The Business Financing Systems Do Not Work – Why and Why Not?

Looking First at the Enterprise Side of the Equation Part III of a continuing series on Small Business Financing (July 12, 2015) – See,http://vetlikeme.org/the-business-financing-systems-do-not-work-why-and-why-not/

As noted in Part I of this VetLikeMe series, the current systems of traditional business funding simply do not work. Such do not deliver adequate timely financing when and where needed most for small business successes, especially as regards veterans.

In Part II of this series, the obvious questions were raised as to why and how to remedy? As a starting point for those investigative analyses, the focus was directed to the two primary parties within the financing equation – the funding source and the enterprise seeker/applicant. Given the inherent complexities, multiple variables and stakeholders in play within the funding side, such was temporarily put aside for later coverage within this series.

Instead the focus first started with the enterprise side where there exist finite prime influencing factors that could be more readily identified and analyzed. As the studies and statistical arrays reflect, the overwhelming contributing causes for inadequate or lack of small financing, are in fact significantly self induced.

Existing and future enterprises (regardless of size) are facing monumental financial and profitability challenges as never before.

The latest data for employer businesses (those with one or more employees) showed that although 400,000 new businesses were created, 470,000 died nationwide – a “deficit” of 70,000 no longer there (US Census Bureau) http://thechairmansblog.gallup.com/2014/02/the-us-economy-kidding-ourselves.html (2014).

For every alleged brilliant new idea, impassioned start up, or early stage business venture (at least up to five years) anywhere from 36% to 50% will fail depending upon industry area (e.g., pick your poison) http://isbdc.org/small-business-failure-rates-causes/; http://www.washingtonpost.com/blogs/fact-checker/wp/2014/01/27/do-9-out-of-10-new-businesses-fail-as-rand-paul-claims/; http://articles.bplans.com/the-real-data-on-small-business-failures/. Only about half of all new establishments survive five years or more – only one-third survive 10 years or more.(US SBA Off. Of Advocacy; also, /www.sbacouncil.org/about-us/facts-and-data). There exist very serious concerns as to whether American entrepreneurship, especially for veterans, might actually be dying? http://video.foxbusiness.com/v/3994178437001/is-us-eentrepreneurship-dying/?intcmp=HPBucket#sp=show-clips; http://finance.yahoo.com/video/entrepreneurship-dying-215053886.htmlhttp://www.gallup.com/businessjournal/180431/american-entrepreneurship-dead-alive.aspx

The obvious questions: Why? What are the prime causes?

Scrutiny of the 2008-2013 data shows that more than half of all business failures/discontinuances were primarily attributable to knowledge deficiencies respecting best business practices and financial acumen – knowing how and where to properly access capital, lack of timely and needed financing, and inadequacies in best business practices or know how. Global Entrepreneurship Monitor (“GEM”) National Entrepreneurial Assessment for the United States of America (2013) http://www.babson.edu/Academics/centers/blank-center/global-research/gem/Documents/GEM%20USA%202013.pdf. Cf., May 2015 Wells Fargo/Gallup Study on Small Business Financing, https://www.wellsfargo.com/about/press/2015/gallup-diverse-study_0521.content

“It’s what you don’t know that is going to come back and bite your rear end”.

In April, 2015, the US Small Business Administration noted that more than 40% of U.S. small businesses consider themselves financially illiterate, yet 81% handle their operations. (Referencing a 2014 Intuit Study) https://www.sba.gov/blogs/april-national-financial-capability-month; http://investors.intuit.com/press-releases/press-release-details/2014/QuickBooks-Survey-More-Than-40-Percent-of-Small-Business-Owners-Identify-as-Financially-Illiterate/default.aspx

“Risk comes from not knowing what you’re doing”. Warren Buffett

Whether emanating from owner/management profound ignorance, inadvertence, arrogance, and complacency, the end results are all the same. The prime and significant factors for business detours that result in needless, costly expenditures of funds, resources, and time that stifle business development, profitability, and outright failures tend to be of the self inflicted varieties. The good news – virtually all tend to be preventable.

“If you don’t know where you are going, you’ll end up someplace else”. Yogi Berra

All the business development on the planet (e.g., new contracts, clients, revenue expansions regardless of source) is completely worthless without the requisite knowledge respecting how and where to properly access to the right type financing at the right time and the financial acumen to plan for and manage those resources. Even with access to timely financing without the requisite best business practices knowledge achieves the exact same adverse results, usually at lightning speed. In fact getting financing often breeds arrogance and complacency within ownership completely masking the real underlying business, financial problems that will come back to plague.

The best advice – the road to real success starts singularly with and within the entrepreneur or business owner. Find and access the right tools for becoming properly educated and empowered with the requisite knowledge to get the business results desired.
As the studies and glaring statistics confirm, unless and until one is fully educated and prepared, starting (or continuing) the business journey is akin to blindly attempting to navigate treacherous waters in the dark. On the job training might work fine in some endeavors but when it comes to creating and maintaining a successful business enterprise it only results in a “fool’s endeavor” with endings to match

“It’s difficult to clear the swamp when you are up to your armpits in alligators.”

What cost for not having the requisite knowledge and practical insight regarding how to better steer and navigate through every financial and developmental stage for your business enterprise? Those with a passion for routinely seeking better, more efficient pathways for business growth and profit will readily seek every avenue for knowledge empowerment (starting with the Ultimate Financing Guide). Whatever the reasons, justifications, or excuses, those who would do otherwise will reap the accompanying results, most assuredly being of the adverse varieties.

“An investment in knowledge pays the best interest”. Benjamin Franklin

This Series is about encouraging pathways and open discussions for business success based on “real world” experiences through knowledge empowerment. Next in the Series will be providing detailed analyses on how to better identify and achieve those type results.

(Profile: Woodrow D. Wollesen, recognized national small business financing expert, former co-partner national law firm, seasoned entrepreneur/business executive, financial/business operations consultant, former graduate school of business professor, military veteran; 2006 US SBA Small Business Financing Champion, (8 years) Board Member, Executive Officer, Instructor with the prestigious National Women’s Business Center, Washington, DC; NWBC 2005 Man of the Year – see also more extensive background profile at http://www.ultimatefinancingguide.com/about-the-author/; LinkedIn www.linkedin.com/pub/woodrow-wollesen/11/147/652/;

** The Ultimate Financing Guide deals with all the critical issues noted in this article in an objective and comprehensive fashion seeking to provide remedies for all stakeholders – all “win-win-win” outcomes. It provides for entrepreneurs and business owners for the first time a thorough, detailed roadmap respecting every facet in preparation, required records, the entire array of available financial options or tools, and how and when to acquire that financing in pragmatic, practical terms – how it works in the real world of business financing. The complete treatise and resource is FREE for all military veterans and their family members (There is a token $5 fee/contribution required for the maintenance of this Internet site which benefits all veterans. That ensures that in fact that “Veterans are helping Veterans to Succeed”.) Download and see for yourself. http://www.operationveteranempowerment.com/ http://www.opvetempower.com
For non veterans, a deep 50% discount off the standard retail cost is available for all client, members of this project’s established supporting partners . http://www.ultimatefinancingguide.com/