Firms report failure results from bad luck
Small firms in the UK are blaming bad luck for their failures while praising their own efforts when they find success, according to a new study.
Of more than 1,000 SMEs questioned by financial technology firm Sage One, 80% listed good customer service as a factor in success, while 55% highlighted the importance of a good business plan.
Luck did not even feature among the top five reasons for success – but when it came to failure it was a completely different story.
Bad luck was in the top three reasons listed for failure, suggesting a degree of uncertainty when it comes to business management.
More than three quarters of the SMEs surveyed reported making a profit – a sign of the UK economy getting stronger.
But it is the situation for those that are not that makes interesting reading – especially given the perceived importance of bad luck influencing failure.
Understanding business finances and the way a company works is an essential component of taking advantage of any situations.
“Luck will only take you so far,” said Claire Cater, head of Sage One. “There will always be a role for luck in business – that chance meeting or new product that comes out of a mistake for example.
“But the people getting ahead are those that load the dice in their favour.”
Growth in the UK economy is expected at a rate of 3% in 2014, although lending to SMEs is reportedly in decline.
Financial management is an important part of business success and it is why swift actions should be taken at the first sign of any potential trouble.
Not only can seeking the assistance of insolvency practitioners help to recover a business but it also provides an understanding of what other solutions may be available.
A failure to act could ultimately lead to the company ceasing trading – often at a significant cost to shareholders and investors.
By Phil Smith