"67% of New Businesses Fail in the first 5 Years"
We have all heard this statistic, or variations on it before. It's quite a scary
fact when you consider the implications, especially if you have started or are about
to start a new business.
But the bad news does not end there:
“ further 22% of Businesses Fail in the second 5 years
So even if you manage to survive the first 5 years, the odds are still against you
continuing your business past the 10 year mark.
So what is the cause for such a high rate of failure in new businesses?
- Lack of research into the market?
- Negligent business owners?
- Lack of funding?
- Changing market conditions?
- Staffing Issues?
- Or just plain Bad Luck
All of these things contribute to the problem in some way. I don’t think that any
of them are the primary cause. Not one of them would be involved in every case.
A more in-depth study would reveal that a more fundamental problem is responsible.
Businesses are generally started and run by people with quite a lot of hands
on experience with the work of the business. Quite often they have
spent 5, 10 or even 20 years working in the industry. You would think that this
experience would allow them to be successful with their own businesses.
Only 10% of new Franchises Fail in the first 5 years
Interesting! So maybe we can work out why small businesses fail
by looking at why Franchises succeed. What is it that (Business Format) Franchises
have in place that allows them to boast such improved survival rates.
Under a Business Format Franchise the franchisor grants the franchisee a licence
to operate as an ongoing business. The agreement allows the franchisee to trade
under the name of the franchisor. They are given access to an entire package, comprising
all the elements necessary to teach a previously untrained person
how to run the business.
The Business Format Franchise establishes an integrated system
of doing business that includes:
- A proven system for successful operation of the business.
- Initial and ongoing training in the operations of the business.
- Ongoing Assistance with marketing, business and technical operation
of the business.
It’s all about Business Systems
So the difference is that a Business Format Franchise
supplies their new operators and staff with well defined tested and documented
Business Systems. A turnkey way of running the business, turn the key
and it works, every time, exactly the way you expected.
The new Franchise operator has the Business Systems in place from
day one to run their business. They have the documentation allowing
them to rapidly train their staff. They also have a management
and reporting structure allowing them to track the Key Indicators in their business.
What do you need to do to ensure you don’t become a Statistic?
To ensure that you survive and are one of the successful businesses you need to
develop your business by modelling the Business Format Franchise.
- Develop Business Systems that describe and document exactly what
needs to be done to run your business.
- Train your Employees in the operation of your Business Systems.
- Design your Organizational Structure to allow you to measure monitor,
track and control your business.
Business Systems Manager provides you with the tools you need to develop
Business Systems, design your organizational structure and monitor and track the
ongoing performance of your business.
Click here and Sign Up to Business Systems Manager Now!
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