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US personal bankruptcies appear to be at an all-time high while business bankruptcies appear to be low. It looks like individual's spending habits are out of control, while business is booming, but the stats are wrong. In June of 2006, Harvard Law School and the Kauffman Group reported that there is an error in the way the statistics are collected. Business owner's personal funds are tied so closely with the business funds that personal bankruptcies are often the result of business failure. Why is business so shaky? It's not rocket science, but much of the training we are exposed to is sales/front office concepts, and training in how to change how the owner or manager behaves. We can find training that focuses on the owner, to change the owner's thinking, strategy, philosophy, psychology, and dealings between and among people. We can also find training in how to deal with customers, sales, marketing, etc. But nowhere can we find nuts-and-bolts training on what should be going on behind the door in the operations area. Questions like, what is the best way to set up a manufacturing facility? How many employees should it take to complete a certain number of tasks in a day? And, how do I use employee complaints to improve my business? remain unanswered. To gain perspective on how large of a problem this is, just consider how many employees work behind the scenes in a company compared to how many work in the customer service area. Think about how many square feet of warehouse or manufacturing it takes to produce and deliver a product compared to the area the customer is allowed to see. It's not difficult to see why ignoring the operation might be a huge problem. The baby-boomers who are not quite ready to retire are selling their expensive real estate, moving to less expensive areas, and determining to own their own businesses as a means to support their future retirement. Most of these adventurers have never before owned a business. Without the mentor that came with the family business years ago, these businesses are destined for failure. Bankruptcy statistics for the last ten years are bearing this out. CPAs generally have business degrees, so does that make them the natural mentor replacements? No. Generally speaking, these folks don't have practical experience running businesses other than their own. The accounting industry rightly focuses on history, on making sure that the entries that are reported to the government and other entities are correct and that no funny business is going on. But they should not be relied upon to teach business owners how to manage the future of their business, other than from the tax standpoint. College textbooks are full of good information about the operation of a business, however, small business owners rarely have the time to attend college classes. And university programs tend to focus on training students in that in which they can become employed. Since small businesses typically don't have the resources to hire graduates, schools turn out specialists, rather than the generalist required by small business. Small business failure statistics will continue to grow as long as operations experts are expensive and unavailable to them. For small business to become competitive and strong, information about operations must become more available to them at a reasonable price, and in a format with which they can identify.
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