Username:
Password:

Remember Me

Copyright, Nicholas A. Bibby, all rights reserved.

In part one of this article, the focus was on the plight of entrepreneurs facing business failure. This installment deals with most of the critical players involved, and an initial glimpse into the truth about resources available for the entrepreneur.

The first important player is government. In general, North American governments do a quality job of providing educational and, in some cases, financial assistance to entrepreneurs. This is great news for focused entrepreneurs who need technical business planning and financial guidance. However, when it comes to businesses in trouble, we find that planning and financial guidance tend to disappear. Resources seem to dissolve in these cases in the same way that people in trouble seem to loose fair weather friends. Therefore, new preventative measures are required that will go beyond the scope of today’s responsive government. What can be done? Much more in the planning stages, and I will discuss that later on. Naturally, if government understood the root cause of failure, it would fix the problem. Possible solutions lie ahead, but here is one early clue. Business failure is not generally a function of the business itself, it is a function of the person who owns and operates the business, and that issue needs to be dealt with long before business plans are ever made.

When it comes to small business failure, many agencies, whose reason for being is to support small businesses, often find themselves helpless. They are equipped to help start-ups, not businesses in trouble. For example, if a loan is made to a sick business, which is often the case, that cash injection will most likely just prolong an inevitable death. In spite of its desire to do so, an outside agency cannot affect real change in an individual business for several reasons. First, business failure cannot be overcome short of day-to-day corrective involvement in a venture. Second, by dint of personality, entrepreneurs and other types of people, generally do not perceive the world in similar ways. Third, help is being focused on the wrong problems. Hang on, I will tell all before the story ends.

Now, just in case you are ready to jump down my throat because you or your uncle work for the SBA or volunteer for SCORE, please calm down, I am not attacking the fine work of these agencies or their level of commitment to small business development. I am simply concerned with their ability to effect change. Here are but three of many reasons I feel this way. First, the people who work within these agencies are primarily executives, administrators, managers and educators. Those are all honorable, required functions in our world, but their experience, mindset and skills usually do not relate to the entrepreneurial lifestyle and personality. Working as an executive manager and owning a business are not at all similar. Second, lest you think I am being critical, which is absolutely not the case, let’s just assume that we placed only ex-entrepreneurs in these agency slots. Even though that will never happen, if it did, the parties could better relate, but it still wouldn’t be the answer. Why? Because once again, small business is about living and working in the trenches, and only the small business owner does that on a day-to-day basis. The differences between living through a business failure and talking about it are simply like night and day. If you’ve been there, you know it’s true. And third, business failure begins long before the business is ever launched. It starts with a poor fit between the entrepreneur and their venture. We don’t focus on that issue. Instead we examine systemic business problems, and those issues are simply not the root causes of failure.

Next we have the banker. In terms of financial assistance the banker can be a great asset, but don’t forget, our focus is on troubled businesses. Due to priorities and abilities, not out of lack of care or concern, the banker cannot champion the cause. In times of trouble, the banker will attempt to “work out” the problem, but be assured that ultimately, collection, in one form or another will take precedence over entrepreneurial counseling. In addition, bankers, like bureaucrats and managers, have and need specific skill sets in order to be effective, and those skill sets are different from those required of an entrepreneur. So once again, you will not generally find a mindset fit between an entrepreneur and other personalities.

Now consider schools. Educators teach us about business management systems, and today, we have many entrepreneurial courses of study as well. However, knowing how to effectively manage a system does not equate to the demands of entrepreneurship. We are fortunate to have brilliant minds housed in prestigious academic settings, but as important as business principles and systems are to successfully running a business, once again, those issues are not at the very heart of entrepreneurship.

Of course, we have to include the business owner’s family, friends and other confidants. As deeply concerned as they are for the welfare of their favorite entrepreneur, they are usually not effective resources if the venture is in trouble. Mostly, after listening tirelessly and offering suggestion after suggestion, friends and family eventually have to get back to taking care of their own lives. Spouses, children, parents, friends and trusted business advisors may feel the owner’s heartache as though it was their own, but usually they are helpless by-standers. When a business is in trouble, so is the owner; this creates a very “human” connection.

So, this all sounds rather bleak, doesn’t it? We have government agencies, banks, educators, friends and family all around, but really no one to help. Do you recall the Ancient Mariner by Samuel Coleridge? “Water, water everywhere, nor a drop to drink.” The analogy works quite well in our story. Just as a thirsty sailor cannot survive on saltwater, the foundering entrepreneur may be surrounded by caring souls totally incapable of providing needed sustenance.

Sorry for the dreary picture, but business failure is neither bright nor cheerful. Resources for entrepreneurs may appear to be abundant, but their abundance is more easily sighted by the successful small business than the ones in trouble. Let these thoughts ferment for a while and I promise a ray of sunshine in Part 3. The focus will be the star of the show, the entrepreneur.

Part Three