In New Zealand – which currently is considered to have survived the Global Financial Crisis far better than most countries in the world – businesses are disappearing faster than ever. 36% of businesses born in 2010 with one to five employees ceased to exist by 2014 whether because of bankruptcy, liquidation, mergers and acquisitions, or other causes. Compare that to businesses with one to five employees born in 2001 where only 20% were gone by 2005. That’s almost double the death rate in less than ten years.
How can that be? Between 2005 and 2014 we have had greater access to information via the internet as well as faster communication. With so much more readily available information (in most cases that information is available free or at very affordable rates), and quicker access to that information, you would think business owners could learn from others and business survivability should be improving.
I believe that businesses are dying younger and/or faster due to the following reasons:
The world around us is changing faster all the time. Business environments are now more diverse, dynamic, and interconnected than ever, and far less predictable.
Business owners are failing to adapt to the growing complexity of their environment;
Many business owners misread their environment so they end up making the wrong choices about what they should be doing;
Business owners are overwhelmed by choice.
In 2013 there were over 84 documented analytical tools and techniques to choose from to help someone grow a business;
There are over 77 million search results in Google about growing your business; and ‘experts’ everywhere telling us we should try ‘X method’ because it worked for them.
The end result leaves business owners paralysed by the fear of picking the wrong strategy and in the end they do nothing.
Most of the 84 documented analytical tools and techniques are long winded and heavy with business and academic jargon which are hard work for most entrepreneurs to understand so they end up being avoided;
Many business owners continue to use ‘classic’ (dare I say outdated) approaches to growing their businesses; approaches that were designed for when times were very different to today;
Business owners select the wrong approach to strategy; and
Business owners fail to support a viable approach with the right behaviours and resources.
So if a business born in 2001 was almost twice as likely to be alive in four years as a business born in 2010, then how can a business born today stand a reasonable chance of growing into the future and not fail?
Is there an easier way to grow your business?
I believe the best answers to most questions in life can be found in nature. And looking for a way to grow your business is no different.
When it comes to growth, life itself sets the gold standard. Nature shows us life and death every day in many shapes and forms. Whether its animals, insects, bacteria, or plants – they grow in evolving environments, and are dependant as well as impacted upon by others in the same environment.
Plants have been around much longer than humans (and business). They have had to contend with changing weather, animals and insects coming and going, other plants, and now they have to contend with humans. But yet they still continue to grow.
Businesses have parallels to plants. Plants grow, stall or die depending on the conditions around them (as do businesses). Plants grow by competing to use what resources they can get to fill whatever space they can (as do businesses).
In nature, a plant cannot grow unless the plant itself is in the right place, at the right time, and it has the right resources it needs. For example:
a plant’s roots and branches must have room (a place) to grow;
the right time includes when the plant won’t be eaten by other insects or animals; and
plants need enough sunlight, water and food (resources) in the soil to feed growth.
Your business is no different:
– the right place must allow your business room to expand (e.g. a countries laws, the marketplace …);
– the right time includes when your business won’t be taken over or beaten by other competitors, and
– the right resources include having enough supplies, employees, money, and space to feed your business’s growth.
What is different is plants just grow, whereas businesses traditionally think about and target growth. And yet plants win the race against business when it comes to growing and how long they live. There must be something plants are doing right that businesses in general are not.
 Analytical tools and techniques were developed by companies and management consulting firms to help provide frameworks for strategic planning. E.g. PEST analysis, Porters five forces, Blue Ocean Strategy …. Strategic planning is just problem solving – setting your business goals, determining the actions you will take to achieve the goals, and organising your resources to accomplish those actions.