Google, the golden rule and how to save a start-up from failure

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It is ubiquitous now for people to talk about giving it all up to start their own thing. They become business owners through savings, retirement money, or financing. With high unemployment rates and a questionable state of economic affairs, there is a passion for being your boss in our country.

Numbers don't lie. An exponential number of people are starting businesses in South Africa, hiring to empower people and operating successfully.

Unfortunately, they suddenly die, as 90% of start-ups do.

As we are witnessing globally, companies which once began as start-ups like Google, IBM and other prominent players in the tech world lay off 1000s of jobs.

We ask ourselves, "where did it go wrong? They had the support and resources, but still didn't make it, what happened?"

I am no entrepreneur, but the survival of start-ups would change much of what my country is going through with the unemployment rate.
I believe that the survival of these start-ups is through the business entity rule', which states 'all the affairs of the business must be kept separate from the affairs of the owner'.

It takes a lot of discipline to apply this concept to a small business as they have minimal to no internal control procedures, and there needs to be more accountability.

Often, owners are also employees. They make and break the rules freely. Since they have the sole power, no limit is drawn in their actions. They pay themselves more than the business makes and use the business's resources for their gain at the cost of the business.

With money going out, not for its normal operations, financial and cashflow problems emerge. With that going on, the going concern becomes no more feasible. Then the results are another failed start-up.
Like most rules and recommendations, if they are not followed, it will be as if they were never there.

How can one ensure that the entity concept is applied? Like a drop of water, it can become a river over time.

This concept is part of corporate governance and ensures that businesses continue to operate in the foreseeable future with or without their owners.

Having an accountant (Firm or individual) to develop and insist on internal controls or policies, and ensure accountability, is always a good idea. Team up with an accountant and keep your investment alive.

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