Another wise observation from PC

[Justloadit]

I have had 3 occasions in the last 4 months in which I have been knocked back financially, totaling a huge sum of money due to an employees negligence, most of my profit for the next 2 years.
So be careful in saying that it won't happen to me, the situation may change because of something not on your radar.

Like driving on the road, most accidents are caused by the actions of others, which affects you directly.

[adrianh]

It comes down to the absurd way we see success and failure. Why do we buy insurance? We do because we foresee the likelihood of something terrible happening....yet we are made to believe that we should blindly forge ahead in our businesses as if we are superheroes who will succeed!

[Pap_sak]

My business is closing down after 7.5 years and I certainly do not look at it as a failure. I had a good run, made some money but some chain stores moved and I found I could not compete with them. Things happen, I am just happy I had a few good years and am pulling out more than I put in.

I should though have started pulling cash out a long time ago, instead of "reinvesting" all profits - my one huge mistake.

People are finding it odd that I have a closing sign on the door but a big grin on my face!

[desA]

Well done in closing with a grin on your face. Getting out more than you put in means you were a roaring success.

All the very best in your next venture.

[wynn]

IMHO the idea of 'unexpected outcomes' covers the subject pretty well!

100% of small startups do not intend to fail from the get go but the sad truth is that 96% of them do and we need to look at the reasons because that is where you will find the 'unexpected outcomes'

Joe Bloggs opens a hamburger stand in a Shopping Mall where there is no other food sold and no space for another food shop, three months later Wimpy gets the mall owners to add an extension where they can trade, an 'unexpected outcome' so so long Joe!

But I believe the 'unexpected outcome' of most small businesses, even when you take the necessary precautions, is slowed down cash flow which starves you of the ability to expand and even chokes your ability to service existing orders, then when the bank refuses or recalls your facility that is what can be referred to as an 'unexpected outcome', you thought you had a relationship with your bank, then your Creditors suspend your account because you are having difficulty getting paid so can't pay them and to make matters worse your clients are giving orders you should be getting to other suppliers simply because they are able to supply at the time.

I don't think anybody in their right mind opens a business with the intention of failing but if you bear in mind that you have a 96% chance of hitting the wall, if or when it happens you are not surprised, afterwards you are in a better frame of mind and probably in a better position financially to start up again, after all it only takes 25 failures to ensure that you reach the magical 4% who succeed, although I believe it is a lot quicker because of all the startups who bet the farm never venture again.

[Marq]

I really doubt this 96% business failure rate over 10 years.
On the net (my only source at the moment for research) Forbes quotes Bloomberg with numbers like 8/10 failure over 18 months but then nothing seems researched or true and they are all just throwing numbers out there.

Eventually came across this researched scenario in the us that looks more credible.
http://www.statisticbrain.com/startup-failure-by-industry/

It so easy to throw stats & BS around - Heres a stat - 100% of media websites will have used a throw away BS stat within the next year to bolster their weak story. Also 100% of the small business guys selling online and web based services relating to that stat will have used it and put their businesses on the line that its genuine and a real factor that should be heeded. 50% of the businesses that use that BS stat will have gone out of business by year one as a result of not understanding their market.

Interesting that among the reasons for failure on the researched site, lack of data and key information and knowledge of selected industry is not listed as a factor for failure. Lack of market awareness probably covers it but only just.

Interesting to see Religious Organisations as number one success rate after 5 years. Always said this is where the money is.

[Marq]

OK - so I am starting this religion today.

12 berths available for disciples.
All donations welcomed. Cash only.
Strategic Planning meeting for mission statement and visionary see-er to be held soon.

[wynn]

http://www.adcorp.co.za/NEws/Pages/N...l-timelow.aspx

A quick google came up with this

interesting to note that the number has been stagnant at 2 million small businesses for the last ten years with an increase of 400,000 units between 2004 to 2006 but has reverted to just below 2 million since, and that since 2006 440,000 small business have closed that to me is as good as a 96% failure rate as anything???

"Against the background of the small business sector’s role as South Africa’s most important originator of jobs, Sharp draws attention to two “worrying patterns”, one of which is that the number of small businesses in South Africa has stagnated over the past decade.

“Between 2001 and 2011, there was a roughly constant number (2 million) of small businesses. The number increased slightly (to 2,4 million) during the economic boom of 2004-2006, but has, since 2006, shrunk by 18,2%.

“Since the boom, about 100 000 small businesses have closed their doors each year, bringing the total number of small business closures over the past five years to 440,000. Given that the typical small business employs 12 people (aside from the owner-manager), a revival of this sector could potentially create 5,3 million jobs.”

[desA]

Given that the typical small business employs 12 people (aside from the owner-manager), a revival of this sector could potentially create 5,3 million jobs.

Dear sir, pray, what are you going to revive, & with what?

[Marq]

Have these numbers taken into account:-

• The option from the taxman in 2010/11 to take properties out of CC's and Ptys to reduce the admin. A large number of small business structures only held properties to avoid transfer duties and other taxes. I do not know how many cc's were closed as a result but would imagine a fair amount.
• CIPC (Cipro) introduce annual duty in 2010/11 which removed a huge amount of dormant and unused corporations after declaring them de-registered. Again a fair amount of cc's would have been de-registered. I folded two of my dormant cc's.

Your source - Loane Sharpe, is a labour consultant that loves to be on TV and in the media throwing percentages around with no value except to be a drama queen and create a scare so that he can keep himself in business.

We need to see an expert from the business world, in economics or accounting, analyse the numbers not a labour consultant.
We need to see a real breakdown from CIPC showing the movements so that we can take out the anomalies adjust for certain values and come to a proper conclusion.

We do not see in any of these numbers how many new businesses were registered by year. That number may be huge, which would indeed indicate a big decrease as well. Or it may be small which would mean a small decrease.
We do not know how many businesses were de-registered as a result of, being dormant, insolvency, no longer necessary etc.
How do we quantify sole proprietors and business' that did not get into the registered world?
Only when all the data is collected, analysed and researched can we determine a real failure number.

Minister Rob Davies stated last year that the answer was 5/7 will fail in the first year. But that was a general world number introduced in the usa which again is not properly substantiated. Even he does not trust the cipc numbers.

No doubt the number is high, but how high? I dont believe the 96%, perhaps up to 80% but I do believe we will never know the answer.