Two recent surveys of SME business owners and their advisers
revealed some key reasons why businesses fail.
REASONS FOR FAILURE
According to a CCH survey, SME owners believe that most business
failures are a result of poor cost management, whilst many of their
advisers believe that failure is often due to a poorly-designed
business model. Both agree that inexperienced management is a key
factor, but a significant number of SME owners also believe that
some business failures are unavoidable as the causes are out of
The survey also confirmed that an SME's accountant is its
most trusted adviser for the continued success and growth of its
business. Financial advisers are also highly regarded.
A recent PwC Report highlighted that the key to business success
is careful planning and formulating a long term business plan. This
demonstrates that the initial emphasis should be on how the SME is
formed and managed to provide the SME with the greatest ability to
capitalise on its business plan.
The results of both the CCH Survey and the PwC Report correspond
with our experiences with SMEs.
Poorly designed business models and inadequate protection of
assets, such as technology and intellectual property, can severely
impede the success of a business by eroding its margins.
If these issues are not addressed at an early stage, this often
results in additional expenditure required to restructure the
business or transfer assets to other entities, which are easily
preventable with advanced planning.
USEFUL TIPS FOR BUSINESS SUCCESS
Both the CCH Survey and PwC Report emphasise that investing in
your business early by seeking the right advice from experienced
professionals will ultimately save costs and ensure that you can
focus on realising the true potential of your business.
As a starting point, you should check whether your business is
structured to maximise tax benefits and to provide for an ultimate
exit. You should also check that you can identify and protect your
technology and intellectual property, and take advantage of
generous research and development grants which are currently
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