Whether it is for flexible work hours, to be your own boss, to pursue your passion, or to achieve 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 business into a profitable organization.
Aiming for success is great, but not every business owner will succeed at running a business. What does it mean for a small business to fail, and how can you protect your business from that?
In this blog post, we’ll dive into what it takes to grow your small business and make it successful, including how to grow your social media presence, get more customers, and 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 only difference is size. However, other indicators can tell you where your business falls.
Management Structure and Hierarchy
Unlike small businesses, big businesses have a set management structure and hierarchy among employees because of the number of people 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. Plenty of small businesses are a team of one (and killing it).
Target Audience
While small and big businesses may overlap in their target audience, big businesses can often target audiences in multiple markets because of their resources, giving them 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.
Finance Sources
Small businesses focus on financial support from low-risk sources like crowdfunding, investors, venture capitalists, community development finance institutions, and government/small business grants known as non-dilutive funding.
Big businesses, however, source money by obtaining loans from banks and other large financial institutions. They also raise equity capital, sell stocks or corporate bonds, and assets 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 U.S. Bureau of Labor Statistics (BLS) says this is false.
BLS data shows only 20% of businesses close within the first two years of operation. 45% close within the first five years, while 65% close down during the first ten years. Businesses that reach the 15-year mark after launch make up 25%. The statistics have remained consistent since the 90s.
That said, you can make clear mistakes 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 is already in a saturated market, breaking in 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 whether your small business offers a solution to a problem 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 you notice something wrong with your plan, find out what it is and fix it, or develop a new business plan instead of making decisions without guidance.
Every business plan should include your market analysis, company description, the service or product you’re selling, your sales and marketing plan, and financial projections, to name a few.
One key part of the business is having an LLC that protects you from personal liability, offers management flexibility, and may provide tax advantages. Before forming one, check the best state for an LLC and its regulations.
Poor Marketing, Internet Presence, and Location
Poor location affects foot traffic, which can become a problem if your business relies on in-store purchases.
Just as a bad storefront location can hurt your business, so can a poor internet presence. Even if you rely on foot traffic, people still buy online, so it’s crucial your small business site is easy to find. 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. You need an advertising plan and an effective SEO strategy so you can be found in more than one way. Otherwise, your sales and operations could suffer, hurting revenue and potentially forcing you out of business.
Sudden Scale-Ups
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 do the work you did when you started. Don’t scale up too quickly and forget the steps needed to set each new location, product line, or additional employee up for success. If it means running a smaller operation until you’re ready to commit to something bigger, 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 avoiding the points mentioned above, you’re already doing a great job. But you need to act proactively if you want your business to grow and prosper.
Get More Customers
You need to continuously bring in new customers for your small business. This will keep a healthy flow of revenue and help things run 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 you not only get new customers but also identify key industry partnership opportunities.
- Entice new customers with discounts and incentives. Create introductory or trial offers, track who takes them, and target them with marketing messages to drive conversion.
- Use a small-business CRM that keeps your contact list organized so you can easily identify dormant customers to re-engage. Include a limited-time offer or discount to win them back and bring in new business.
- Develop partnerships with complementary businesses that don’t compete 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 because it supports 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 combine all this into 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 to improve and listening to your market’s needs, you can make your product indispensable.
- Review your pricing and compare it with your competitors. If you can offer discounts and bonuses they can’t (without hurting your bottom line), use them 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 encourages repeat business and referrals that 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 in 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.
- Watch viral and industry trends, and use them 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 consider automation to handle repetitive tasks.
- Track, analyze, and measure using metrics tied to the business goals outlined in your plan.
Increase Customer Retention
Keeping a customer costs much less than acquiring a new one. And while we highly recommend (and already do) actively gaining new customers, that doesn’t mean you should neglect the ones you already have.
While you’ll need new customers to fill your pipeline, increase sales, and grow, you must also retain 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 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 giving them multiple ways to reach you, you show how accessible you are.
- Upselling products to existing customers. This gives them more options as their needs grow.
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 to make it more flexible and appealing.
- Set a customer service goal to improve your feedback score.
- Re-examine your market to see whether there’s a new need your product can meet. Expand your offering to include products complementing one another. This can also increase your upselling opportunity and subsequently improve your bottom line.
- Diversify by reviewing your product life cycle. Do some market research to identify new needs or pain points you can address with a new product or service.
Growth opportunities exist 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.
