According to SBA, 30% of new businesses fail during the first two years of opening, 50% during the first five years, and 66% during the first 10 Years. This might be because they don’t investigate the market, lack a proper Business Plan, or have critical financing issues.
In this article, we’ll discuss three reasons a business may fail, how to overcome or prevent them, and the required steps to scale up your small business.
3 Top Reasons Small Businesses Fail
Almost 90% of newly built businesses halt operations. As an entrepreneur, you should know the common reasons behind this failure to set off alarm bells in mind and follow a better marketing policy to prosper.
Read on to learn three top reasons a small business may fail.
No or Poor Web presence
At one point, the location of a brick-and-mortar business was by far its most powerful feature; Phone books ruled the world, and newspapers had the service directory. But in the 21st century, web location is where the action is.
In today’s era, your web and social media presence are more important than your company's physical presence. People shop, search and research online for everything these days. So if the need is already there, your business's virtual availability, reputation, and visibility are crucial.
Lack of Proper Marketing Plan
In the early stages of their business, SMBs usually devote most of their time to product development and marketing. As their effort pays off, however, more of their time will be devoted to servicing the customers and less and less to marketing. Within two years, most of them stop growing through deliberate budgeting and marketing. And as a result, they reach their profit potential.
Bad Social Reputation
The social Reputation of a company is becoming the number one reason a consumer chooses to use the company. Businesses that cannot monitor and improve their social reputation will lose customers to the more visible competitors with a higher ranking.
16 Steps to Expand Your Small Business
Now that you know what may put a small or newly established business in trouble, let’s dive into the steps you can take to bypass these bottlenecks.
Step 1: Budgeting & Commitment
The very first step on the first-day task is to establish a budget for marketing and stick to it.
Establishing a new business is like building a brand new house: It’s almost always going to take more time and money than expected.
If you aren’t well funded, Your dollars must be spent more wisely and tied tightly to specific deliverables. Remember, there’s nothing worse than spending every penny you have to build Marketing plans the wrong way only to start over again–or worse, give up altogether.
To be successful, Startups and Established businesses must spend no less than 6% of their annual projected revenues on marketing. Doing it correctly and consistently will add as much as 50% to the company's revenue.
Step 2: Networking & Setup
In order to go somewhere, you need to know where you are. So, the second step in marketing is to gather your existing data and study your past customer experience to decide what works and what doesn't.
In a process called Prospecting, find out what customers have already purchased your product or service. The marketing success rate is much higher with past customers than with first-time customers.
Factors to consider in this phase:
Current customer list
Current Contracts being used
Current marketing material
Step 3: Organize & Document Customers
Before an organization starts a marketing endeavor, it should review and organize its customer service. This lets you identify deficiencies in your customer service communication and improve their overall satisfaction.
Also, customer lead preservation and tracking should be integral to any customer service department. A CRM (Customer Relation Management software) can greatly enhance marketing productivity, prospect tracking, and sales cycle. It also reduces your marketing cost.
Learn to use CRM
Organize all customer contacts
Organize all leads
Step 4: Customer Service & Communication
Customer service is about making the customer feel comfortable; feel important, and valued.
To have good customer service, businesses must make their ordering process convenient and ensure the customer will remember their brand for future sales. Here are a few tips to enhance your customer service:
Enroll in Gsuite
Have an email address through a custom domain name
Include a separate phone number to receive sales calls
Order sheets, contracts, Invoices Etc. with your logo and contact information
Invest in mobile software specific to your industry
Step 5: Local Market Survey
A market survey gives businesses insight into their customers, their demographic, how much money they spend on certain types of products/services, and how to reach the target customers.
These are some top-notch questions to ask in a market survey:
How did your current customers find you?
Who is your competition & How do you compare with them?
What does your competition have or do that you should do or avoid?
What are the demographics of your most successful customers?
Step 6: Products & Services
To make more revenue out of what you offer, you need to communicate clearly about the product or service. But avoid highly detailed or technical descriptions. Explain what you offer in simple terms that everyone can easily understand.
Once your customers have a clear understanding of your product, upselling and cross-selling are two other techniques to provide value to them and increase your revenue.
Upselling encourages customers to purchase a comparable higher-end product than the one currently considering, while cross-selling encourages them to buy related or complementary items.
What to consider in this phase:
Review and, if needed, reconsider your products & service details.
Create pictures and descriptions for your products/services to use on the website and social media.
Any UpSale, Later date, or repeat opportunity.
Make price points and coupons.
Phase 7: Branding
Your brand is how your customer perceives you, and every small business should have one.
