Demystifying Failure in Small Businesses

I just finished reading a book that will be published in late 2009. What a fascinating read. The author, Dr. John Watson has embarked into a review of success and failure on Small and Medium Size businesses (known as SMEs). Read on to be surprised!

He has spent years evaluating, among other things, the myth of the high failure rate. Someone said a long time ago, that the failure rate of SMEs was 80%. I have heard this statistic in the U.S.A, where supposedly the rumor originated, in Chile, Venezuela, Mexico, Guatemala, Australia and even in Bahrain! So much for globalizing failure rates!

What striked me most was the consideration that a business closure was not a sign of failure. It is one of those reflections where one realizes that common sense is not that common. John found time and again that the closure of businesses could be ther result of many non-failure related decisions: the owners may decide to close a company to retire or to separate pieces of the company to sell separately (I have done both). they might also sell to move on to other ventures or to do something else (been there, done that too). Of the 9 companies that I started, I have sold 5 and I have closed 2 at a personal loss. So, my personal stats are 12% ... I have worked with hundreds of entrepreneurs some in the most uncertain circumstances: taking innovations into markets outside of a corporation, the 80% failure rate is a myth.

John statistics prove that the failure rate of SMEs, at least in Australia using his work and revising many others, is 3-28% with a peak at 3 years, where companies that are less profitable compel the owners to take two actions: either reinvent (aha! I also had to do this) or closed (in my case, one closed one on year 2 and the other on year 4).

Demystifying SME's failure rates is very imporant for entrepreneurs to be, policy makers and for the community in general. With the current economic crisis, chances are that many people will move to start a business, yet, more than ever, we need entrepreneurs, not to form companies, but to create wealth ... right?

That is why we are turning our company to a Wealthing company.... more to come soon...

I hope John's work will help reshape the way you view SMEs, it has changed mine.


Alicia


PD: Next week I'll cover his work on performance!


Alicia

Why Venture Capital is good for you?

It is always so nice when someone captures your thoughts around cyberspace. Tony Malkovic posted a note all the way back in October on Science Voice... and I could not be happier by the way he summarized my words:

“What entrepreneurs get out of venture capital is not the money, it’s the support, it’s the capacity to create wealth. It’s the knowledge of what to do and what not to do, so you can maximise your resources.” - Alicia Castillo Holley, Wealthing Group

Here is the link to the highlights of the event:http://www.sciencewa.net.au/index.php?option=com_content&task=view&id=2320&Itemid=710

Organized last year to foster innovation and investments, the Leading Lights conference was another step in the right direction.

It will take many more to get this trend comming, but we are getting there.

PMU's visit. Dammam, Saudi Arabia

If you want to be inspired by people changing the world, I couldn't but recommend the PMU in Dammam, Saudi Arabia.

The group of people that Dr. Isaa (hey, they go by their first names there) has formed is fascinating. Dr. Nassar, Dr. Zlatica and Dr. Res are establishing a leading organization.

PMU, which stands for Prince Mohammad Bin Fahd University, was created by a vissionary to provide high quality education to men and women in the region. The campus, carefully planned to account for their cultural values, is beautiful. I had the opportunity to visit the auditorium, and get two tours, one with the technology officer, and one with the head of the library. This is not only world class but state of the art.

Keep them in mind... This young university will be one of the top providers of high quality education in the region in no time.

Here is a picture of my meeting with the authorities. Missing fromt he picture is Dr. Nassar. http://www.pmu.edu.sa/enn/ir_dnews.asp?id=31

Tweet, tweet, tweet

We are still working on understanding how do we create wealth.

Basically we can do that two ways: we create new markets or we reduce costs. In both cases, our net profit incresases, allowing us to feed that back into the economy: growing and spending: we then create new jobs, demand new services, pay more taxes. Everybody wins.

We create new markets by finding uncontested market space: in our own industry, in the industry next door, in an industry that is in itself being created.

Let's see a new market: twitter

I just succumbed to twitter, (http://twitter.com/aliciacastillo) thanks to John Kremer, a marketing guru for authors. As I am not to wait until my books sell, I sought his expertise. From twitter, I moved to tweetlater and to postlater and to tweet analytics.... I envisioned there would be at least a hundred companies promoting the better use of tweets.

Chris Pirillo, a well known geek has posted several youtubes on tweets...

Alex Mandossian, another marketing guru, started a group to maximize the use of tweeter, for only $30/ month. I am sure they will be sharing best practices, secrets and so forth.

I laughed at twitter first but I am curious to see where this all would go to.



and well, yes, I tweet, I use tweetlater and I have a life.

I couldn't tweet without tweet later. http://snipr.com/k6rzf

here is to your tweet,

Alicia

Starting a trend

Starting a trend is easier than we think... the magic number is three...

