Top 5 Reasons Small Businesses Fail
By Abbie Drew
Sep 21, 2006, 15:00
You want to succeed online, right! Well, according to the Small Business Administration(SBA) you have about a 40% chance.
The SBA new statistical findings show two-thirds of new businesses survive at lease two years, and 44 percent survive at least four years. As a general rule of thumb, the SBA states new businesses have about a 40% chance of surviving for five years or more.
If you’ve been under long-held belief that 50% of businesses fail in the first year and 95% fail within five years, you can put those dismal stats behind you. The truth is you do have a realistic chance of success.
The bad news is if you do not run your business well, your business could fail within 5 years. And according to the NFIB over the lifetime of a business only 39% are profitable. Another 30% of business break even, the other 30% lose money and 1% can not say.
So how do you make your business one of the profitable 39% that succeeds for the long term?
You start by avoiding these 5 big mistakes. I have been profitably running DEMC since 1995 and I speak from experience. I have battled the mistakes I am about to review and I have worked with 100s of small businesses over the years. Thus, I have seen what works and what doesn’t.
Here is what you need to avoid.
1) Fail to establish a team.
I saw a great definition of entrepreneur in an email I received from Dan Lok recently. Entrepreneur was defined as an individual who uses the time and money of others to make his ideas a reality.
Think about that definition and your own business. Are you are doing all of the work in your business yourself? If yes, you need to re-evaluate.
Too many small business people are caught up in doing the day to day tasks of running their businesses. As a result, they are unable to work on the bigger picture of growing their businesses. When your business is not growing and improving it is falling behind and headed for extinction.
You have to stop trying to be your own copy writer, web designer, customer support staff, product innovator, tax accountant, marketer, search engine optimizer, press release contact, book keeper, etc., etc., etc..
Start becoming a believer in the saying – “Do what you do best and farm out the rest!”
Establish a “Team” of people who help you succeed. Some will work with you and/or for you. Others will be mentors to you. Use your team to help build your business and improve your prosperity.
To emphasize the importance of establishing a team, I encourage you to review some of the Interview articles from past issues of DEMC. In fact, I’d recommend you start by reading the interview in today’s issue of John Di Lemme. You will find again and again in these interviews, that successful business owner mention how their “Team” has helped them arrive where they are today.
2) Fail to establish a niche.
Who is your business’ target audience?
Let me share a story with you . . .
Just yesterday, I was speaking with a customer who directed me to her web site. I asked her what is the site about. She said, well it’s a portal for people to click to other places that might interest them. Upon visiting the site, I found it even says: “Check out the wide selection of programs and entertainment we have to offer!”
I was shocked that some one had sold her the site as a money making opportunity. There was no reason for anyone to go to this site. The site had no niche, no product to sell and no unique selling proposition. I expect, if anyone happened to go to the site, they would promptly go elsewhere.
She wanted to know what she could do to improve the results of the site. Honestly, I told her she needed to start again and build a business with a niche.
She asked me, “What is a niche?”
I explained to her, a niche is simply a specific subject matter that your business focuses on. With a niche you are able to deliver information that answers the specific questions of your marketplace.
“But why do I need a niche?” She followed up with.
I responded that a niche allows you, a small business, to compete with big businesses. Big businesses have more money, more resources and more staff than you do. They can drive much more traffic and spend lots more money on branding their business in the mind of consumers.
Think about it, why would a web surfer go to your portal instead of Yahoo! or MSN or Google?”
She dismally replied, “They won’t.”
To further explain the importance of a niche I shared with her the example of our site, DEMC.com.
DEMC.com is an email newsletter publication for small businesses.
Can you think of any other publications for small businesses that DEMC might be in competition with?
Let’s see . . . Entrepreneur, Inc., Fortune, are just a few of the big players and there are way too many smaller competitors to name.
The reason DEMC.com is successful is because it has a very specific niche.
DEMC.com focuses on delivering information about email marketing for the small /home business marketer. This niche, has given DEMC.com an edge in the marketplace so it can compete.
As a small / home business you’re not going to pick up Entrepreneur Magazine to specifically learn how you can run an email marketing campaign. You’re going to look for a publication which has specific information on email marketing. That’s why you subscribe and read DEMC.com which makes our business a success.
Your business can succeed too, but first you need to select a niche. Once you have chosen your niche, you can then create a unique selling proposition that fulfills a need of your niche audience.
If you are wondering, how do you select a niche, be sure to read my article – Here's the 1 Marketing Secret You Need.
2) Fail to create a Unique Selling Proposition - USP.
Why should your customers buy from you and not your competition?
Evaluate your business for what makes it unique and attractive for your customers. Summarize your key selling points that make your product or service a 'must have' for your clients.
Emphasize your USP in your promotions and marketing. It is your USP that will attract prospects to your business rather than your competition.
4) Fail to organize.
You must plan.
First you need to have a vision for your business. What are your business goals? How are you going to achieve those goals? What are you going to sell? How are you going to find and service customers so you can grow?
Second, you need to plan your time. If you are a disorganized mess, with to do lists on scrap paper all over your desk, it’s time to get a planner and use it. Your business needs your guidance, if you can not manage your time, how will you manage your business?
5) Fail to market.
Marketing will make or break your online business. As you know there are hundreds of thousands of web sites, you have to continually promote your site to let people know you exist. If people do not know your site is out there they are certainly not going to find it by chance.
In the offline world, when you have a storefront, marketing while important, is not as critical to your success. Location, on the other hand is crucial. If you have a good location where consumers naturally will see your storefront, this in effect does a lot of your marketing for you.
To succeed online, rather than a great location, you need great marketing that continually promotes your site. If you are caught up in handling the everyday operations of your business (i.e. you fail to have a “Team”) and neglect your marketing, you quickly will have no business.
What marketing strategy can you use?
Take a few minutes to review 2 of my previous articles, they will outline for you a marketing strategy you can use. All you have to do is implement the steps.
The articles are -
Here's Your Marketing Checklist
Top 4 Most Profitable Promotions
There you have the 5 big mistakes online business make. I know how easy it is to let these areas of your business slip. I’ve struggled with these elements myself at times. If you follow through and keep your business on track you too can be one of the 39% of business who not only survive but profit!
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