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The SEDI Blog

blogging about the development of organisational performance

10 Reasons Small Businesses Fail in South Africa

1. The maths just doesn't work. There is not enough demand for the product or service at a price that will produce a profit for the company. This, for example, would include a start-up trying to compete against much bigger business and its economies of scale.

HOW OUR TRAINING HELPS:

Financial management training for the entrepreneur – Understanding and responding to the numbers.
Marketing and sales training – Positioning your product to the right market
Developing and updating a business plan – This course will assist and guide the entrepreneur to flesh out the numbers and how to respond to the market.
Customer Care training – Positioning your level of service above your competitors.


2. Owners are often incapable of being objective, in terms of their own weaknesses. This may affect their ability to lead effectively.

HOW OUR TRAINING HELPS:

Management Styles Training – Use the right management style for your type of business and stage of development
Training on Coaching Techniques for Managers and Supervisors – Use coaching techniques to get the best out of your employees
Emotional Intelligence Training – Increase your level of emotional intelligence to become a more effective leader. Also, by your staff increasing their emotional intelligence, you will have less absenteeism, a more harmonious workplace and a more productive labour force.


3. Out-of-control growth. This one might be the saddest of all reasons for failure -- a successful business that is ruined by over-expansion. This would include moving into markets that are not as profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate. Sometimes less is more.

HOW OUR TRAINING HELPS:

Using our Systems and SOP’s Training– Most SME’s don’t create or adjust their systems as they grow. Training programmes on using the right systems and developing SOP’s (Standard Operating Procedures), will allow you to grow your business with confidence and with the right tools.


4. Poor accounting. You cannot be in control of a business if you don't know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common -- and disastrous -- misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the financial manager, one of the many hats an entrepreneur has to wear until a real one is hired.

HOW OUR TRAINING HELPS:

Financial Management Course – You’ll be in a position to accurately analyse your business’s financial position and performance at any time.
Pastel, Excel courses – Let you and your staff be trained to use these tools effectively, and you can then spend more time on analysis and decision making.


5. Lack of a cash cushion. If we have learned anything from this recession, it's that business is cyclical and that bad things can and will happen over time -- the loss of an important customer or critical employee, the arrival of a new competitor, the filing of a lawsuit. These things can all stress the finances of a company. If that company is already out of cash (and borrowing potential), it may not be able to recover.

HOW OUR TRAINING HELPS:

Financial Management – Training on being able to analyse the financial indicators of your business accurately and at the right time, might be the difference between success and failure.
Marketing and Sales – Having more customers in your base is better than only a few big customers. Let us assist you to increase your sales through developing good marketing and sales plans, which are aligned to your mission, vision, values and goals.


6. Operational mediocrity. I have never met a business owner who described his or her operation as mediocre. But we can't all be above average. Repeat and referral business is critical for most businesses, as is some degree of marketing (depending on the business).

HOW OUR TRAINING HELPS:

Training on Mission, Vision, Values and Goals - Inculcating the mission, vision, values and reaching goals into your business will assist your organisation to get to the next level.
Training on SOP’s – This training will assist you and your staff to continually improve SOP’s, aligned to the mission, vision and values of the company and thereby creating consistent customer experiences, operation excellence and new business through referrals.
Customer Service Training- Most businesses don’t realise the number of clients they lose through bad service, and the number of clients they gain and retain through good service. Let us train your employees to value each client who walks through the door of your business and in so-doing, create repeat business and referral business.


7. Operational inefficiencies. Paying too much for rent, labour, and materials. Now more than ever, the lean companies are at an advantage. Not having the tenacity or stomach to negotiate terms that are reflective of today's economy may leave a company uncompetitive.
Management training – Learn how to negotiate and structure your business.
Lean training – Develop a lean organisation and reduce costs and increase efficiency.


8. Dysfunctional management. Lack of focus, vision, planning, standards and everything else that goes into good management. Throw fighting partners or unhappy relatives into the mix, and you have a disaster.
Training on Mission, Vision, Values and Goals will assist in keeping the business focused.
SOP and Lean training also provides direction and clarity.


9. The lack of a succession plan. We're talking nepotism, power struggles, significant players being replaced by people who are in over their heads -- all reasons many family businesses do not make it to the next generation.
SOP Training – Agreeing on SOP’s creates clarity and less conflict.
Mission, Vision, Values and Goals Training - Creates unity and direction.
Management training – Identify potential leaders and use our training sessions to start developing them.


10. A declining market. Book stores, music stores, printing businesses and many others are dealing with changes in technology, consumer demand, and competition from huge companies with more buying power and advertising rands. Strategy Training – Consistently analysing your strategy can prevent your business from changing direction too late. Financial Management Training – Understanding which indicators to look out for is important to know the short term and long term health of your business.

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