Do You Know Why Your Small Business Is Failing?
Did you know there are over 28 million small businesses in the United States, according to the Small Business Administration? If your business is succeeding, that’s great! Good job! Because, unfortunately, only about 50% of small businesses survive – and only one-third survive 10 years or more. Why do you think that happens in such numbers?
Why is it some businesses succeed while others fail?
The life of an entrepreneur can be a constant challenge. You must manage many different aspects of your business, such as product development, marketing, sales, accounting, and human resources, to name a few. If your efforts in any one of these areas begins to slip, your business may fail.
Unfortunately, many entrepreneurs aren’t even aware of what’s happening until it’s too late. After all, if the business owner really knew what was going wrong, he could have done something to save it. Also, many small business owners aren’t even aware that they’re making mistakes. Others deny there’s a problem. But the main reason why businesses fail is that the owner didn’t act and address a problem within their business.
While every business is different, below are some typical issues that occur within a failing small business:
Problem #1: Your business doesn’t have a clear brand.
Your company messaging is disjointed and inconsistent. Your logo doesn’t even convey what your brand is to your customers.
Solution: Determine your brand story. Who are your target customers? How is your product or service different from your competitors? What problem does your product or service solve? The answers to these questions will help you create a coherent brand message.
Problem #2: Your prices are too low.
If you have enough work, but you still can’t make ends meet, your pricing may be the issue, especially if you close sales too easily.
Solution: Assess your prices. When determining a price, you must figure in the cost to buy or make the product, plus your desired profit margin. Additionally, you need to factor in your overhead, salary, and office expenses. However, don’t double your prices overnight. Raise your prices first for new clients to see what the market can handle. If you get push back, you may have raised the prices too much.
Problem #3: You don’t have a marketing strategy.
You don’t really have a marketing plan. You may have a website and a couple social media accounts. However, your website doesn’t really say much, and you’re not updating your social media accounts regularly. You have printed brochures that you hand out while networking. And, occasionally, you may place an ad in the local newspaper. Marketing inconsistency won’t attract new customers or engage existing ones.
Solution: Develop a marketing strategy that’s geared toward your target market. If you’re not marketing savvy. Invest a couple hours a week teaching yourself about marketing to draw more people to your website and business.
Problem #4: Your small business has a cash flow issue.
To succeed in business, you must have positive cash flow. In other words, you must have more money coming into your business than the amount of cash that’s flowing out. If you have a negative cash flow, it’s extremely difficult to keep your business going.
Solution: Invoice your clients promptly once the job is completed. Or, ask for a deposit or full payment in advance. Offer incentives for early payment. Avoid extending credit, if possible. Or, be selective in determining which customers receive credit. Create a strategy for handling late-paying customers. Get a handle on your business expenses. Reduce or control the expenses that you can.
Outsource the Tasks that You’re Not Experienced Handling
Are you trying to juggle too many tasks? Many small business owners think they must do it all. Not only will you lose your sanity, but you could also lose your family, too, by working too much. As an entrepreneur, you must realize, you can’t – and don’t need to – do everything. In fact, you’re probably not even good at doing everything within your business. Therefore, you need to leverage the talents of others. If you don’t want to hire employees, then outsource those tasks you struggle with.
If you’re having problems developing a brand and marketing strategy, hire a professional marketing firm to handle these tasks for you. Remember, your marketing efforts are directly tied to your sales results. So, if you want to see your sales go up, you need to invest in marketing.
If you’re neglecting your accounts receivable and spending too much on expenses, you need to outsource your accounting to a seasoned bookkeeper, like Grace Walker at The Payroll Department. Grace can handle your accounting work faster and more accurately than you can. She can help you get expenses under control, and make sure you’re getting paid by your customers in a timely manner.
When you outsource your bookkeeping activities, you’ll have more productive time to focus on other important tasks within your business. Plus, you won’t have to worry about doing something wrong when keeping track of your books that may potentially expose you to an audit or other complication. To learn more about how outsourcing your bookkeeping can benefit your small business, contact Teresa Ray, owner of The Payroll Department, today at 317-852-2568.
Don’t let your small business fail! Business owners who understand they need to carefully plan and execute a business strategy, that includes outsourcing tasks which they’re not skilled at, are more likely to succeed. And, at The Payroll Department, we want you to succeed.
– Ariane of The Payroll Department Blog Team