Last week, Dan and Bradstreet in Israel (D&B) issued its annual survey of local SMEs, small and medium sized businesses.

• Over the past five years, roughly 50,000 operations started up each year, while 40,000 closed their books.
• For the period of 2013-2015, there has been a 27% rise in those filing for bankruptcy.
• Meanwhile, the country’s economy grows steadily at around 2.5% annually.

There seems to be one stand out conclusion from this. First, while the big guys generally continue to do well, the SMEs are prone to struggle.

D&B point to three central causes of failure when trying to learn to swim in rough financial waters.

1. 20% – poor cash flow.
2. 50% – weak business model / lack of profitability.
3. 30% – bad decision making skills/ questionable management technique

(It is interesting to note that the fact that many business leaders in Israel have to commit time each year to military reserve duty was not designated as a key reason for failure.)

I have not carried out a thorough search, but these finding are similar to several other countries, such as in the UK.

What surprises me is that if these are facts that are so generic and been around for years, why do the founders / senior partners in SMEs not take more steps to prevent such follies in advance? Why do they wait until the last moment or close to it, before they call in the help of a consultant or business coach?

I guess that the fault lies in people like me, the blog writers. The next time we write a piece on “the three part checklist to set up a new business”, we should include a promo for ourselves. Find yourself a neutral external business mentor or consultant, who you can rely upon for some practical advice.