While there are no magic solutions that will guarantee that a business will be successful, understanding the solutions for some of the leading reasons for business failure can help increase your business’ chances of succeeding.
Here are five of the most common reasons that a business fails, and possible solutions to help you avoid them and to become part of the one-third of small companies still in business after five years.
Insufficient Cash Flow
Insufficient cash, whether from deficient working capital, lack of revenues, or uncontrolled costs, can be the death knell of a business. Having sufficient revenues, or working capital for start-ups, is key to business success. Keep careful track of your revenues and expenses to avoid nasty surprises in this area. As well, a lack of sufficient revenues can often be linked to poor sales and marketing. Small business managers who periodically become “too busy to market" can set themselves up for a feast and famine cycle of work, which can throw cash reserves out of whack and cause business and personal financial crises. Generating a continuous flow of marketing activities can go a long ways towards helping a business maintain sufficient cash flow.
Lack of Planning
It is commonly said that “if you don't know where you're going, you're likely to end up somewhere other than where you wanted to go" and that includes your business vision. Trying to manage a business without proper planning often means that you're unprepared for what happens, which lessens your chances for success. A well-researched and strategically developed business plan is a key element for business success. As well, a strategic marketing plan can be used to drive sales. Remember that plans are only as good as the amount they're used - they should be frequently referred to and revised according to changing market conditions and new information.
You may well have the “better mousetrap", but to make people come and become customers they need to know you have it and how it's better. Marketing is much more than simply throwing money into advertising. Effective marketing can be achieved for little money, with proper planning and implementation of activities. Marketing ideas can make creative use of online and offline opportunities to reach your prospective customers. And a full marketing plan can guide you through these activities, with an organized schedule so finances remain under control.
Lack of Clear Processes and Systems
Many problems that occur in a business, such as poor customer service and substandard quality, can be traced to improper processes and systems. Processes and systems can help business managers gain competitive advantages that increase revenues and lowers costs. Establishing processes and systems for marketing, for example, can help ensure it gets done regularly. If you're too busy to get it done, you can outsource it knowing that who you've hired can follow your process and systems and get it done in the way that you'd like to have it done - the way that will get results.
Ignoring the Competition
Customers will often compare you to your competition, so building customer loyalty can be key to a business’ success. At the same time, the only constant seems to be change. By staying aware of your competition, you can recognize opportunities and adapt to them so your business survives in spite of competitive or economic conditions. Competitive analysis is also a key element that managers should consider when planning their marketing programs.
Many small business managers lack time to focus on marketing. We can help. While you focus on the main key to your success - your product and/or service - we can develop and manage a marketing program customized to your goals. From generating marketing ideas right through to final implementation, Route One Research & Marketing Services can help you target new customers and generate brand awareness, giving you a competitive advantage to help your business thrive. Contact us either through firstname.lastname@example.org , or at (604) 731-2785. Mention that you saw this article, and receive a FREE subscription to our newsletter filled with valuable marketing information designed to help you maximize the success of your business.