Monday, July 26, 2010

The Top 7 Mistakes Why Second Generation Small Business Owners Fail at Business Success

Why do small businesses fail? Well most of the time because a lot of small business owners especially the beginners pattern their way of handling their business which makes them imitate what the first batch of entrepreneurs did. They copy EVERYTHING, "everything" means including the mistakes. New batch of small business owners need to analyze things. It is good idea to have someone to look up to but you also need to know if you are copying the right thing. It is good to know the mistakes but for them to be avoided not to be copied.


I found an article written by a business coach in United States which gives a list of WHY DO THE SECOND GENERATION SMALL BUSINESS OWNERS FAIL. And there are seven of them!! Yes, that means 7 things to avoid! Read on and learn.

Many small businesses successes today are the result of the actions of the previous generation. Yet, many second generation businesses owners fail to capitalize on the efforts of their ancestors. According to the US Small Business Administration, small business failure for family owned businesses is two out of three.

From my experiences as a business coach and an employee of a first generation business owner, this failure is probably much more about people failure than knowledge failure. These 7 mistakes may help you avoid the failure that many second business owners experience and achieve the business success that you desire.
  1. Ivory Tower Mentality - Knowledge Failure
  2. External Customers Relationships transfer - People Failure
  3. Source of Employee Loyalty - People Failure
  4. No Plan - Knowledge and People Failure
  5. Performance Savvy - People Failure
  6.  Since businesses are comprised of people, managing people takes an understanding of what motivates people to do their very best. For example, when the current management team cries poverty and can't afford raises for the employees, but then purchases brand new expensive cars, their actions have a negative impact on the employees. Employees don't mind new cars, but do mind luxury cars. 
  7. Assumptions - Knowledge and People Failure
  • Market place
  • What motivates employees
  • How much time the business demands
  • Owner entitlements

  • Values - People Failure

  • Many first generation business owners operated by core values where a man was as good as his or her word. Handshakes instead of formal contracts had much greater value. Today's business owners appear not to have the same deep seated values of their ancestors. The result of the lack of values can be summed up in one word - greed.

    So if you truly want the efforts of the previous generation to be sustainable, then look to see if you as a second generation business owner are making any of these mistakes. Your small business success depends on the actions you take right now so that you are not 2 of those 3 family owned businesses that experience complete business failure.

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