5 Reasons Businesses Fail (How to Avoid Becoming a Casualty)
Do you remember the excitement you felt and the hopes you had the first day you opened the doors for your business? Of course! Many have described this day to the feeling of having a newborn child.
On the flip side in all of this excitement, is the crushing sense of defeat when many find themselves with the reality that it is time to close those doors. This can often feel like a death in the family. Accompanied with this sense of defeat are all of the questions many ask themselves of “What went wrong?” or “What could I have done different?”.
In this article we will discuss 5 common mistakes made in small businesses, and ways to avoid them.
1) A Lack of Focus
For your business to turn a profit your company is going to have to offer a unique selling proposition, a specific solution with a specific benefit that customers will want to buy from your business.
Focusing on a specific product and service and striving to be the best in your particular industry will make you the go to business for your customers. Being too general can fragment your business, as well as be costly by having an excess of inventory, space, personel, etc.
In a beginning business, a much more sustainable approach will be focusing on one thing, and doing it very well, as opposed to trying to provide all things to all people.
2) A Lack of Training/Sales Professionals
To gain your customers trust and ultimately dollars, you are best served to staff your business with experts in your field.
Customers form opinions quickly, and more than ever before are willing to quickly move on to the next business, as well as tell their friends about a poor experience. Too many startups, sometimes to save money up front, are willing to delegate sales to clerks.
A well trained staff of sales professionals is essential to building sales volume, trust with your customers, as well as repeat business. Hiring individual’s who possess a talent in sales, providing them with an ongoing training program, and financial incentivizing them, will give you your best chance for success.
3) A Lack of Marketing
We have all heard the question asked “If a tree falls in the woods and no one is there to hear it, does it make a sound?”. Well the same could be asked “If a
business is open and no one knows about it, does it exist?”. The answer is of course it does, but your bottom line may not notice.
Budgeting for marketing is essential to the growth of every business. A multi layered, targeted marketing approach will help you reach as many customers as possible. The proper sales materials is key to implementing in your strategies.
Many companies often cut the marketing budget first when finances become tight. This is often the final nail in the coffin before the business is buried so to speak. Conversely, never fool yourself into thinking that business is so good that you do not have a need to advertise or reach new customers.
4) Complacency and Competition
Some of the biggest mistakes in business, just as in life, happen when you think you have it all figured out. Simply opening your doors and stocking inventory is not going to make your business a success.
Being aware, and staying ahead of your competition is a necessity to succeeding in business. Constant research of competing offers, innovative new products, convenience oriented customer services, as well as creative marketing strategies, is the knowledge you will need to win.
Many failing businesses do not invest the time needed to position themselves as the business that will offer the greatest benefits and value to their customers. They seem relegated to get by on charm and location, while their customers are investing time and research to find the best products, service, and value.
If you are going to be perceived by your customers as the best in your industry, you must be constantly working to position your business to beat the competition.
5) A Lack of Follow-Up
Creating an ongoing sales relationship with your customers is the only way to continue to grow your business into the future. New customers provide growth only if they are not replacing lost business.
The best way you can keep a customer for life, is by following up with them after their experience with your company. This means following up with Thank You cards or phone calls, following up with them when they ask you to, and following up with them quarterly to see if you can be of service to them.
A customer should never be someone you meet once. A customer should be someone you are going to make sure hears from you again, soon.
Customers do repeat business with those companies who have taken the time to build relationships with them. Customers return to businesses that make them feel special. Customers will recommend friends to businesses they know care about them.