Your small business got off the ground. Congratulations! For many people, launching their own business fulfills a long-time dream. Maybe you love the product you sell, or you enjoy building a team, or you just want the freedom to be your own boss. Maybe you plan to turn your enterprise into a family business and leave it as an inheritance for your son or daughter.
Whatever your reasons for starting a small business, you deserve a pat on the back for getting yours up and running.
Over the next few weeks and months, however, you may start to notice a problem. Your small business isn’t growing. In fact, more money is leaking out than rolling in. Maybe a lot more money. That’s a scary place to find yourself, especially if you owe for a loan or (worse) you’ve mortgaged your property to kick off your idea.
Before you start making plans to liquidate your assets and run back to your corporate cubicle, though, consider these 8 basic reasons your small business could be struggling and some proven plans for turning things around.
1. Poor marketing practices.
Marketing simply means informing the public about the product or service your small business provides. Most business owners recognize that strong sales numbers rest on an effective marketing platform. Nevertheless, Stephanie Burns, a contributing writer at Forbes, estimates that 14% of small business failures can be attributed to ineffective marketing. Common marketing mistakes include not having a website, failing to track results, reaching the wrong audience, working without a plan, and hiring the wrong team.
Fortunately, you can fix bad marketing practices. Identify an agency in your area that can help you create a sensible, affordable marketing plan based on your ideal customer and your budget. Working with an agency usually gets better results at less expense than hiring an internal team or (worse) trying to do it all yourself.
A solid digital marketing agency won’t try to snow you with a lot of jargon about SEO or get you to buy into a clever new scheme.
Instead, the agency will work with you to identify your ideal customer and where he or she hangs out online or in person. Its team will craft a basic brand story with you and then set up a website, integrate social media, establish metrics, and coach you through a good evaluation plan so you can find what works. The right marketing agency can be business gold for a new enterprise.
2. Hiring the wrong people.
In his classic book Good to Great, business expert Jim Collins said, “The good-to-great leaders understood three simple truths. First, if you begin with “who,” rather than “what,” you can more easily adapt to a changing world.” Collins’ idea became established wisdom as a bus metaphor. Get the right people on the bus and the wrong people off the bus. Then get the right people in the right seats on the bus.
As a leader, you know that hiring the right people for the right positions can make your business — or kill it. But it’s easy to hire someone you know, who will work for cheap, or who really needs the job. Don’t do it.
Instead, look for people who possess the professional skills and experience to do the job right. Incidentally, a job interview is about the worst way to discover your ideal candidate. Instead, tap into your network. Spend some time hanging out on LinkedIn where you can read articles, watch videos, or listen to podcasts people are making. Your just-right new team member may be hosting a YouTube show on your exact business idea right now.
What if you already hired the wrong candidate, though? This is tough, for sure. You could first try to move the person to a better-fit job internally. If that’s not an option, then working with them to transition to a new company will benefit everyone.
You don’t have to act mean or resort to demeaning “employee discipline” tactics. Just help your people find the right job for them. And do it quickly.
3. Overinvesting in your small business ideas early on.
You get pumped about your idea. You can’t wait to see it all happen. So operating in a feverish rush, you pour money into your concept, and before long, you are running out of capital and your business hasn’t taken off. In fact, it’s stalling on the runway, and your investors are circling. Finding yourself in this position can feel scary, and it should. Running out of operating capital is the fastest way to go broke.
There’s a way out, however. First, stop acting on your emotions. Spending money when you were hyped up on feel-good hormones was your first mistake. Don’t compound it by making decisions rooted in your feelings of depression or fear now. Instead, sit down with your mentor. Show him or her the full picture of what’s going on in your company.
Don’t be afraid to open the kimono all the way even if the truth about what you did feels embarrassing — especially if the truth about what you did feels embarrassing. If you are honest about your situation, a seasoned mentor can help you create a plan to raise more capital, reign in spending, and get your ROIs back to where they should be.
Don’t have a business mentor? Professional associations, the local Chamber of Commerce, or a retired executive in your industry can be rich mines of potential mentors. Find yourself one without delay.
4. Pinching pennies.
Maybe you have the opposite problem. You grew up in a low-income family and you know the value of a hard-earned penny. So you search out the best deals, hire the cheapest contractors, and spend money like you’re the tech era’s Ebenezer Scrooge.
