Why So Many Companies Do Not Have a Values Statement

The statistics for the numbers of new businesses that will fail are staggering. According to Statistics Canada, in 2016 there were 1.17 million companies in Canada of which 97.9% were small businesses, 1.8% were medium sized businesses and 0.3% were large businesses. According to Industry Canada, 30% of small businesses won’t survive longer than 2 years and only 50% make it to 5 years.

Certainly, there is a great deal of contributing factors to the failures. In the book E-Myth Revisted by Michael Gerber, he believes one of the reasons for the staggering number of failures is that many of the people who start businesses were employees who decided to hang up their own shingle. The employee thinks “that any dummy can start a business, I work for one, how hard can it be”. The employee works as a technician in their business doing what they know best – working on the requirements of the day, rather than as an entrepreneur – working on what needs to be done for the future. I ask all my new clients how much time they spend as a technician versus as an entrepreneur – and not surprisingly the answer is typically about 95% as a technician and 5% as an entrepreneur. I’m guessing that if these percentages were reversed, these business owners wouldn’t have needed to seek me out.

I also ask my clients to tell me their company values – what they are, and what they mean. Both these questions are almost without fail met with a blank stare. Evidently, if the entrepreneur prepared the values statement at all, it was an academic exercise prepared for external parties (such as the bank) and it has since been shelved away and forgotten. Regardless, not having or knowing the values – the guiding principles of the business – is an indication of the lack of clarity in the business. Clarity is the foundation of the business.

If clarity is so important, why are so many entrepreneurs skipping this step?

Unfortunately, many small business owners do not take the time, or perhaps lack the know-how, for meaningful strategic planning (which starts with identifying values) – considered an “entrepreneurial” task. Often the entrepreneur is an expert in their technical field, but they are not experts in business and are thus overwhelmed with the challenges of the strategic process. Other times, the entrepreneur is challenged managing their time, prioritization and focus.

Do companies fail that have prepared well thought out strategic plans, complete with vision-mission values statements? Yes, of course, they do.

What I am proposing is that to reduce to reduce the risk of failure, the entrepreneur needs to stop spending the majority of their time working in their business (being the technician) and working on their business (being the entrepreneur). They need start by developing clarity – to know the why they are in business and what that business stands for.


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