A business book by a business improvement expert could reduce the number of startup failures in the US
Whilst the statement, ‘9 out of 10 startups fail‘ might continue to circulate the media and business worlds, most entrepreneurs aren’t to be deterred.
In the United States alone – data from the US Small Business Administration reveals that there are currently 28.8 million small businesses operating and contributing to the economy. In 2013, small businesses created around 1.1 million US jobs.
However, according to the U.S. Bureau of Labor Statistics, two thirds of businesses in the United States survive just two years, half will survive five years and one third may survive their first decade.
Data has also shown that businesses are indeed still failing for a number of reasons. These could include problems with cash-flow, launching non-viable products, poor management skills and fragile team structures – to name a few.
For any entrepreneur, launching a new business and bringing their first product to market comes hand in hand with a myriad of potential risks and pitfalls. And, given some of the above statistics, survival is never assured.
Today, a business book by the business innovation and business improvement guru, David A. Duryea offers a fresh perspective on why businesses are indeed failing.
And whilst this book gives new hope to entrepreneurs seeking success with their startup ideas, it takes its lead from forensics performed on hundreds of companies that have failed to stay the course.
As well as shining a new light on why many startups aren’t making it, Do The Right Thing: in Business Improvement, Including Process and Technology also serves as a manual for entrepreneurs and founders by offering them new and deeper insights into how they can see their enterprises succeed.
This business book contains easy to follow project improvement methods and strategies which are holistic in approach. With a focus on identifying the essence of a business, above all, David advocates creating and improving a companies ‘core business model’.
This can be accompanied by initiatives that may radically transform any startup and its projects, ensure readiness to spot new opportunities, lead to transition and foster disruption.
Entrepreneurs and new business founders can also learn methods to combat cash flow problems, achieve high performance and become exceptional leaders in their given fields.
From the companies I’ve reviewed, especially technology-focused startups there has been a failure to convert a product/service to a core business model.
Here, David tells Nativa World about his business book and offers tips to prevent startup failure…
David, what data did you include in the business book?
Data on total business project failures is referenced from the Standish Group on pages 4-5 in the book. Total IT spend in 2013 is referenced from the Gartner Group on page 5 in the book. Whether it’s a project failure or a total business failure, they both point to the same issue – the sustainability of the organization’s core business model. In each case a connection back to the organization’s failure to enhance, develop, transform and even disrupt with its core business model is the root cause.
When writing the book did you make any new deductions?
Yes. The holistic connection of an organization to its core business model. Basically, an organization’s operations and all aspects need to be in-sync for outstanding performance. Otherwise the organization is failing and the leadership might not even know it.
Was writing the book cathartic for you?
Yes it was very liberating and even a total understanding of what it takes to have a successful, sustainable business. This even helped understand how a new core business model can be developed for startups successfully.
What’s the book structure?
The book is structured for leaders to follow a step by step process to be successful. Whether a business leader needs to focus on strategy, process or even how to select the best technology, my book highlights the best way to review and understand the main issues to be successful. The book is aimed at anyone involved in business enhancements, innovation or transformation of their organization. Basically, if a business or technology professional participates in improvement then this book with help do it successfully.
What’s the core message?
The core message of the book is true and successful business improvement, innovation or transformation is centered on your ability to further the organization’s core business model. Core business model is to uniquely serve your organization’s customers in a profitable way. All initiatives, whether process improvement or technology enablement, need to holistically perform for the core business model. If they don’t, the project will fail or the company will.
What are the best ways for a company to define its ‘core business model’?
First understand exactly what your organization’s industry is and then what your organization’s products / service your company provides to your customers. Ask, why do customer purchase from our organization instead of our competitors? This needs to be honest and direct. Then compare this information with how the entire operation is actively fulfilling this reason. From that point calculate the profit generation and whether your organization can serve your customers in a consistent and sustainable way.
Why do you think more business aren’t creating a core business model?
There’s a lack of a realistic understanding of the impact of a core business model. That’s why I place a level of significance on this and call it “The Law of Business Reality”. Just like a law in the natural, either you understand and adhere to the law or your organization will cease to exist. From the companies I’ve reviewed, especially technology focused start-ups there has been a failure to convert a product/service to a core business model. This has increased the failure rate for entrepreneur endeavors and startup initiatives.
What success stories have you seen through your work?
Yes many stories. From building and manufacturing companies using applications that did not fit their core business model and hurt their customer service base. To insurance and financial companies that were utilizing too much technology and increased costs to the point of insolvency. Plus, airlines that were looking to change their operations only to find they had the best innovation of their industry. But most of all, disruptive startup organizations that could not convert their product/service ideas into viable operating business models and waste millions of investors capital when the company was dead on arrival.
Key reasons for startups failure:
- Not able to understand the organization’s core business model and the effect on operation
- Not able to convert a product/service into a viable core business model
- The misnomer that new technology will automatically further an organization’s core business model
- That fallacy that innovative technology automatically makes a viable core business model
- Simply, core business models that are outdated and or not sustainable
Top tips to prevent startup failure:
- Understand implicitly the organization’s core business model and the effect on operation
- Understand how the organizations profit generation is tied to the core business model and what will affect the model’s generation
- Constantly review industry trends and changes that might impact your core business model
- Review current and or future technology to enhance, further or disrupt your industry and your core business model
- Select innovative technology carefully to make sure the impact is positive to your core business model
Photography courtesy of David A Duryea & Shutterstock.com