Whether it is for the flexibility of work hours, to be your own boss, to pursue your passion, or for a better work-life balance, no one starts a small business to see it fail. Every business owner aims to succeed by growing their small businesses into profitable organizations.
While aiming for success is excellent, not every business owner will be successful at running a business. What does it mean for small businesses to fail, and how do you safeguard your business from that?
In this blog post, we’re going to dive into what it takes to grow your small business and make it successful, including how to grow your social media presence, how to get more customers, and how to take your small business to the next level.
Small Businesses vs. Big Businesses – What’s the Difference?
Before we get started, let’s differentiate between big and small businesses. It may seem like the difference between the two is simply the size. However, there are other indicators that will tell you where your business falls.
Management Structure and Hierarchy
Unlike small businesses, big businesses have a set management structure and hierarchy between employees due to the number of people that work in the organization. The CEO or board of directors are the highest decision makers and have the most control.
In a small business, the business owner runs the business solely in some cases and sometimes with a few other people. However, that isn’t always the case. There are plenty of small businesses out there that are a team of one (and killing it).
While small businesses and big businesses may overlap in their target audience, big businesses can often target audiences in a number of different markets due to resource abundance, providing them with larger audiences.
Since some small businesses are confined to locations and regions, their target audience can be more local. However, if they have the resources and invest in their online presence, they can expand their target audience exponentially.
Small businesses focus on financial support from low-risk sources like crowdfunding, investors, venture capitalists, community development finance institutions, and government/small business grants.
Big businesses, however, source money by obtaining loans from banks and other large financial institutions. They also issue equity capital, sell stocks or corporate bonds, and have assets that can stand as collateral when needed.
What Percentage of Businesses Fail?
We have all heard the saying that more than half of new businesses close during the first year. Data from The US Bureau of Labor Statistics (BLS) says this is false.
From the BLS data, only 20% of businesses close within the first two years of business operations. 45% close within the first five years, while 65% close down during the first ten years. The businesses that hit the 15-year mark after launch make up 25%. The statistics have remained consistent since the 90s.
With that said, there are clear mistakes you could make that could drive your business into the ground. Stay clear of the following:
Not Conducting Market Investigation
Many people start businesses based on hobbies and passions. If your passion has an already saturated market, breaking into the market will be difficult.
Instead, your product or service should be fulfilling an unmet need. It’s easier to sell a product/service that meets a need than to convince people they need to spend money on a new product for a problem they didn’t know existed. Make sure you conduct adequate market research to determine if your small business is offering a solution to a problem that people need solved.
Straying From a Developed Business Plan
A realistic business plan sets your business up for success. However, when you stop following the plan, you increase the chances of failure.
If there’s something wrong with your plan based on observation, find out what that is and fix it, or develop a new business plan instead of making decisions without guidance.
Every business plan should include things like your market analysis, company description, service or product you’re selling, sales and marketing plan, and financial projections, just to name a few.
One of the key things in the business is to have an LLC business that protects you from personal liability, gives flexibility in management, and some potential tax advantages. It is recommended to check the best state for an LLC, and its regulations before forming one.
Poor Marketing, Internet Presence, and Location
Poor location affects foot traffic which can become a problem if your business relies on in-store purchases.
In the same way that a bad storefront location can hurt your business, so can poor internet presence. Even if you rely on some foot traffic, people like to purchase things online, so it’s crucial your small business site is easily found online. If not, your credibility could come into question and discourage people from doing business with you.
This is where your marketing plan comes in. Poor marketing can affect your exposure, messaging, and how it connects with your target audience. It’s crucial that you have an advertising plan as well as an effective SEO strategy so you can be found in more ways than one. Otherwise, your sales and business operations could suffer, negatively affecting revenue and forcing you out of business.
Scaling up the business suddenly without proper research, planning, and strategy development can lead to failures for business expansions. This, in turn, can affect the entire business.
Instead, treat every expansion as a new business and put in the work you did when you started your business. Don’t scale up too quickly and forget to take the right steps to ensure each new location, product line, or additional employee isn’t set up for success. If it means running a smaller operation until you’re ready to focus on a bigger commitment, then so be it.
How to Grow Your Small Business and Take it to The Next Level
Obviously, you don’t want your business to fail. And by staying away from the points mentioned above, you’re already doing a great job. But there are things you need to do proactively if you’re to see your business grow and prosper.
