The Business Autopsy: A Fact Of Life

Written by Tim Knox


Last week we discussedrepparttar importance of performing an autopsy on a dead business. No, I haven't been watching too many of those wonderfully graphic, TV forensic investigation shows. The reason I recommend you do a business autopsy is to uncoverrepparttar 104684 exact reasons whyrepparttar 104685 business died. This is valuable information that can not only heal feelings of personal failure, but also better prepare you forrepparttar 104686 pitfalls of business should you ever takerepparttar 104687 plunge again.

Starting a business is never easy andrepparttar 104688 odds of your success or failure are about even money. The fact is, approximately half of all small businesses fail withinrepparttar 104689 first four years. And a large percentage of those failures occur withinrepparttar 104690 first year. These arerepparttar 104691 statistics that keep many entrepreneurs awake at night. Like Sisyphus, always pushing that boulder to repparttar 104692 top ofrepparttar 104693 hill only to have it tumble back torepparttar 104694 bottom each time, you never know when you're going to lose your grip on your business and have it tumble back over you.

OK, so far in this column I have managed to squeeze in references to modern American television and ancient Greek mythology. Enough highbrow beating aroundrepparttar 104695 bush. Performrepparttar 104696 autopsy and learn from it. Only by knowingrepparttar 104697 real reasons your business died can you identify and hopefully stave off those maladies before they take you down next time, if there is a next time. And if you're a true entrepreneur there will be a next time, trust me on this.

There are many reasons why businesses fail, but according to a recent survey by U.S. Bank,repparttar 104698 majority of business failures can be attributed to three reasons: bad management, bad financial planning, and bad marketing.

Bad management comes in many forms. The survey showed that seventy-eight percent ofrepparttar 104699 business failures examined were due in part torepparttar 104700 lack of a well-developed business plan and a business owner who had no business being inrepparttar 104701 business he was in. In other words,repparttar 104702 business owner did not have an adequate knowledge or a thorough understanding ofrepparttar 104703 business he had chosen to start. This is why software entrepreneurs like me don't start shoe stores. I have feet, I wear shoes. That's not enough to qualify me to go intorepparttar 104704 shoe business.

Next, seventy-three percent ofrepparttar 104705 business failures inrepparttar 104706 survey were also manned by owners with rose colored calculators. These business owners over-estimated revenue projections (the number of expected sales) and under-estimatedrepparttar 104707 burn rate (the amount of money required to sustainrepparttar 104708 business per month).

It gets better. Seventy percent ofrepparttar 104709 failed businesses inrepparttar 104710 study were led by entrepreneurs who were in denial regarding their own competence, or more torepparttar 104711 point, their own incompetence. These business owners either didn't recognize or chose to ignore their own entrepreneurial shortcomings. These entrepreneurs also did not seek assistance from others who might have made up for their inadequacies. It's sometimes hard to ask for help when you are supposed to berepparttar 104712 one with allrepparttar 104713 answers.

Noncompete Agreements Help Protect Your Business

Written by Tim Knox


Small Business Q&A with Tim Knox

Q: One of my former employees has started a competing business and is calling my clients and trying to steal their business from me. Do I have any legal recourse against him? -- Brad J.

A: I hate to break this to you, Brad, but unless this former employee signed a noncompete agreement while on your payroll, there is probably very little you can do to stop him from wooing your customers. You should discussrepparttar situation with your attorney, but unless this person is also breakingrepparttar 104683 law in some other way (using stolen trade secrets, for example) your attorney will probably concur with me.

Renegade former employees ridingrepparttar 104684 free enterprise wave is one reason noncompete agreements are gaining in popularity among employers who hope to use them to help protect their business from competitive threats launched by former employees. Many employers are now demanding that key employees sign noncompetes as a stipulation of employment. While signing noncompetes usually doesn't sit well with employees who view them as potential roadblocks to their upwardly mobile career path, many businesses will not hire a key employee without his or her signature onrepparttar 104685 dotted line.

A noncompete agreement is a formal contract between you and your employees in which they promise not to use information or contacts pertinent to your business in a competing situation. In other words, they agree not to take everything they learn working for you and put it to use for someone else. This could mean going to work for a competitor or starting a competing business of their own.

While not popular with employees, noncompete agreements are a good way for employers to keep key employees onrepparttar 104686 payroll and protectrepparttar 104687 company's proprietary information. That said, do not go overboard with noncompetes: not every employee should be required to sign one. If an employee does not have access to sensitive information, customer or accounting data, or is integral torepparttar 104688 overall success of your business, there is no need to have them sign a noncompete. The janitor, for example, poses very little threat to your business if he gets a job with a competitor. Your sales manager, onrepparttar 104689 other hand, can devastate your business by hooking his wagon to a competing horse.

Which employees should sign noncompete agreements? Whilerepparttar 104690 prerequisites vary from business to business,repparttar 104691 following is a good general list. The term "employees" represents executive level, management, supervisory, and non-management personnel relative to that example:

- Employees involved in research or product development. - Employees involved inrepparttar 104692 design, fabrication, engineering, and manufacturing process. - Employees who service products made and sold by your company. - Sales and service employees who have regular contact with customers or sensitive customer information. - Employees with access to sensitive business information or trade secrets. - Most importantly, employees who have sufficient information about your business that would allow them to start a competing business.

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