There is nothing gloomier than empty storefronts on Main Street. Yes, the economy was rough on commerce for a while, but still many businesses fail unnecessarily. If I’ve gained any wisdom about business, it’s that there is a learning curve and you must always improve your skills for your business to thrive. Here are the top preventable causes for small business failure.
Not saving enough money- People with assets have options. If you don’t save enough money before you start your business, you may not be able to hang in there until the business can generate any real revenue. It takes on average 12-18 months to break even in a new business, let alone replace your corporate salary.
Lack of a niche focus- Too many small business owners sell to anyone they think has money. Take the time to develop a well-defined niche for your business. It is so much easier to develop a marketing plan when you are clear on your target. By the way, specialists can always charge more money.
No marketing plan- Too many small business live off referrals, which is good, but that eventually will dry up. You must put some effort each day into generating sales for your small business. You can make a call, send an email, write a blog post, and ask for a testimonial on LinkedIn from a happy new client. Do not rest on your reputation. Actively let the world know you are open for business.
Not managing your brand online- It’s now easier than ever to build a brand online. It’s also just as easy to damage your business brand. Do you have a good, helpful website? Do you Google yourself and your business monthly? Do your social media accounts tell people how to hire you? Do you have a blog that hasn’t been updated in six months to a year? Do you have bad reviews online that you have not responded to? Can your website be seen easily from a mobile device? People will search for your company online before they ever call you, what would they find about your business today?
Not communicating with existing customers- It’s cheaper to keep a customer than to go out and get a new one. You must have a database, CRM system and email marketing program to communicate with your customers so that they know all the ways they can work with you. At least monthly, your customers should hear from you.
No clue about how hard it is to run a business- People start small businesses for many reasons. They hate their job, need some side money or always wanted to open a shoe store or cupcake shop. The trouble is that too many people do not take the time to really think about what their life would be like as an entrepreneur. It’s a tough lifestyle, at first. Think about what you want out of life first, and then build a business that supports your personal and professional goals. Develop a life plan because you do not want to start a business that is NOT a good business for you.
Lack of fiscal discipline- If you do not run your household with a budget, you won’t run your business with one. You must make business decisions based on up-to-date financial information. Know your latest numbers by the 15th of every month. Ask yourself “Why” three times before making a purchasing decision for your business.
No network- “Your network is your net worth.” You must spend time cultivating the market to develop and nurture your professional and personal connections. Your first customers will come from your personal network. If you have no network, your business will not be able to survive.
What recommendation could you share to help stop small business failure?