According to the latest statistics from the Small Business Association two thirds of small businesses survive two years, and only 44% survive at least four years. So that leaves us with more than half of all small businesses failing in the span of four years, ever wonder why? The major reason is simply poor communication with customers and lack of sales engagement and expertise in the product or services area. Brian Head, Economist with the SBA Office of Advocacy, noted that the latest statistics are a much more accurate assessment of new business success rates, and that "as a general rule of thumb, new employer businesses have a 50/50 chance of surviving for five years or more." I found this information at businessknowhow.com along with a their seven reasons for failure, which I don’t necessarily agree with.
The Seven Pitfalls of Business Failure
1. You start your business for the wrong reasons.
2. Poor Management
3. Insufficient Capital
4. Location, Location, Location
5. Lack of Planning
6. Over Expansion
7. No Website
During the course of my career I started, cofounded and/or joined seven businesses and I don’t agree that small business failure can be attributed to these seven pitfalls only. In my experience knowing, understanding and engaging with customers to understand their stated and unstated needs is the key ingredient for success. There is no question that if you don’t have the right location for your business, you don’t plan, you over expand and don’t have enough money you probably will fail and deserve to. Aren’t these all key management decisions? There are of course many people that have life style business aspirations and need to limit their businesses growth, and start businesses for all the wrong reasons. But today if you are not selling products over the Internet, my question is do you need a website? I would love your comments on this.
Engaging Customers
How many times have you walked into a small business and felt ignored? And how many times have you walked out of a small business without making a purchase because of this? I think this is one of the primary reasons why so many small business fail, lack of marketing and sales engagement by employees and small business owners. I also think that merchandizing (retail) of store windows and products within small business is another reason for failure. If the products and store doesn’t look inviting and products aren’t well presented in the signage then why should I go into the store? We are visually oriented beings and our journey begins with our eyes, although the nose can play an amazing role.
Net/Net
When I walk in your business (retail or other), don’t make me feel like a stranger, engage me even if I am a visitor to your town. Make me feel like I am welcome and you are not doing me a favor by talking to me. Small business owners need to carefully select employees with engaging personalities that will foster a business personality and environment that drives sales. In any business the customer experience or what modern marketers call “the brand experience” begins before you even enter the door, but in my mind it’s all about communication. All of this sounds like common sense, but it is the biggest challenge in business today. Communications and engagement are only the first step; the second and most valuable is expertise.
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