If like many small business owners, you came to starting your business after a successful career elsewhere, you may be a little surprised with all the extra stuff to do… including getting customers.
Greg Hays of Hayes Knight, a national accounting firm, recently quoted in the Huffington Post that about a third of small businesses close in the first year. Then in the following three years, about 15% of small businesses under 3 years old will close annually.
So only about half of the businesses see it through to the end of the first three years. Probably better than you’ve been told, but that’s not the end of the story.
There are over 2,100,000 small businesses in Australia and about 28 percent have a turnover of less than $50,000 and another 35 percent between $50,000 and $200,000. That’s turnover, not profits. Source Life Hacker
The number one reason small businesses fail is poor trading results. Read that as not having enough customers and sales. That’s back in the Huffington Post article and coming directly from the Australian Bureau of Statistics.
So what are the common traits that hold small business back?
1. Low or no Marketing investment
I appreciate that often cash flow is restricted and funds are tight. Yet if you don’t market your business properly, how will you ever attract the clients you don’t know (and I’m assuming that you’ve already talked to the people you do know about what you do). Woocom suggests 7-10% of your projected turnover is a sound investment when spent wisely. Microsoft, looking to regain market shares, invests 18% and Twitter about 44%, but these are extreme examples. Here’s the article. Oh, and don’t confuse social media involvement with marketing. It’s part of the recognition package but rarely is it the whole package unless it’s crafted, planned and executed precisely.
2. Lack of clarity in who is being targeted
One of the big challenges for many small businesses is that they do not wish to give up any opportunity, “the world is your oyster”… whatever that means. The challenge is when you’re not targeting anyone with your message… nobody will believe it’s for them.
3. Offering too many choices
This is kind of the other side of the last point. When you offer too many choices, prospects may become a little confused about what exactly it is that you do… of what you specialise in. With all those choices, are you great at what they’re seeking or the other stuff you’re also offering? If they can’t decide, they’ll go elsewhere.
4. Do you know what they really want?
Although sometimes we may know what our clients need even more than the things they want, if they don’t realise that, they’ll simply go to where they can get what they want (even if it’s not what they need). I’ve been there before, looking for one thing and once I got it, realised it wasn’t what I was after at all. I just wasn’t ready to admit that at the time (not even to myself).
5. It’s about the service
Here’s a pet one for me. Small business owners feel that they offer a really personalised service, and most of the time we do. Occasionally because of time stresses or gaps in systems, things go astray. That’s OK, clients should understand… Shouldn’t they… Well, no! If you’re charging the same price as any other business, they are entitled to expect the same consistency of service. I know I’ve been let down just as much by passionate small business owners as I have by big businesses. It makes some look to the security of big business, unfortunately.
At the end of the day, make sure that you’re offering a service that solves the problem of your client. Know who your clients are and where they hang out. Then go and find them there. Be sure they know you’re talking to them and what’s in it for them… how will it improve their lives.
Hopefully, this gives you something to think about. The list isn’t exhausting. It’s a start to get you thinking about what you’re doing and how you could be getting better results for all the efforts you put into your business.
Get on with it. Be successful and help more clients.
Catch you soon.