The Average Business Fails So....



  • This is something that comes up a lot in discussions and I think it is both extremely hard to understand and very important to address. Here is the sad reality: the vast majority of small and medium businesses will fail and go out of business. This is the cold, hard truth. Associated with this is the generally accepted, and probably true assumption, that most SMB managers are less than competent and that most SMB IT struggles with what we would often consider to be pretty basic things either because they are not skilled, trained, lack access to resources, are overworked and pulled in too many directions or whatever. Bottom line, management, IT, operations, HR and pretty much every non-janitorial department in the average SMB is less than stellar and the combined disaster will drive the average SMB into the ground in the first year and most of the remaining ones in the next seven years. Almost every SMB fails before the eight year mark, most must sooner. Of those that make it past eight years, most of those continue to struggle even if they survive the long haul.

    That is fact, the numbers are just what they are. Knowing this is useful, but we have to be very careful not to carry it to conclusion when we run IT. What I mean is, if we "assume that the average business will fail" and we advise or design systems based on this rather than based on the needs of the specific business, then all advice and guidance would result in "shut down the business, spend nothing and go find other jobs." Literally, if we assume that a business is going to be "average" then we always would give this one, standard piece of advice.

    The problem that I see cropping up in IT circles regularly is using this general concept - that SMB businesses will perform poorly because it is common to do so - and giving advice or guidance based on that assumption. It feels like there is logic in this, but it is a false logic. If we applied this "treat them for common problems" evenly, we know that we'd give up on the business immediately and just assume total failure. Obviously this is not good logic. So the foundation of that must be bad as we know that that is the logical conclusion of thinking in that manner.

    There are two core reasons why this does not work:

    • The failings of one business will not be the failings of another. Businesses do things uniquely and all fail for different reasons. Not only are businesses themselves unique, but especially in the SMB, individuals within those businesses are unique and have a lot of influence on their part of the business. Just because another shop makes a mistake in IT, or even if most shops make that mistake, that does not imply that the shop to which you are speaking will make it. There isn't that kind of influence between businesses. There might be an average failure rate, but each actor is an independent statistical individual.
    • We are giving advice with the intent of success. Whether we are consultants, internal IT, business advisors or whatever, we are not advising a company on how to fail, but on how to succeed. That is the goal. We must assume that there is a possibility of that and that we are working towards it.

    There are other factors too, of course, like that someone asking us for advice or seeking advice at all is already outside of the average in a good way. But those two core things drive any giving of advice. Essentially, you can never treat people "as the average", it's a nonsensical approach. Knowing that there is an average and what it is is, of course, very important. Knowing common mistakes and advising against them or to watch out for them can be valuable. Knowing that success is unlikely, very useful. But assuming that any given business or, by extension, any department within that business or actor within a department will act based on an "average" is dangerous because there is no connection from the average to this specific player, and even no means of knowing what average is really like.

    For example, if we assume that an SMB IT department is foolish and might miss major things, we might want to audit that backups are being taken and checked. But we should audit to ensure that it is or check in some way, probe. But we should not assume that it is not being taken, or worse, assume that it won't be addressed even if we mention it. This would result in either attempting to implement two backup systems or attempting to spend a fortune to create a system that does not need a backup. Knowing that backup could be forgotten, good. Believing that it will be forgotten, bad.

    We can't pick and choose mistakes to believe or assume will occur. Either we go crazy and assume that the business is simply non-viable and walk away; or we assume that the business will succeed, do good things and will need logical, reasonable advice and guidance. There isn't an in-between where we can assume that what another businesses has done will be mirrored at another business, businesses are not coupled in that manner. We can, with great effort, identify common mistake patterns (misusing budgets, misapplying RAID, skipping backups, over buying storage infrastructure, failing to consider risk design) and audit for them, in many cases, but we cannot assume failure, that leads to only one logical conclusion. We must assume success.



  • This one has been intended for years, but never bubbled to the top of the writing list.