Multi-Unit Franchisee Magazine Issue III, 2013 | 页面 78
Finance
By Steve LeFever
Are You Building for
Success or Failure?
90 percent of small businesses fail because
of poor financial management
Y
ou say you want to own a business and make your own decisions? You say that owning a
business is one of the few remaining ways to build net worth today?
You say that building a business is one of
the greatest personal challenges you can
face? That success makes the clearest possible statement about your perseverance,
ingenuity, and skill?
Well, ladies and gentlemen, you’re right.
And you’re right no matter how you became
an independent business owner. You probably didn’t volunteer for the job. Perhaps
you married into it, or inherited it, or got
fired from another job and just fell into it.
No matter. There it was, and you did it.
It wasn’t easy, either. I know. In more
than a decade of working with business
owners, I’ve learned to recognize the type.
You come home after a normal 16-hour day
and sit at the dining room table complaining bitterly about cutthroat competition,
the over-reaching government, thieving
employees, and the lousy unions. Then
you look across the table at your 15-yearold child and say, “Kid, some day all of this
will be yours!”
Why-a-preneur?
What makes you tick? For starters, you
probably have a technical skill: you know
how to do something well, and you’re
prepared to work long hours to succeed.
Why? Maybe to show the so-and-so who
said it couldn’t be done that it could. But
more probably, it’s because you want freedom, power, and the last word—or perhaps, opportunity, something uniquely
available in this nation of ours. Reasons
involve dreams, too: dreams for a path to
a better tomorrow.
These, perhaps, represent a few of the
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Multi-Unit Franchisee Is s ue III, 2013
components in the fabric that binds us
in common—all of which makes you a
card-carrying member of this country’s
traditional small business community,
founded on the principles of opportunity
and upward mobility. The innate attraction was the chance to get ahead on your
own merits. And despite the socioeconomic
changes that have transformed this nation
Statisticians will
tell you that
600,000 new
businesses are
started each year
in the U.S. They’ll
also tell you that
an almost equal
number fail.
since its earlier days—the machine age, the
industrial revolution, and ever-accelerating
technological advances and growth—the
small business tradition has tenaciously
survived. More than that, and in the face
of sometimes monumental obstacles, it
has even prospered.
Of the 26 million businesses in the
United States, the vast majority are small
enterprises, closely held or family managed. The small business sector employs
roughly 50 percent of the non-government
workforce, making it easy to imagine our
economic plight without the support of
small business. Statisticians will tell you
that 600,000 new businesses are started
each year in the U.S. They’ll also tell you
that an almost equal number fail, some 50
percent in the first three years.
Beyond the stats
From bittersweet statistics such as these,
you can draw two conclusions: first, the
lure of independent ownership is as strong
as ever; and second, the laws of natural selection and survival of the fittest operate
here with staggering efficiency.
To know what it takes to survive as a
small-business owner, you must look at
why businesses fail. While the excuses
offered are many, the real reasons actually are few. Usually, when you see two
partners involved in a business enterprise,
one knows how to make it and one knows
how to sell it. Unfortunately, neither knows
much about financial management. Let
the record show that 90 percent of small
business failures are the result of poor financial management.
Where financial management is concerned, some otherwise intelligent, hardworking, and creative business owners
are exactly like the automobile owner we
used to see on the old Fram Oil Filter TV
commercial. His car needs repairs, but he
doesn’t want to bother with them now. Of
course, the longer he puts them off, the
more serious they’ll become, and the more
they’ll cost. As the TV salesman warns,
“You can pay me now or pay me later.”
The business owner who ignores his
company’s financial picture runs the same
kind of risk. Only instead of a ruined car,
he’s looking at a dead business, which
means his own and his family’s livelihood.
The telltale signs are clear enough. He
leaves the company’s financial analysis to
his banker and accountant and, if there is
no red ink in their reports, he breathes
a sigh of relief and tosses them into the
third drawer, lefthand side, along with all
the others gathering dust there.
Taking financial control
Why, then, does this frequently fatal ignoring of financial management occur as
often as it does? It’s psychological, mostly.
We are all human, and it’s human nature to
focus on what we do well and try to ignore
what we don’t. Also, there’s a deep-seated
suspicion that this whole finance business is a bunch of hocus-pocus malarkey,
secretly controlled by pompous, bespec-