If you do a quick Google search on the reasons why small businesses fail, you’ll likely see results about insufficient capital, poor management, or lack of differentiation. While there’s merit to all of these results, I’ve found that the failure of many small businesses stems from other factors entirely. Let’s discuss the five reasons why small businesses fail and what you can do to succeed.
Business Growth is Tied to Your Personal Growth
It might seem counterintuitive, but I’ve found that your business will never be able to outgrow you. Many times, a company will only grow to our capacity to sustain it.
After eight years of plateaued sales, one business owner finally decided that he was going to invest in himself because nothing else worked. For years, they had worked tirelessly to improve, employing the latest ideas and trends to try and generate more business, all to no avail. When he took the time to invest in himself, the business was able to break out of its plateau and see growth for the first time in years.
Unsure where to begin? I suggest reading as much as you can. I can hear some of you protesting now, but, trust me, you’re worth the investment.
When I first started this agency, I had no time to do anything other than work. Because I was so busy building I kept putting reading on the backburner. Friends and mentors had given me book suggestions for years, but I had ignored them, adding each title to a list and then moving on with my life. After about three years in this constant cycle of work, I took their advice and my life hasn’t been the same.
Here are the books I started with:
After reading The 4-Hour Workweek, I completely changed my business by focusing on fewer services and increasing my quality. This way I was able to focus on a few areas and become the best at those. We immediately dropped about $100,000 in annual sales but, six months in, after we had adjusted to the new normal, we nearly doubled our client list. And collectively, with both of my businesses, I broke over $1 million in revenue.
Had I not taken the time to invest in myself, I probably would’ve worn myself out and had to close the agency. Instead, I have been able to open multiple businesses and employ many people to do what they love.
Winging It is Never the Answer
Where is your company going? Where do you plan for it to be in a year? Five years? Ten years?
It’s easy to start a small business without much of a plan in mind, but that usually ends up being a detriment. Without methodical steps taken in a determined direction, it’s easy to go wherever the wind of the market seems to blow. This is how you go from being a niche company with a specific focus to a company with many different products or services none of which are done with excellence.
Without a clearly stated goal, we can end up looking back and finding ourselves far away from where we intended to be.
There are many websites out there with advice for planning for a business, but this one from Sequoia Capital is a great one to help you get started.
No Brand? No Business.
People don’t like doing business with companies, they like doing business with people. Think about the various brands you choose on a daily basis; how do you choose them? TOMS grew quickly, not because they make high-quality shoes, but because the brand makes people feel good. Apple isn’t popular because it’s the best product, but because of its brand image. People walk into a Target, not because of the reasonable prices, but because the brand personality is welcoming and inviting.
Just like these other brands, you have to create a personality for your business. Give your brand a face, a story that resonates with customers, and values that people can get behind. The truth is, as small business owners, we are responsible for creating companies that people will want to do business with.
Still have some questions? Check out these helpful articles:
Once you have your brand personality, story, and values down, you can incorporate them seamlessly into your website.
Limited Online Presence Produces Lackluster Results
Google is king when it comes to customers finding your business, with the majority of people locating products on services using search engines. And today, it’s not enough to appear on the first page of the search results, but it’s vital to rank #1 on Google.
The first result on Google receives, on average, 30% of the clicks, meaning customer visits to the website. The second drops to around 15% and the third falls to below 10%. From there, the numbers continue to decline. Even if your business ends up on the first page of search results, the likelihood of a potential customer clicking on it decreases dramatically.
Increase your brand’s online presence by optimizing your website for SEO, asking for and receiving reviews from your current clients, and leveraging online word of mouth. There’s no reason why you can’t take advantage of the growing number of online searches today!
Where’s your Focus?
Loss of focus is one of the biggest reasons why I’ve seen small businesses fail. In business, there’s always something else competing for our attention. It’s our job, as business owners, to cut through the clutter and focus on the most important things.
What will impact your business the most?
Maybe you need to start with investing in yourself before you do anything else with your business. Or maybe your brand lacks a clear personality. Maybe you have a solid plan and strong leadership, but your website is out of date and doesn’t rank well.
If your small business is failing, has plateaued, or is doing great, select one of these areas and focus on it. It’s tempting to pick more than one or try to tackle all of them halfway, but that won’t generate the long-lasting success you desire. By putting forth concentrated effort on each of these tasks, you should be able to improve your business, increase sales, and create a positive experience for customers for years to come.