If you watch the news, read a paper, or go online, you will hear about the big box stores daily; Toy R Us, Pier One, Stein Mart, and many more public companies that are all going under after being in business for decades. What you don't hear about are the small business owners going out of business across our nation.
Small businesses are the majority of all businesses, and 70% of them will go out of business withing 10 years of founding, according to the U.S. Bureau of Labor Statistics. That's out of a sampling of 27,600 businesses, and these statistics are all before Covid-19. The effects of these closures are felt across communities, and, crucially, in families. In my 20 years of experience as a business advisor, I have seen many owners forced into selling for pennies on the dollar, closing their business, or even worse, filing bankruptcy. Many times, that means owners don't just lose their business assets. Instead, they often lose family assets as well, as business owners will comingle funds and pierce the corporate veil by pledging personal assets and signing personal guarantees. In my experience, personal guarantees are required when obtaining commercial loans, small business loans, leasing property and many financial institutions require collateral to secure financing.
There are many reasons why businesses fail, but one big one is due to a lack of AIM (always innovate and market!). According to CB Insights, 14% of businesses fail due to poor marketing while 42% failed due to unoriginal or useless products and services as reported by Fundera. In this ever-evolving digital world, it is vital to keep a business up to date in all marketing facets. This lack of adaptability, innovation and marketing will almost always result in failure. Let's face it, business owners can easily become complaisant and are often married to their original idea that they founded their business on. People don't like change, especially seasoned entrepreneurs. I always say, "you're either growing or dying, there is no in between!" Entrepreneurs must get comfortable with being uncomfortable and this means taking calculated risks. It's imperative for business owners to survey their clients, competitors, and other industries in which to continue to AIM. If we don't, we will lose market share and eventually die on the vine.
Ask clients, "what are the 3 most important things you would like to experience when doing business with our company?" Work to understand your current and perspective customer's buying habits, as buying habits have changed dramatically in recent years. People used to go shopping for food, clothing, supplies, books - pretty much everything, but now we can just click through our necessities and luxuries from home in our PJs. In addition, some of my clients have been in business so long that their clients are aging out...that's why it's paramount to AIM to ensure your products and services appeal to the younger generation.
The name of the game is AIM, always innovate and market. Don't just learn from your competition, learn from phenomenal brands in other industries like Apple, Amazon, Disney, and so many others. Don't copy, innovate...and remember to always AIM.