One Percent Success Rate: Perpetuating Failed Models

Each time I hear the statistic quoted that only one percent of the start-up businesses advised by government small business programs succeed (99% of them fail), I cringe. No other “industry” would be allowed to continue with a “success rate” that abysmal.

The truth of the matter lies in the “business model” of government in business, in which businesses are being advised and provided programs by well-meaning and well-intentioned “advisors” who rarely have experience in start-ups, small business, or the type of business issues that these fledging and/or struggling businesses need help with. So with few exceptions, the true issue is that the businesses are not being given the real picture and current, timely, relevant insight into what it means to be in business, run a business, and compete in the real-time of the day-to-day world they operate in under the realities and circumstances of today’s competitive, technological environment.

The well-intentioned and experienced government advisors and ancillary programs used to support the business start-ups are as entrenched and rooted in established programs as any other part of the government (It is, after all, “the government”). Big business and textbook methods are all too frequently used to lecture and provide seminars to would-be entrepreneurs and business owners. Textbooks, case studies, and corporate answers are cumbersome, time consuming, and burdensome to individuals and entities that are in need of innovative business models, quick turnarounds, fast answers, and practical solutions. These new businesses are cash strapped, time constrained and need savvy insights into how to market on the Internet and build a “buzz” about their brand. They aren’t interested in hearing why no one will do business with you because you are “too young,” “a woman,” or any other stereotype that is being played on the ol’ eight track of how business used to be done.

Not every governmental office or advisor “doesn’t get it” but too many of them don’t. Oh, and then there are the ones who are there to get it for themselves; this is the second category of government advisors my clients have encountered: The ones volunteering with the government so they can find the clients for their daytime company and the product or service they have to sell. The “day job” with the government is the SIDELINE! Talk about conflicts of interest! You may be a volunteer, but that doesn’t mean this is a marketing opportunity for your business!

Back to the Businesses that Need Advice: Improving Success Rates

The success and capitalization of these companies are dependent upon the ability to make things happen quickly, do business well, find answers, take action, and get things right the first time. They are eager to learn and need content and programs that work.

Programs and workshops have to be formulated to teach business owners and entrepreneurs what they have to know and do now. What it means to be in business, what they have to do to make sales, what numbers mean, and where the numbers come from. Performance becomes the ability to be fully capitalized because the business becomes the source of capitalization earlier and the business is capable of working effectively and efficiently to preserve the limited capital it has available in the early stages.

Government Isn’t the Answer for Starting Small or Big Businesses … or Bailing Them Out

Government advice and programs cannot provide the ultimate answers for small or big businesses. Certainly, providing entrenched and antiquated content that has demonstrated an inability to generate success is not the mechanism to achieving different results. Change is definitely needed if a different result is desired, and more businesses are to succeed and stay in business in their first five years (and beyond). Looking to lessons learned and to successful entrepreneurs and innovative programs is definitely part of the change that is needed to revive the economy. The question is: Are start-ups and new businesses, as well as the established systems, truly ready to change or just willing to talk about it? Change requires actions different from those previously taken. So far, there’s a whole lot of talk and a lot less action.

The problem with creating meaningful change stems from a need for a platform or a foundation for building the change. The basis for change arises out of the dissatisfaction with the current state of things, whatever they may be. But along with that dissatisfaction comes a need to hold onto something familiar and not leave everything we have known behind … so change ends up not being radical, or progressive, but an incremental process, often bringing with it the burdens of the system it seeks to break free from.

Corporations with the penchant for change initiatives and program after program for “innovation” find themselves to be the casualties of the unending desire to change and the inability to successfully innovate. The spirit is often all too wiling to pursue “change” and “innovation,” only to find the body unwilling or incapable due to a physical incapacity to change. Having worked in Fortune 500 organizations, it is institutionally built into the systems to protect the infrastructure through the CYA (cover your assets) mentality.

For instance, one past project that I had the experience of watching seemed to be just what was needed: The creation of a streamlined financial reporting and forecasting tool with just-in-time, real-time management information. The requirements for this tool came from top executives, with specific metrics they wanted calculated and measured. Very few metrics had been selected—only the most meaningful, and the list was literally a single page of financial information. Eureka! The light had been seen! Then, as all things must buckle under the weight of a big corporation, each layer of management said “But what if they ask for this too later?” … and suddenly one page of information, one page of stream-line glory became 1.3 billion pieces of data that had to be collected and calculated, sorted, and manipulated. We were back to producing all the numbers from the old system in a new system that was cobbled together in a less efficient manner because it had been a prototype for a new way of business, an innovation that was killed by the entrenched processes and approaches of “We’ve always had this piece of information and although we never use it, what if we want to sometime … ”

Government and large corporations have been and continue to move forward under momentum, sometimes despite themselves. They have been set in motion and until some unexpected force changes the rules and becomes the immovable object,the course will not and does not change. Even when giants stumble and fall, even when industries tumble and collide with reality, everyone hangs on to the way it has been and says “No. We cannot allow it to change.”

So government will continue to attempt to guide small businesses in how to do business. Government will continue to compete with the small businesses it is attempting to encourage to succeed. Government will now become big business through its operations, its stake in industries, and its so-called regulations and oversight of the companies it funds, regulates, and/or otherwise has managed to reach into on the behalf of the taxpayer.

The companies the government advises through its small business programs have a one percent success/survival rate. If those were cars manufactured and put on the road, it would be criminal. Well, now that the government is in the automotive business, let’s just hope they will be more successful at manufacturing cars than they have been at producing businesses.

©2009 F.O.C.U.S. Resource Inc.

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