Such economic practices sound wise, and you probably feel like your grandma would approve. But what makes for a good household budget doesn’t always make for good business practice. No entrepreneur ever saved their way into prosperity. You have to invest. Be smart about it, but let go of those dollars.
Writing for INC, Shawn Murphy, the CEO of WorqIQ says the two most valuable places to invest internally are top talent and culture. “If you want to outcompete your competitors, you need to be willing to pay top dollar for people with in-demand skills,” Murphy wrote. “No matter the maturity of your company, investing in your culture needs to be a top priority.”
Hire the right people, pay them what they deserve, invest in the resources they need to do their jobs, put up the funds for an engaging office culture, and watch the magic happen.
5. Thinking entrepreneurship is a religion when it’s really a lot of hard work.
Some people love the idea of entrepreneurship. They listen to Gary Vee, Noah Kagan, and the rest of the business inspiration lineup with the devotion of a fanatic. These are the folks who fork out four-figures for a trip to see their business idols even if they have to drive for Uber for a month to pay off the bill.
Don’t be those guys. Entrepreneurship isn’t about being cool, following a fad, or thinking you’re going to get internet famous. Building a business takes a lot of hard work, and most of it goes unnoticed and unappreciated. Dustin McKissen killed it on INC when he wrote, “I met a lot of people who talked about the potential for a billion-dollar exit as being the sole barometer of whether an idea was worthwhile.
Most of these founders are gone, their startups living on only as long-neglected Twitter feeds. The entrepreneurs I know who’ve succeeded usually took a skill they learned or knowledge they gained during their career and applied it to a problem they had experience with, with the full understanding that success requires paying customers.”
Running an enterprise, even a small one, means taking a lot more kicks in the butt than getting pats on the back. If you are looking for affirmation, then find a good-hearted boss at a company with a nurturing culture and punch in from 9 to 5. If you are looking for the business equivalent of Marine boot camp, however, start your own business. Just don’t confuse those two scenarios.
6. Missing adequate background either in your field or in general business.
Do you know the average age of a successful entrepreneur? According to the Harvard Business Review, it’s 45.
Surprised? Thanks to the public image of entrepreneurs such as Mark Zuckerberg and Michelle Phan, many people think startup founders are young and hip. But it’s not true. In fact, most people whose businesses last more than five years started their entrepreneurial life with a wealth of knowledge and experience supporting them.
These are the people who know their product, their customer, and their industry. They know how to run a profitable enterprise. And they enjoy access to deep networks of potential mentors, funders, employees, and board members.
If you fear your business is failing due to your own lack of knowledge, you can get help. Mentors and board members are often willing to step in and offer a steadying hand. You can also put up the money to hire more experienced team leaders. Don’t be afraid to appoint an executive suite with more experience or education than you have. Those are the people who can guide your business through troubled times.
7. Failing to learn about your customers.
Do you know who will buy your product or service? If not, you probably don’t know who you should be marketing to, and your sales team doesn’t have a clear idea of whom they should be targeting. Knowing your customer is foundational to creating an effective marketing and sales strategy. Here’s how to learn about your ideal buyer:
8. Refusing to pivot when needed.
With time, your company probably won’t look like you envisioned it when you started. A few months in, and you’ll need to make a change. Another few months in, and you’ll change things again. That’s how businesses evolve. James Carbary founded Sweet Fish Media as a blog writing service for companies. It wasn’t long, however, before James realized that blogging wasn’t enough to make most companies to stand out in the crowded marketplace around them.
So he experimented with providing a done-for-you podcast service. Today, Sweet Fish is a leading media producer of podcasts for B2B companies and only offers blog writing as a supplement to its podcasts.
Maybe your enterprise will unfold like James’ did with a big change after a few months. That’s a good thing! It shows you are learning and growing. If your business is struggling, consider that you might need to pivot a bit. Take what you’ve learned from the time you’ve been operating your company, and see what new problem you could solve for your clients.
Opening your own small business can make a lot of dreams come true. More and more Americans of all demographics are launching their own ventures each year. Unfortunately, 70% of those same small businesses will fail by their 10th birthday. Yours doesn’t have to be one of those failure stories, though. You can build a business that grows and sustains itself for decades to come through hard work, initiative, and smart decisions. Figure out a solution to your problem now and get to work implementing it.
The rewards are worth it.