Businesses fail all the time. Around half of UK start-ups fail within five years, according to the insurer RSA, with survival rates lower now than they were before the financial crisis.
What are the reasons for failure? The main one is cash-flow. This arises from not being properly prepared, a lack of capital due to bad debts on the part of creditors, and choosing the wrong people to work with as partners.
However, there are also things businesses fail to do to help underpin their structure and make them ready for growth and adaptable to change.
The Pitfalls of Entrepreneurial Traits
Hywel advises, “There are qualities that work for entrepreneurs, that differentiate them and often give them an edge over the competition:
- They need to have a visionary mindset, to think ahead and see opportunities where others do not.
- They cannot be risk-averse, but be ready to take their chances, to strike when they think the time is right.
- They must also be resilient, to take the knock-backs on their journey to success.
- And they need a degree of flexibility too.”
“Most of all they must care, with passion, for what they do,” says Hywel
However, these same traits may be a disadvantage when it comes to patiently structuring a business for long-term survival.
“There has to be a firm foundation upon which you build your business otherwise you risk your dreams crashing down around your head”
As Hywel points out, “The product can only be as good as the process that forms it, and the service depends on how the business delivers it. At the startup stage, there might be a lot of drive behind a business, but less in the way of administrative detail.”
“Enduring success comes from ensuring the quality in what you offer, and you do this by having clear business processes and procedures,” he states.
Creating Business Processes and Procedures
Once a business gains traction it is looking to grow but also to maintain a level of consistency. Furthermore, once a startup goes beyond a sole-trader or partnership structure and begins to take on employees, it becomes critical that everyone is following the correct steps.
“A business might begin by being one person’s vision, but for it to grow, that vision must be shared and then executed in a practical way by people put in the key roles for this purpose”
Procedures set out how to accomplish certain tasks, but they also provide a means of measuring performance.
“With properly written down processes and procedures you’re helping to consolidate what you’ve built while providing the basis for further growth,” Hywel observes. “These documents can serve as a tool for training and staff development.”
“These written down processes and procedures help enshrine an organisation’s values while also being a cornerstone upon which to build and improve the business,” concludes Hywel.