interests us, and we are seeking to be proactive in helping small and medium sized business owners survive, grow and profit by connecting them with experienced managers in all areas of business, from retail to supply chain, from finance to marketing to IT. For further information refer to our sister site and register for latest developments
Referenced Article : Pushing small business past the 5 year mark
And here is a more basic one regarding SME survival pointers and other reading:
Top 10 SME survival strategies
Majority of small business do not last 5 years
SME News Asia
For further information on SME and how we, as part time CFOs’ can help, learn more here
