If there is one small business statistic that stands out from the rest, it is the fact that an estimated 96% of ventures fail within their first 10 years.
Conversely, this means that just 4 out of every 100 SMEs are able to achieve genuine longevity, regardless of the precise market or industry that they operate in.
This may resonate with some of you, particularly if your venture is less than 10 years old and beginning to show signs of stagnation.
While the portents may not look good, however, there is still time to adapt a proactive mind-set and turn your failing business around.
Of course, there are numerous factors that can cause your business to fail, from the impact of macroeconomics to the levels of real-time demand for your products or services. While some of these factors will be unique to your venture and reside outside of your control, however, there are others that are universally relevant and capable of being resolved by an open and strategic mind.
1. Ensure That Your Business is Scalable
One of the biggest issues that afflicts SMEs is a fundamental lack of organic growth, which can leave ventures struggling to compete and remain relevant (particularly in competitive markets).
This is usually the result of underlying scalability issues, which occurs when you lack the resources to expand your business infrastructure in line with rising demand or workloads.
Subsequently, businesses either stagnate or attempt to increase their turnover without investing in additional resources (which can impact negatively on the quality and reputation of your brand).
Recognising this issue is the first step towards resolving it, as it enables you to create and invest in a scalable growth plan for the future. This provides opportunities to evaluate your progress in real-time, while also allowing you to identify effective funding methods that can drive your growth. This includes accessible alternatives to traditional lending, including factoring and crowd-funding (both of which minimise risk and protect your short-term cash flow levels).
2. Reinvent Your Business and Business Model
While a high turnover may be a nice thing to have, it is ultimately bottom line profit that determines your business’s success or failure. This is something that SMEs can easily lose sight of, causing them to lose money and market share as a result.
At this stage, you may want to reconsider reinventing your business or the precise model that underpins it.
Since the turn of the century, the leading entrepreneurs have stated that businesses derive strength from the flexibility of their models, as this enables them to evolve and seek out brand new competitive advantages over time.
Whether this involves expanding in a new and relevant niche or diversifying your range of income streams, it is crucial that you are proactive in your approach and afford your venture options in the future.
Most importantly, this allows your business to adapt quickly to the changing demands of the marketplace, whether this relates to evolving consumer behaviour or the way in which products need to be manufactured.
3. Have a Clearly Defined Focus and Value Proposition
Let’s be clear; creating a flexible and evolutionary business model does not mean becoming all things to all people. Instead, it allows your venture to grow in line with the demands of the market and it’s core identity, while retaining its core value proposition and a clearly-defined focus.
Unfortunately, too many SMEs lose their focus as they look to grow, meaning that their products and target segments become confused. This is a common factor that undermines business success, as it leads to ineffective marketing and relatively low sales conversion rates.
To avoid this, your business must retain a defined niche and value proposition that is synonymous with its overarching brand. Additionally, when you do expand into new markets or extend your existing product range, be sure to research and define your precise target audience as a starting point.
4. Focus on Building Long-term Relationships with Customers
We have already extensively discussed the wide range of small business marketing tips to drive growth on a low-budget, but we’ve also touched on the failure rate for SMEs within 10 years, and studies have also suggested that a staggering 80% of start-ups collapse within 18 months. Although this highlights many potential risks to new businesses, it also exposes the dangers of short-term thinking when starting a brand new venture.
Undoubtedly, the failure to plan and think in the longer-term is one of the main reasons why so many SMEs struggle. After all, if you intend to achieve longevity and establish a successful business that can survive the harsh realities of the global economy, you must have a deterministic approach that is focused on long-term growth and the cultivation of sustainable consumer relationships.
Your marketing and brand efforts must, therefore, extend beyond merely attempting to sell individual products, and instead look to drive awareness, loyalty and long-term trust among customers.
This will ensure repeat business for your company, helping you to maintain a consistent market share that can be built on over time.
5. Empower Your Staff as the Saviours of your Business
Once your company begins to experience a period of decline, you will notice an impact on every aspect of the business. This means that the morale and the productivity of your staff can suffer as a result, particularly when they are not involved in strategic planning or empowered as key components of the business.
This negative can be turned into a positive, however, in a similar way to how customer service representatives have recently evolved into a proactive, front-line marketers. These individuals are now seen as skilled communicators who interact with customers when they actively engaged with the brand, rather than being undervalued as token employees who simply process and manage complaints.
Similarly, you can empower your employees as the potential saviours of your ailing business, involving them in strategic brainstorming sessions and encouraging them to deploy skills such as problem-solving, initiative and creative thinking.
By creating a culture of empowerment and training your staff members to negate any potential skills gaps, you can breathe new life into a struggling business and create a clear path towards future growth.
The Last Word
Ultimately, the factors that are causing your business to flat-line will determine the precise course of action that you take as a response. Our universal tips will hopefully help you to identify some of the common issues that plague small businesses, while enabling you to create strategies that can overcome them.
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