Evening star., 1932-11-20
Reasons for Business Failures
BY FREDERICK HASKIN.

Individual shortcomings rather than
depression and general adverse condt-
| tions are responsible for commercial
| failures in the United States, according
| to q survey just completed by the De-
partment OF Commerce working in coll
laboration with the Institute Of Human
Relations Of Yale University. Business
men who do not know their business
are responsible for most OF the failures
and the practice of blaming hard times
and similar vague and general causes
no longer can be accepted as conclu-
sive.
That some competent business men do
fall victims to combinations Of cir
cumstances beyond their control is not
denied. but is minimized as never pre-
viously. One of the oldest alibis IN
business has been exploded by this new
study. The conclusion drawn is that
most Of the failures in business never
should have entered their fields at all.
Their presence in business is burden
which is an irritant and handicap to
all other business and lowers the gen.
eral standard of efficiency. AS mat
ters stand, in order to be business
success, a man must not only be able to
| handle his own affairs competently,
l but be able to Withstand the extra
hardship imposed by the failures Of in
competents around him. Every failure
makes it more difficult for others in
the community because failure nearly
always entails losses to more than the
individual who has failed.
The information obtained Is based on
careful survey Of large numbers OF
bankruptcies and has been checked
against error SO far as possible. The
| findings are regarded as sound.
Some of the facts found are nothing
less than astonishing. For example II
is shown that more than SO per cent
of the owners and managers who have
failed in business in recent years did
not have so much as complete high
school education. To be sure business
acumen does not necessarily follow lines
of scholasticism, but the general be-
lief has been that some elementary
education is Of value in dealing with
| figures and values. With more than
two-thirds Of the business failures pos
sessed Of only a primary schooling
there Is q suggestion, at least, that they
never should have attempted to set
up In the first place.
ell-Meaning, But In-Equipped.
1t might be urged that even an illit-
crate may cut notches on @ stick and
be successful In trade. The investiga-
tors agree to that, but reply that more
than half Of the thousands Of failures
studied kept no records Of any kind
whatsoever. Not even on the backs OF
envelopes. There must be added To
these an additional 28 per cent whose
records were inadequate, who, in short,
did use notched sticks or the backs OF
envelopes. It appears, therefore, that
less than one-fourth Of the bankrupts
kept the sort of records which normally
are considered indispensable TO the
conduct of business
Moreover, nearly half Of the bank
rupts had not previously been engaged
in or possessed any experience Of the
business which they entered only tc
fail. Not only that, but SO per cent had
met difficulty in paying debts in any
line before embarkation upon O new
line of business endeavor.
The study emphasizes anew the old
story Of the well meaning but ill-equip-
ped who assume that good intentions
will enable them to meet success in
some unaccustomed field. There is in