Get More Customers
You need to continuously bring in new customers for your small business. Doing so will keep a healthy flow of revenue and ensure things are running smoothly. Here are some ways to do that:
- Ask for referrals from existing customers. Don’t wait for customers to refer you without any request from your end – you’ll most likely be waiting a long time. Instead, set up a referral system and ask customers for referrals after successful transactions or when you follow up with them.
- Attend industry-relevant networking events and organizations. Provide value to other attendees and spread the word about what you do for the best results. This helps not just to get new customers but also to identify key industry partnership opportunities.
- Entice new customers with discounts and incentives. Create introductory or trial offers, track people who take the offer, and target them with marketing messages for conversion.
- Use a small business CRM that organizes your contact list regularly so you can easily identify dormant customers to re-engage with. Include a limited-time offer or discount to win them back for new business.
- Develop partnerships with complementary businesses that are not competing with you directly. That way, you get a fresh audience to market your products to while they also do the same.
Nab More Market Share
Market share is essentially how much of the market your business or product controls. You want it to be high, as that leads to business longevity, but it’s easier said than done. Here are some tips:
- Improve your business branding. It should embody the business vision, mission, brand voice, and unique messaging. When you put all this together in one design and present it to your audience repeatedly, you’ll make an impression on your target audience.
- Keep innovating and developing your products to meet current realities and trends. When you’re complacent, your product or business will go stale and become irrelevant. By continuously looking for areas of improvement or listening to the needs of your market, your product will become indispensable.
- Review your pricing and compare it with your competitors. If there are areas where you can offer discounts and bonuses where they can’t (without affecting your bottom line) and use it to sway prospects to your side.
- Appreciate current customers and make them feel valued. Engage and listen to them, and reflect on their suggestions. This will encourage repeat business and referrals that will expand your audience.
Grow Your Social Media Accounts
Everyone uses social media, including brands. It’s a great way to connect with your target audience and humanize your business, which can encourage loyalty and create a community.
Your small business should be active on social media, using it to drive engagement and increase visibility. Here are some small business social media tips to follow:
- Develop a social media plan and tie this to your business goals.
- Know your audience and where you can find them on the social media space.
- Identify social media platforms that align with your business and set up your official pages on them. You don’t need to be on every platform, just the ones that your audience is active on and that make sense for your business.
- Observe viral and industry trends and take advantage of these to boost engagement.
- Use social commerce to keep selling and showcasing your products.
- Use different content formats to create variety and increase social engagement in new ways.
- Focus on producing helpful, valuable content instead of churning out posts to populate your feed, page, or timeline.
- Engage with your audience when they interact with your posts.
- Use the right tools for easy management and also consider using automation to take care of repetitive tasks.
- Track, analyze, and measure using metrics that tie to outlined business goals in your plan.
Increase Customer Retention
The cost of keeping a customer is much less than the cost of acquiring a new one. And while we highly recommend (and already have) actively gaining new customers, that doesn’t mean you should neglect to keep the ones you already have.
While you’ll need new customers to fill your pipeline, increase sales, and grow, you must also work on retaining current customers for repeat business and stable revenue.
To improve customer retention, try:
- Adopting a CRM for your business. Choosing the right CRM for your small business can give you insights into who your customers are so you can provide them with personalized, tailored solutions.
- Creating a loyalty program that rewards existing customers and encourages them to remain loyal.
- Improving your customer support efforts. If your customer support team isn’t receiving adequate scores from customers after they offer them help, it’s time to adjust your process (or hire new customer service reps).
- Using social media to engage more with your audience. By having numerous ways for them to get a hold of you, you’re showing them how accessible you are to them.
- Upselling products to existing customers. This will offer them more options based on their growing needs.
Improve Your Products or Services
The better your product or services, the better your customer experience. You may be able to get existing customers to purchase more and attract new clientele by simply improving the products or services you already offer. Some ways you can improve what it is you’re selling is to:
- Regularly test your product to ensure it’s working correctly. Be prepared to make tweaks when needed.
- Find new uses for your top-selling item, so it is more flexible and appealing.
- Set a customer service goal that will give you a higher feedback score.
- Re-examine your market to determine if there’s a new need your product can fulfill. Expand your offering to include products complementing one another. This can also increase your upselling opportunity and subsequently improve your bottom line.
- Diversify by brushing up on your product life cycle. Do some market research to identify new needs or pain points you can address with a new product or service.
The growth opportunities are there for your business. You need to put the pieces in place to make that growth a reality. By implementing one or more of the above strategies and avoiding the mistakes common to failed businesses, you are well on your way to becoming part of the top 25% of businesses that make it past the 15-year mark.