Why is American Business is Failing?
Sue Canyon
US bankruptcy statistics are out of control. Statistics show that business failure rates are falling while personal bankruptcies are skyrocketing. But in reality, the opposite is true.
Last year, in a joint study, the Kauffman Group and Harvard Law School, students proved the statistics to not only be wrong, but to be inverted. They reported that the method used to count personal versus business bankruptcies is biased. The form used to collect the information offers only one box for a borrower to declare whether the bankruptcy is personal or business. It fails to recognize that personal assets are so intermingled with small businesses that, once the business fails, it brings down the individual as well.
Why are business failures so prevalent? The answer is in how we look at business. For instance, the common man has a great deal of contact with the customer service function and possibly the owner in most any small business, but no visibility into what happens beyond that function. Most of the training that is available focuses on the two areas we have ready access to.
We can find training that focuses on the owner, to change the owner's thinking, strategy, philosophy, psychology, and dealings between and among people. We can also find training in how to deal with customers, sales, marketing, etc. But nowhere can we find nuts-and-bolts training on what should be going on behind the door in the operations area.
Questions like, what is the best way to set up a manufacturing facility? How many employees should it take to complete a certain number of tasks in a day? And, how do I use employee complaints to improve my business? remain unanswered.
Think about how small the lobby or customer service area is compared to the enormous size of the area it takes to provide the products or services they offer. Think about the tiny number of people that it takes to man the lobby compared to the vast numbers that it takes to produce and deliver the product or service. In the literature, the largest portion of the business the operation is ignored. Why? Because few of us know what goes on behind that door, accountants included.
Baby-boomers are retiring in droves, liquidating their assets, moving to less expensive pastures, and investing their excess funds into small business. For most of them, going into business is a first-time adventure.
On their own, without the benefit of business training or the mentor that came with the family business of long ago, these businesses are failing at a staggering rate.
Small business owners are looking to their accountants for the answers. But should they? Probably not. Accountants rarely have any more experience in running businesses than those who are asking for help.
They are great at capturing historical data, and reporting in a manner that is consistent with generally accepted accounting principals. They can file taxes. They can audit books to ensure that entries are made correctly and that there is no funny business going on. But they shouldn't be asked for advice on how to run a business.
College textbooks are full of good information about the operation of a business, however, small business owners rarely have the time to attend college classes. And university programs tend to focus on training students in that in which they can become employed. Since small businesses typically don't have the resources to hire graduates, schools turn out specialists, rather than the generalist required by small business.
Why are bankruptcy rates so high? Because good people are resting their hopes and dreams on being able to access the wealth of knowledge about how to do it that should be available by now to everyone who asks. But they don't know how to ask, and there are few good answers available and for a reasonable price on how to manage the work that goes on in the background of a business.
Visit us for a complimentary white paper on http://www.businessbooming.com/ how to get and keep employees and more information on http://www.suecanyon.com/ how to run a business This article is available as a http://www.uberarticles.com/?id=34960&b=79 unique content article with free reprint rights.
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