It's a fact.
Only one in three businesses survive their first five years of existence.
This is during normal and prosperous times. The numbers are probably significantly worse when the economy is in a recession or a once-in-a-lifetime event like our current pandemic presents itself.
In good times and bad however success or failure of a business can be traced to some key components. If you, as a small business owner, are aware of these mistakes and prevent them, you increase the likelihood of your business surviving.
Here, in no particular order, is a list of items that contribute to business failures that we should guard against.
*Not Deeply Understanding Your Market
It is your job as a business owner to constantly update your knowledge with respect to the people that you serve. You need to be on top of any changes in preferences.
You should always plan to take surveys of, or at least talk to, your customers. By constantly trying to learn more about your customers wants and needs you do a few things.
First, you'll provide services or products that meet their demands right now.
Next, you'll create marketing and advertising that will easily attract other customers that are just like your best customers.
Finally, you'll be able to reach out to existing customers and keep them coming back more often. On to the next reason businesses fail.
*Not Knowing Your Numbers
It is important to be able to see your business at a high level and understand how it is progressing simply by looking at financial reports.
Proper financial reporting is necessary to ensure that you can generate a profit, pay your bills, save money, and keep your business on track to meet your financial goals.
There is plenty of software available to help you do accounting, bookkeeping, and budgeting. But if you do not understand how they work it is very likely that the numbers that come out of these products won't help you.
So you either need to buckle down and really start to understand the numbers, or you need to pay someone to do it for you. Either way, understanding the numbers will set you apart from most small-business owners.
When I talk about understanding the numbers, I do not mean just knowing how much revenue your business generated and how much money was spent.
You also need to understand the secret places that you are able to generate money from or that you are losing money on without realizing it.
You also need to understand how you can save money on taxes and use your business to create hidden wealth. Once again hiring an expert in this area will probably pay for itself.
A book that I highly recommend for anyone who wants to do it themselves or hire a person who really understands how to create a successful business is called “Profit First”.
Go through this book a couple of times so that you really understand what the author is trying to say. Then try to find an accountant or bookkeeper who either understands this methodology or is willing to learn it with you.
Having a professional who understands the Profit First method is a great way to keep you on track with your financial situation in your business.
Your Marketing Is Not A Money Making System
Marketing and sales go hand-in-hand. However many small business owners believe that having a Yellow Pages listing or a Facebook fan page is all that is needed to say they are “doing” marketing.
Others say that all they need is word of mouth advertising and referrals from existing customers in order to have the business they want.
I have a good hunch that if this is your thought process about marketing, then what you really have is a job and not a business. Sure, it's a job that you control, but it is still a job.
Someone in your organization needs to be responsible for sales. However, in order to grow sales and grow your business to the point where it does not need 100% of your input, it must have a marketing system that generates new prospects for your sales team to turn into new customers predictably and consistently.
If you know your current best customers intimately then you already know everything you need to get more copies of that customer for your business to serve.
However you do it, whether by advertising on Google, Facebook, or by investing in search engine optimization for your current website, to grow a real businesss quickly you must invest in marketing.
The best form of marketing that is working today is paid advertising online. The reason this is the best method is because it allows you to test your message very quickly, track what you test, and target the perfect prospect. This is more control than business owners have ever had in history.
Tying these things together will allow you to find your perfect customer floating out there on the internet and put your perfect message in front of them.
Also, if something is off in your message or your market does not respond to it, you will know very quickly and be able to pivot and experiment with new and different messaging without wasting a crap ton of money.
*Altitude Is A Function Of Attitude
If you read more than one article on this site you will probably find that nearly all of them contain a small section on mindset.
The reason is if you do not have strong control of your mindset it is very likely that your business will fail.
There are businesses that have a great product and plenty of people that want to purchase the product, who operate in a market with plenty of funding available to them that still go on to fail.
Then there are other businesses that get started in a depression or recession where there is almost no hope of receiving outside funding, where their customers are in a state of fear regarding spending money, who go on to become some of the largest businesses in America.
The one thing you can always point to when you talk about the second business is that the owners had a vision, discipline, and complete mastery of their emotions even when faced with incredible odds of failure.
One of the best things that you can do each morning is to wake up and immediately start to tune your mental attitude. Most of us wake up in a neutral state and then let whatever activities hit us in the face affect our attitude.
By the end of the day we might say “Oh today was a good day” or “Oh today was a bad day”. But we do not realize that we let outside forces determine the kind of day we had, and it probably affected the way we made decisions too.
However, if you control your attitude and force it to be positive, grateful, and accepting more and more throughout the day, regardless of what happens, then every day ends up being a positive day. And positive days stack up to become a positive week, month, year, decade, and so on.
In this way you control your business destiny one day at a time and are able to accomplish whatever you want to do regardless of the economy.
11/17/2022 07:39:24 am
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Lilly Cook is a seasoned Accountant, Licensed Esthetician and owners of two Spa & Wellness Illinois businesses.