Branding generates customers, supports advertising, and makes marketing campaigns more memorable. Without branding, there’s no name recognition, nothing to set you apart from the competition, and no clarity about what your company is about.
Here are a few ways you can optimize your branding:
Have a custom domain name for your website and email marketing
Logo Design–if you don’t have one
Decals, Banners, letterhead, and business cards with the same design and your logo
Step 8: Marketing Plan (Writing & Documenting the Sales & Product)
A marketing plan is a road map for winning and keeping customers; It lists all the resources and tactics you’ll use to achieve your revenue goals. This includes the products and services you offer, those who are interested in them, and tactics to generate leads that result in sales.
Marketing plans must be defined within the marketing budget of an individual business and must conform to the type of customers and location of customers you need to reach.
However, not all marketing tactics are cost-effective for all businesses. Successful marketing plans must be in constant review and be revised as needed:
Write Company Bio
Write your Company mission statement
Write Product & Sales Copy
Develop Marketing Strategy
A color hand-out according to your needs to use with your customers
Make Customer handouts
Step 9: Website
In the 21st century, the most important part of a business is its website and how the Google algorithm perceives it as valid. Although there are other search sites like Bing, Google counts for over 90% of all searches.
88% of consumers who search for local businesses on a mobile device either call or visit the business within 24 hours.
46% of all searches on Google are seeking local information.
Here’s what you can do in this phase:
Develop the website (Wix)
Complete website SEO
Have the website copy proofread
Step 10: Develop Content
Each website and social media page should be informative, engaging, and regularly updated. Plus, the content cycle should be researched before a company starts working on its web and social media sites.
Google constantly visits new websites when they’re originally published. At first, it does it in short intervals. But if it sees no updates from one visit to another, it will extend its visiting intervals until it becomes as long as once a year, giving you a very low ranking.
Here are some proceedings to prevent google from doing so:
Based on your company expertise, write short instructional articles (under 500 characters) and have them proofread
Create an RSS feed
Make short 1-minute videos
Create an online forum
Ask users to contribute articles.
Step 11: Web Intelligence (Reputation & Syndication)
Content syndication is a method for distributing Web content to many online sites. Syndication generates additional traffic, improves SEO, and increases brand awareness.
Many online sites that provide content syndication also allow consumers to comment about a company's product and service. These comments can affect a company’s reputation positively or negatively.
List of website & Review sites the business is listed
Review Current consumer reviews & sales material
Document social media activity
Step 12: Business Information Syndication
In the scope of business development, syndication is to submit company information and consistent content to various websites and social media pages.
Google PageRank (Google PR) is the most important method Google uses to determine a page's relevance and importance. A website with many social and directory backlinks receives higher PageRank.
Once a customer searches for a product or service, they normally pick the ones that show on the first pages of the search. To appear on the first page of Google Results, you should either run a google ad–that fits your budget–and compete with other companies or gain organic traffic.
Some helpful techniques in this regard are as follows:
Submit Website & Business to Google Local
Submit Website to 40 other directories
Submit Website to Industry Directory
Monitor reputation and reviews
Step 13: Social Media Syndication
Social media gives businesses a voice, allowing them to reach new customers and contribute to their brand. Turn your social media page into a source of information and, alongside providing value, educate the consumers about your product or service.
Websites with a higher volume of information and consistent updates usually rank better in Google. Simply put, if a business regularly provides educational material on a particular situation or problem related to its niche, Google makes it more discoverable than its competitors. So the potential customers will be aware of their brand.
Here are a few ways to use syndication to your benefit:
Setup Facebook, Instagram, Pinterest, Youtube, and Linkedin
Setup Twitter (Certain Businesses only)
Schedule content & posts.
Step 14: Customer Engagement
All proceedings by which a company creates a relationship with its customer base to foster brand loyalty and awareness are called customer engagement. This can be accomplished via marketing campaigns, new website content, and outreach via social media and mobile and wearable devices, among other methods.
Step 15: Local Marketing
For certain businesses, the best way of marketing is to become known around their town. For example, a local plumber moving around a city with six identical blue trucks would have a better chance of name recognition and probably do most of the town plumbing work.
Have cars with decals
Order Yard signs
Do Every Door mailer in a select area
Step 16: Daily & Scheduled Tasks
After budgeting and proposing your marketing plan, try to implement it consistently. Then, evaluate its progress routinely, and modify it according to your sales increase, technology improvements, and customer behavior.
Email Customers & Prospects
Research & Post content for social media
Monitor Reputation Daily
Have a strategy to answer incoming calls live