There is a saying in Spanish: One is a loner, two is a couple, three is a multitude..

The first one makes a move... the pioneer... another might or might not follow.
The second one creates a balance... connects
The third one creates a trend... a multitude...

Watch how this works on a Sasquatch Music Festival... Enjoy it!

Funding your million dollar idea

We did it!

Finally, after so many months of ups and downs it is here, the DVD and CD of one of my most successful topics: Funding your million dollar idea!

Find the answers to most questions:

debt or equity?
angels or partners?
venture capitalists?
where to go when the bank says no?




The best part is that you can listen and preview it all BEFORE you buy. With so many people now looking at creating their own wealth - so happy about it- it is the perfect time to think about it.

The book is coming up soon, but in the mean time.. ENJOY IT!

and if you have ANY comments, I am all eyes for them.

and many many thanks to Goran Paunovic from www.artversion.com who created the art -as well as all my corporate id- and to Justin Woodward from www.wormwoodstudios.net for editing and polishing the video.

The Arabian Mystery

I wrote this wealth drop in the first leg of my round-the-world trip in April. Unfortunately, I had not been able to send it until now. I will be posting more notes hoping to bring the world together a bit more. We only have one world, let’s do our bit to make it better.

April 11th…

I am sitting inside the private rooms of Effat University, the first private college for women in Saudi Arabia. The external walls avoid any contact with the outside world; most girls are wearing the abaya (the black overcoat) because some professors are men… although they have been relegated behind blue curtains in the area furthest from the campus’ centre. Two very distinctive differences to where I live are evident: separation and segmentation. Women and men are separated. Women were the abaya and head cover in public, they enter public places and restaurants through the back door, the “family entry”. Banks have exclusive areas for women, also through a back entry, and no man is allowed in. Extreme care is taken to restrict the view of “private” or “family” areas from the outside. Doors to the outside world are designed in zig zag, so there is no clear view from the outside. Walls are very high and completely shut out, the windows are facing internal gardens, inwards. Men can wonder around in areas designated for 'single people' in the public areas, that do not have that sense of inwardness. If they are not in the company of a female relative, they cannot enter the “family” area. No doubt there is a strong gender separation.

The second difference relates to praying time. I decided to call this ‘segmentation.’ Muslims pray 5 times a day. The shops are closed, everything sit stills whilst praying takes place. I get the impression that the rules are a bit more relaxed for women, but they do not work in stores or in public areas, at least I have not seen, except for the few in the market by selling water, spices and foods. When we went to a café in the evening, all seemed to stop for about 20-30 minutes, the lights were turned off, the window blinds closed, the doors locked, and the waiters' disappeared '… Shops that had clients closed their doors, sometimes leaving them inside. The world seemed to stop at praying times… early in the morning, at noon, mid-afternoon, just before sunset and an hour or so after sunset. There is no fixed schedule for the praying times, as they are regulated by photoperiod (daylight period) and change a little every day.

These differences surprised me and made me think about how different we are. I used to think about differences between the tropics and temperate climates, or so many other smaller cultural differences, yet I can only imagine how hard it must be for a person raised in Saudi Arabia. In Jeddah, we found a small café by the ‘corniche’, a beautiful walk by the ocean –by the way, almost across from Somalia.

Jeddah has a stunning cornice, with date palms, giant sculptures, and a beautiful view of the sea. On a Friday night families linger in large crowds, dressed in black (women) or white (men), with children trotting along. And the market (entry below), a market that has been here for ages, where the pilgrams to Mecca and Medina can come to sell their products.... it is a magical place.

I met with a group of women and was pleasantly surprised by the liveliness, the humour, and the interesting conversation. Actually I felt internally embarrassed by my own ignorance, what was I expecting? I dunno.

These women have been meeting for years, they are active, intellectually astute and very funny. Something poetic and inspiring pops up here and there, one of them makes a statement that I love: rights are taken, not given. Ta da… the highlight of the visit to Jeddah.My conference takes place in an open area, and the young women fill the space. I am surprised by their participation; once again a hint of poetry and inspiration, yet their questions and answers are so clear and assertive. Where is the chauvinism?

I note that behind the black robe there is something many westerner women lack: assertiveness. In my few days here I have noticed the spontaneity and ability to speak freely and fluently. Very authentic. Perhaps because I am the foreigner, there is no need to conform.

I cherish the energy of the Saudis I’ve met so far. It is not the restrictive culture I expected. People are vibrant, appreciative of their culture and the ‘other’ culture, curious –after all not many Venezuelans living in Australia come to visit.

The role of women seems to me a mystery, the Arabic mystery. Their rights taken not given. It makes me think about MY rights, something I have never thought about. How many of us or how many times have we waited for our rights?