For Washington state businesses it has been the best of times and the worst of times. Our state regularly ranks near the top of the list in new job creation. Less commonly known, Washington is among the highest of states in numbers of business closings. According to a report by the Washington Technology Center for 2006, although Washington ranked second for new jobs creation (Idaho was first), it ranked first for number of business closures. Undoubtedly, much of this churn stems directly from the high rate of new business creation and the subsequent discarding of some of the resulting products or services as they are exposed to the marketplace. But, some of these closures are a result of failure.
In a 2007 report on Washington small business survival to the governor, business failures were concluded to result from limited business experience and knowledge. This was evidenced by such symptoms as a failure to plan, overly optimistic assumptions, improper pricing, under capitalization, and employee theft. In fact, most business turnaround leaders cite internal reasons such as bad management or a non-participative board as the root cause for business failure the majority of the time.
This situation need not be! Our state can do better, and in so doing create a more vibrant and healthy business community. The key is for business owners and managers to recognize their weaknesses before it is too late. Among other things, this might mean bringing on the necessary financial talent to ensure adequate cash flow planning, product costing, or accurate financial reporting. Whether the solution involves adding board strength, hiring or replacing a CFO, or adding interim financial talent, the resources exist to fix these problems. In today's challenging economy it is more important than ever for businesses to increase their probability of success rather than letting inertia stand in the way.
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