Four Ways Businesses Fail (And How Yours Will Succeed) Presented by: Solution Resources

Objectives Set the stage for understanding Introduce you to the four common small business mistakes Explain how you can avoid these errors to succeed

Solution Resources Setting the Stage SBA says small companies are using their credit cards to finance their business Small business bankruptcies have been increasing since 1998 More than 40% of small businesses operating today will not be in business five years from now

Solution Resources Setting the Stage Reasons sited for bankruptcy in Sullivan, Warren and Westbrook’s report to the SBA 39% - Outside business conditions 28% - Financing 27% - Inside business conditions 20% - Tax 19% - Creditors 17% - Personal 10% - Calamities 6% - Other

Solution Resources The Four Ways Businesses Fail F-L-O-P Financial Leadership Operations Planning

Solution Resources Financial Mistakes: Finance,Tax and Creditors A staggering 40% of failed small businesses cite some element of financial structure in their bankruptcy claims n Failure to calculate taxes n Failure to pay taxes n Financing arrangements n Relationships with creditors

Solution Resources Leadership Mistakes Unprepared for the people, process and technology issues in running a business Inability to find time to externally scan for important business influencers which can hamper success

Solution Resources Leadership Mistakes (cont’d) Leadership Mistakes (cont’d) Doesn’t have expert support council Executes without a plan Sets unrealistic expectations Lacks strategic thinking skills

Solution Resources Operational Mistakes People Customers Lack of knowledge of their needs Inability to build rapport or repeat business Employees On-the-Job training only Underestimate time and effort required to insure satisfaction

Solution Resources Operational Mistakes (cont’d) Operational Mistakes (cont’d) Processes Inflexible No established processes to grow with company No budget to give guidance -- operate off-the-cuff No contingency plans for emergencies Technology Not using to full potential as an enabler Think of it as a panacea

Solution Resources Planning Mistakes No plans Business Financial Operations Marketing Contingency Succession Too busy to plan Execute ineffectively without a plan Use your plan rigidly versus fluidly

Solution Resources F -L-O-P Solutions F = Financial Tax plan with a professional Estimate your tax liability Develop a better understanding of liabilities Request quarterly alerts on due dates and amounts

Solution Resources F -L-O-P Solutions F = Financial Finance Identify realistic minimum capital requirements Understand optimal level of capital required Audit your accounts Request a debt/equity strategy from your financial services advisor

Solution Resources F -L-O-P Solutions F = Financial Creditors and debt Better understand the prudent use of debt Develop an understanding of what creditors value Ask how you can enhance your relationships with creditors

Solution Resources F- L -O-P Solutions L = Leadership Find internal or external expertise to scan the environment for potential influences Set up an objective advisory council AND listen to them Create a flexible, actionable and workable plan AND follow it Establish positive yet realistic expectations

Solution Resources F- L -O-P Solutions L = Leadership Practice thinking strategically Acutely listen and observe Keep an open mind Focus View situations from multiple perspectives Assess risk Get to the bottom line

Solution Resources F-L- O -P Solutions O = Operations People Get to know what drives customer and employees Deliver what they want -- not what YOU think they want Processes Develop them WITH the user Adjust them when needed Technology Spend the time to learn how it can make work easier Adjust expectations about its value

Solution Resources F-L-O- P Solutions P = Planning

Solution Resources Action Steps Contact your bookkeeper/accountant to find tax, finance and credit implications for your business Set up an objective advisory council Keep your eyes peeled on the horizon or hire someone who can Sharpen your leadership skills Think through how you can leverage people, process and technology Plan, plan, plan

Solution Resources Objectives Did we set the stage for understanding? Have we covered the common small business mistakes? Do you better understand how to avoid these errors?

Solution Resources Thank You! Questions? Sandy Robertson Solution Resources Phone: