Companies are born and businesses die every day. Unfortunately, the mortality rate increases and now exceeds the birth rate. This has obviously been caused by the change of the economy. Unfortunately, small businesses being so vital for the economy, it is also a cause of the recession continues! It’s a vicious circle, but the one that can be stopped …
In the myth e-myth revisited (Michael Gerber) published in 1995, Michael Gerber reported that 80% of companies fail in the first five years of negotiation and that 80% of those who survive the first five years do not do it 10th birthday. Which means that only 4% of new businesses will celebrate their 10th anniversary.
The Office of National Statistics in the United Kingdom publishes statistics on “births and deaths” of British companies each year. The main statistics of this report are as follows:
The number of closing companies increased by 20,000,000 (7.4%) to 297,000 for the year between 2009 and 2010
The number of companies started remained largely flat with a low decrease of 1,000 (0.4%)
For the second consecutive year of companies that have stopped negotiating in digital inferiority that has begun a 1.8% drop in the number of active businesses
Data also provide information on business survival rates.
From there, we can see that about 40% of all companies started in 2005 were still negative in 2010. A little higher than the 20% suggested in the myth e-myth.
Although there is no 10-year survival data, model the data you can predict that 17% of companies started in 2005 should see their 10th anniversary.
However, the figures also suggest a drop in survival rates since 2008, since you wait for me to economic conditions. As a result, the average life expectancy for a new company has increased from 5 years to businesses open in 2005 to a 4 years planned for companies in 2010.
This is considerably better than the 3 years suggested by survival rates cited in the e-myth myth. This may mean that global things are better than they were in 1995. or it may mean that companies are more sustainable in the United Kingdom than they have ever been in the United States. Or both…
Anyway, if the goal of business is to generate a long-term cost-effective company for individuals and their employees, the absolute numbers do not import too much. Most corporate owners do not start a business that expects it to be there for only four to five years on average.
What to do about it?
Although the economy accelerates the closure of companies, one of the main underlying causes of the majority of commercial failures is that most corporate owners never manage to create a fully systematized business.
Research shows that if the majority of corporate owners know they consistently need their business, nearly 99% of business owners have been unable to do so. It’s not their fault. Nobody has ever shown them how to do it.
The company remains for the most part in the owner’s head and that the company can not work without them. Over time, it puts the owner until they had enough and near their doors, never realizing the dreams they had when they opened business in the first place. Worse still, without business systems in place, it can not adapt in a declining economy.
Writing systems are not difficult and most businesses will not reach it. There are several reasons. It does not seem that the profitable work is not a priority … it’s not a very exciting / interesting job … it’s not something that the owner is good at … there is has too many distractions from customers, employees, suppliers, etc.