When it comes to advice, it seems everyone is an expert. Whether you are buying a new car or selling your home, the advice gurus seem to come out of the woodwork.
However, be careful whose advice you take to when it comes to your business.
Have you ever heard the old adage, 1 in 3 businesses fail in the first 5 years? That’s around 33%. It’s a statistic that gets thrown around a lot. It’s well known, often recited and a business myth.
That’s right, a MYTH.
In 2000, the Productivity Commission conducted research into business failures and changes. They found that in truth only 7.5% of businesses exit the Australian market.
1.5% simply changes ownership. Of the other 6%, reasons for exiting include solvent but insufficient funds (2%) or solvent but exit for reasons unrelated to the financial position of the business (3.5%). The number of businesses that fail (i.e. bankruptcy or liquidation) only account for 0.5%… That’s 1 in 200, significantly less than the clichéd 33%!!
One important fact that came from the Commission’s findings is that of those businesses that do fail, more than half were the result of poor business management.
Ultimately, what you should take away from this information is that to stay in business, you should be actively managing it. This includes seeking expert advice.
Running a business is a busy and, sometimes, overwhelming experience. New business owners can feel that because they have worked in the industry for many years, they know how to make their business successful. But while your experience will provide a strong guide for you, you may not have been blessed with a natural understanding of business management or fiscal matters, key factors in business success. Don’t be too proud or afraid to ask for assistance.
If you aren’t sure where to get the best advice regarding a particular matter, remember that your accountant, lawyer or business coach will be able to recommend someone to you. Also, you may find peace of mind through asking for references. You reference new employees so why not also ask for them from your ‘experts’. They should happily provide you with evidence of their past achievements.
Above all remember, there’s no such thing as a stupid question…