The Top 5 Reasons Small Businesses Fail
Entrepreneurs are determined, bold, and competitive. Most of the time, they have the personal qualities they need to run a successful business. Then why is it that an astonishing eight out of 10 small businesses fail every year?
By examining pitfalls in businesses that are doing everything "right," it becomes easier to see how it takes more than an ambitious CEO to achieve success. Here are five of the most common mistakes I've seen small business make in their first few years of operation:
1. Failure to market online. In an age where "Google" is a verb, if you're not marketing online, you're not selling as much as you could be. According to Invesp, 80% of Internet users have used the Internet to make a purchase. Additionally, 81% of Internet users research products online before making a purchase. In order for your business to thrive, your business must be visible to consumers doing their online research and shopping. SEO work, social media marketing, and cross-selling between all communication channels are all absolutely crucial to increasing online visibility.
Press exposure, press releases, traditional PR, social media, and even print marketing should incorporate strong online components. For example, many companies now incorporate QR codes and social-media icons into their print ads because they know an increasing number of people will look up their business online. The more that SEO activities intersect with marketing efforts, the more visibility you gain.
2. Failing to listen to their customers. 78% of consumers will listen to the input of other consumers online more than any other source. Whether or not your primary marketing efforts are online or offline, give your customers an easy and immediate way to interact with you online. They can give you feedback about your product, pricing, and business practices. In turn, you give them a "chat level" of response that can turn into an ongoing relationship. Your quick and helpful responses to your customers' feedback and reviews will impress both your current customers and potential customers--those who are looking into online reviews to determine if they want to use your business.
3. Failing to leverage future growth. While many offline marketing efforts have short-term impact, your online marketing efforts can last long term. If you brand yourself effectively, you can grow exponentially. The online marketing you do once can continue to influence your business for years to come. Make sure your online presence, ranging from a corporate website to a company Twitter account, are all in sync with one another in messaging, tone, and overall look and feel. Customers and potential customers will respond well to aesthetically pleasing websites and are more likely to return to your site. Put in a little effort now and you'll be reaping the rewards for months and even years to come.
4. Failing to adapt (and grow) when the market changes. Perhaps your initial business model can produce a certain level of activity, but if you are not perpetually studying your market and evolving accordingly, you run the high risk of being left behind. Our own company learned this lesson in a very big way, and it has resulted in exponential growth that would not have been possible if we had maintained status quo (in fact, we may not have even survived). Do your research on your industry and the market in your geographic location. You may find that you can be ahead of trends in your area based on similar companies in other areas. Study how other successful small business owners in your area thrived and incorporate what you find. Taking the time to do the nitty-gritty research will pay off when you are ahead of market trends and standing out in your community.
5. Failing to track and measure your marketing efforts. Web analytic tools can provide you with valuable market research and insight. Use Web analytics to see which activities generate traffic to your business, what your audience wants to know, who's buying what (and who isn't) and which customers are leaving your site without purchasing. Being able to measure your online business in action allows you to improve user experience, discover trends among your customers, and boost your numbers.
By eliminating these five risk factors, you're well on your way to success without falling victim to the intimidating 80% fail rate of small businesses in their first year of operation. Have you experienced these five practices in your own business? How did you resolve them? I'd love to get your comments and hear about your experiences.