If sales are declining, you’ve got fewer customers coming in your door, or you’re having trouble paying your vendors, it’s time to figure out what’s broken in your business and make a serious commitment toward fixing it.
While every business is different, there are some typical reasons for small business failure. See if any of these resonate with you, then check out the “What to Do About It” section to turn things around.
1. You Don’t Know How to Market Your Business
Not every business owner is born knowing how to get the word out about their business, and that’s fine. But when a business owner’s shortcomings put their business in jeopardy, that’s when somebody must take responsibility and take action.
If you think marketing is too hard to figure out yourself, or you assume it costs more than you’ve got to hire someone, you’re essentially shutting down the possibility of finding new customers. Yes, marketing is an investment in time, money, or both, but an essential one.
What to Do About It: Start marketing. If you lack money, then invest an hour or two a week to read a few marketing books, blogs, or articles and teach yourself how to use social media, blogging, and PR to draw more people to your website and/or your store. If you’ve got more money than time,get a quote from a few marketing consultants or freelancers, or see my article, “7 Killer Online Marketing Tactics That Take a Minute or Less.”
2. Your Prices are Too Low
If you’ve got more work than you can handle but are still having trouble making ends meet, it’s time to assess your pricing. Pricing products tends to be a bit easier than pricing services, because you know what it cost you to buy or make those products, so price can be determined easily based on desired profit margin. But even with business services, you’ve got to factor in things like overhead (Internet service, heating/cooling), salary, and office expenses. Your profit shouldn’t be so scant you have difficulty paying your own bills.
What to Do About It: Don’t double your prices overnight. Instead, raise prices for new clients only and see what the market will bear. If you’re getting pushback, you might have raised them too much. If you’re closing sales too easily, you might have room to raise those rates even more.
3. You Don’t Really Know Your Customers
You know who you think they are, but unless you’re really clued in to your demographic, know what makes them tick, and understand their problems, you’ll do a terrible job of trying to present an appropriate solution.
What to Do About It: A little market research can go a long way. Talk to actual customers. Use surveys. Ask questions on social media. Build out buyer personas that will turn numbers into humans, and solve the riddle of how to connect with each type of customer you’ve got.
4. You Think SEO and Social Media Don’t Apply to You
Regardless of whether you’re a global accounting firm or the bakery down the street, you should engage in an SEO campaign to help you get more customers. After all, it’s the keywords you use on your website that help the right people find you, and the links you’ve got online that help solidify your brand reputation. For entrepreneurs, SEO is uniquely important, as I outlined in my article, “7 Ways That SEO Is Uniquely Important For Entrepreneurs.”
Social media is becoming more intertwined with SEO, but has also established an extremely strong niche of its own in the online marketing sphere. If you don’t think social media can yield positive ROI for your business, see my article, “Myth Busted: My Industry Isn’t A Good Fit For Social Media.”
What to Do About It: Again, it comes down to time or money. Teach yourself SEO tactics that work and stay on top of Google’s latest algorithm updates to make sure you don’t get shot down those results. Or, hire a professional SEO company that’s well-versed on the subject and can help you focus on other areas of your business while remaining competitive online.
5. You’ve Got the Answer for Everything
There’s a bit of ego that comes with running a business. After all, if you were smart enough to figure out how to launch this company in the first place, surely you’re smart enough to figure out how todesign a logo. Or manage your finances. Or tell everyone else what to do. Unfortunately, the more micromanaging you’re doing, the more harm you’re probably doing. Entrepreneurs know the things they excel at, and outsource the things they don’t. The most successful entrepreneurs do only the things that only they can do. Anything else can almost always be outsourced more efficiently.
What to Do About It: Get out of your own way. Think about those tasks that take you far too long to do, or result in shoddy work (that logo that took you 18 hours to design still doesn’t look as good as what a professional could have done in an hour), and outsource it. If you’ve got staff, trust them to do what you hired them to do. If they aren’t doing it correctly, fire and re-hire. Focus on what you do best: running your company.
6. You Can’t Handle Growth
You started small and didn’t expect to burgeon overnight. Just ask any business that’s ever been the recipient of the “Oprah Effect” or even the “Groupon Effect” and then had a flood of sales the next day: rapid growth isn’t always a blessing. If you’re not prepared for the strain your servers will experience, the number of sales to process, or the flood of customer service calls, you risk seriously harming your brand’s reputation.
What to Do About It: Overall, rapid scaling should be a good thing, but you need a plan to quickly hire more staff and train them, as well as how you’ll manage more website traffic, phone calls, and customer service requests. For a great read on scaling up properly, see “Eleven Lessons For Scaling Up.”
7. You Don’t Have Business Savvy
While it’s not imperative that you have an MBA to start a business (or even a college degree), a solid understanding of finances, management, marketing, leadership, and sales will take you far. If you’ve mixed your personal and business finances, have trouble managing staff, or are just throwing your hands up at running your business in general, your risk of failure is multiplying by the minute.
What to Do About It: Consider whether you truly want to be an entrepreneur. Many business owners start a business because they want to “do what they love.” That’s respectable, but without a CEO that knows how to run a successful business, any business is doomed. And to be honest, many business owners get far away from the actual thing they love doing once the business takes flight; focus shifts from fulfillment work, and toward running the business. If you’re committed to sticking it out, invest time in classes, workshops, and resources to beef up the skills you’re weak in.
Take these as warning signs that things need to change for your business. Then start making changes that will positively change the direction your ship is sailing. Have you successfully recovered a failing business? What were the warning signs? Leave a comment and let us know!