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Have you ever pondered the reasons why the majority of businesses end up failing? In the UK, it’s a harrowing truth that two out of three businesses fail within three years. It’s a shocking statistic, but what’s even more shocking is that most of these failed businesses love to place the blame on everyone but themselves. As Robert Craven, a personal favorite of mine and a marketing expert who’s an authority on business advice to the UK SME sector, rightly points out. Recent independent research in the UK has revealed two key factors that contribute to the failure of businesses: poor marketing and a failure in financial management. Now, when we look at the criticisms of managerial incompetence, it becomes clear that there’s a weakness in the decision-making process and the follow-through in SME management. So, when your sales plummet and your profits crumble, and the pressure is on, what action can you, as a business owner, take? It’s a common consensus among consultants, mentors, and coaches that many SMEs are so tempted to bury their heads in the sand that they can’t make the necessary shift. So, how can we avoid these management pitfalls?

Leading experts have proposed that SMEs need an “early warning system” similar to a fire drill. It’s like knowing what to do in case of a fire. It seems logical, and the balanced scorecard developed by Kaplan is an excellent system for SMEs to monitor their business performance. The concept was developed and expanded in the US during the late 1980s and early 1990s. It provides a comprehensive management report that offers an up-to-date view of business performance based on key performance indicators (KPIs). Many UK corporate companies have implemented this system with great success, notably the Halifax, which experienced a meteoric rise in the 1990s and eventually merged with the Bank of Scotland (HBOS). The scorecard can be used to track various aspects of the business, from money generating activities to critical success factors like productivity, internal business processes, human resources, and finance.

The most important aspect is that the scorecard is designed by management itself and reports on the chosen key performance indicators. Microsoft has even attempted to incorporate the scorecard style into its own financial package for SMEs. Even a small operation with just one or two individuals could benefit from the expertise of a financial specialist to help set up the system at the beginning or during review time. But where can you find top-quality financial expertise at a reasonable price? Your local Regional Development Agency (RDA) has a register, and there are new services like Business Service Finder. Marketing, on the other hand, is often considered the least understood but most important skill in business. Since it’s impossible to have all the necessary management skills in-house, it’s beneficial to outsource the work. In fact, most business owners fail to delegate, leading to further managerial incompetence. Business planning and strategy implementation are crucial activities that greatly benefit from expert assistance, with the payback being well worth the initial investment.

I’ve personally had discussions with business leaders who seem to believe that marketing merely involves the colors used in their brochures, despite managing a significant business. However, one of the best definitions of marketing comes from Robert Craven himself, who wisely stated, “Marketing is the battle for the mind of the consumer, not a battle of the product.” He doesn’t mention the color of a brochure or the color of a product small item. Let’s never overlook the main reasons for business failure.

A competent marketing specialist would empower management to follow through on the set direction and implement efficient systems to stay on track. Ignoring the internet today is nothing short of commercial suicide (refer to my EzineArticle “3 key aspects of a business website…”). E-commerce and the ability to generate revenue online are critical success factors. In this recent global downturn, it’s impossible to predict its duration or the impact it will have on your industry sector and your business. Acquiring new customers is an ongoing process that goes hand-in-hand with performance improvement. For most businesses surviving at the moment, the internet plays a vital role. The time is now to review the performance of your e-commerce and e-marketing strategy. It’s best to consult an external specialist consultant who can provide an objective viewpoint and consider the best options and solutions.

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Ihab Salloum