More than half the working population in the U.S. are employed by 28 million small businesses, including 22 million who are self-employed, according to data Forbes culled from the Small Business Administration (SBA) website. While small businesses—defined as those with fewer than 500 employees—generate more new jobs than larger ones, half shut their doors within five years.
Tim Carroll of Deluxe Corporation, a provider of marketing services and products to small businesses, told Business Intelligence that he estimates 50–70 percent of small businesses fail within 18 months.
Planning Can Help Avoid Small Business Collapse
Many reasons can be found to explain the high failure rate for small businesses. Most point to a lack of planning in strategy, marketing, customer outreach and finance. Part of this may be the nature of entrepreneurs, who are often so focused on their product that details fall by the wayside. “I enjoy taking risks. I’m adventurous, I pursue a life of challenge,” one entrepreneur told a Deluxe survey.
Even if planning isn’t your thing, some things must be planned and addressed in order to tip the scales to your side:
• Get a business plan, or blueprint, in place, says Business Know-How. Not having one is one of four major reasons why businesses fail. Use it to define personal and corporate goals and to put in timelines. If you don’t reach them, revisit your plan.
• Put operational supports in place, Business Know-How urges again, to help you work more efficiently. They can be software and programmed alerts that keep you aware of critical events such as a low threshold in your bank balance, upcoming administrative deadlines and other details that can sink a small business.
• Back up and safely store corporate data every day. This is most often—and most safely—done through cloud-based backup services. Many cloud services also make data instantly available, which may help you save on storage and software expenses. Cloud provider Mozy advises that businesses ensure that backups are completed and include mobile devices, which can be easily misplaced or lost along with important data.
Make Sure Your Marketing Sends a Clear Message to Customers
Marketing is part of planning, and is not as easy as many think. Many entrepreneurs don’t know how to market their products and services, author and “serial entrepreneur” Drew Williams told Fox Small Business. It may take some time before they recognize this.
Business News Daily says businesses need to have at least an informal marketing plan in place based on research into potential customers and why they would turn to a new business. It should address these questions:
• Who are your target customers?
• Who is your competition?
• Do you know if your competitors’ customers are willing to leave for another firm?
Write down your brand-positioning statement. Use your marketing plan to create an outline for a website. Particularly focus on the About Us page, where you can lay out your vision of how you (will) serve customers. Provide a couple of white papers explaining how your product works and its superiority to competitors.
Finally, use at least two or three social media sites that will echo your brand statement and link readers to specific parts of your website. Create a business account on places like Twitter and Facebook even if you already have a personal account with them. Also, get a page up on LinkedIn, which is free, has great networking tools and offers an abundance of articles and groups you can join to learn more about the business world from operations to technical specs.
