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8 Reasons Why Small Businesses Fail

By on March 11, 2013 in Become Your Own Boss Tips, How to Start

Reasons Why Small Businesses Fail 300x300 8 Reasons Why Small Businesses FailThe saddest thing in the world to me is to drive down a main street in a small town and see “going out of business” or “for rent” signs in the windows of retail spaces. The last few years in business have been tough, but many of the business failures out there are largely preventable.  The thing I know about business, is that you must figure out what you don’t know about business to survive.  Here are the 8 most common reasons why small businesses fail.

1)     No clue about how hard it is to run a business- People start small businesses for many reasons. They hate their job, need some side money or always wanted to open a shoe store or cupcake shop. The trouble is that too many people do not take the time to really think about what their life would be like as an entrepreneur. It’s a tough lifestyle, at first. Think about what you want out of life first, and then build a business that supports your personal and professional goals.  Develop a life plan because you do not want to start a business that is NOT a good business for you.

2)     No network- “Your network is your net worth.”  You must spend time cultivating the market to develop and nurture your professional and personal connections. Your first customers will come from your personal network. If you have no network, your business will not be able to survive.

3)     Not saving enough money- If you don’t save enough money before you start your business, you may not be able to hang in there until the business can generate any real revenue. People with assets have options. It takes on average 12-18 months to break even in a new business, let alone replace your corporate salary.

4)     Lack of a niche focus- Too many small business owners sell to anyone they think has money. Take the time to develop a well-defined niche for your business. It is so much easier to develop a marketing plan when you are clear on your target. By the way, specialists can always charge more money.

5)     No marketing plan- Too many small business live off referrals, which is good, but that eventually will dry up. You must put some effort each day into generating sales for your small business. You can make a call, send an email, write a blog post, and ask for a testimonial on LinkedIn from a happy new client. Do not rest on your reputation. Actively let the world know you are open for business.

6)    Not managing your brand online- It’s now easier than ever to build a brand online. It’s also just as easy to damage your business brand. Do you have a good, helpful website? Do you Google yourself and your business monthly? Do your social media accounts tell people how to hire you? Do you have a blog that hasn’t been updated in six months to a year? Do you have bad reviews online that you have not responded to? Can your website be seen easily from a mobile device? People will search for your company online before they ever call you, what would they find about your business today?

7)    Not communicating with existing customers- It’s cheaper to keep a customer than to go out and get a new one. You must have a database, CRM system and email marketing program to communicate with your customers so that they know all the ways they can work with you. At least monthly, your customers should hear from you.

8)    Lack of fiscal discipline- If you do not run your household with a budget, you won’t run your business with one.  You must make business decisions based on up-to-date financial information. Know your latest numbers by the 15th of every month. Ask yourself “Why” three times before making a purchasing decision for your business.

Do you have any other reasons why small businesses fail?

“Failed Stamp Showing Reject” image courtesy of Stuart Miles / www.FreeDigitalPhotos.net

Melinda F. Emerson, SmallBizLady, is America’s #1 small business expert. She is an author, speaker and small business coach whose areas of expertise include small business start-up, business development and social media marketing. She writes a weekly column for the New York Times, publishes a resource blog, www.succeedasyourownboss.com which is syndicated through the Huffington Post. She also hosts a weekly talk show on Twitter called #Smallbizchat for small business owners. As a brand, she reaches 1.5 million entrepreneurs a week on the internet. As CEO of Quintessence Multimedia, Melinda develops audio, video and written content to fulfill her mission to end small business failure. Forbes Magazine named Melinda Emerson one of the #1 Woman for Entrepreneurs to follow on Twitter. Melinda has been featured on MSNBC, Fox News, NBC Nightly News, and in Fortune, The Washington Post, USA Today, Wall Street Journal and Black Enterprise. She is the bestselling author of “Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works,” and the ebook How to Become a Social Media Ninja; 101 Ways to Dominate Your Competition Online.

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January is the Perfect Time to Become Your Own Boss!

By on January 7, 2013 in Become Your Own Boss Tips, How to Start
January is the perfect time to Become Your Own Boss 300x300 January is the Perfect Time to Become Your Own Boss!

Image courtesy of adamr / FreeDigitalPhotos.net

Have you had it with the daily grind? A New Year is the perfect time to start planning your new life as your own boss. But don’t start drafting your resignation letter just yet. Take some time to make sure that the entrepreneurial life style is for you before you cut your paycheck off. On average it takes 12-18 months for a small business to break even let alone replace your corporate salary, so the more you think through how you are going to run your new business, the more likely you are going to be successful. Start using your evenings and weekends to start planning to Become Your Own Boss.

January is a perfect time to start a small business. You need to honestly evaluate your skills, network, discipline, niche, optimism and ability to be coachable to determine whether you’re ready to start a new business.  I highlight the Emerson Planning System in my book Become Your Own Boss in 12 Months to give you a roadmap for business success. Here’s a break down of my six-step system to make the transition from employee to entrepreneurship.

  1. Develop a Life Plan First: You must first figure out what you want out of life, and then build a business that supports your vision.  Too many people start businesses that are not good for them or their families. Your life plan should outline your financial, personal, learning and retirement goals.  For example, you need to know up front how much money you need to make in order to be happy. Your personal goals will play a role in just about every decision you make in your business. Decisions relating to how you structure your life and your business. Will you take on a partner? Will you try to pursue investors?  Do you want to have one great store or a build a chain? All of these decisions must be measured against your big picture goals for your life.
  2. Get Your Money Together: The money to start your business will come from your personal savings. Your ability to save has everything to do with your ability to become your own boss. Before quitting your job, I suggest planning your exit for at least 12 months. You should try to save 20%-40% of every paycheck and start living on a budget. Try to raise your credit score to 750 or higher. Eliminate as much debt as possible. Starting a business while carrying a bunch of credit card debt will put a lot of pressure on you. Take care of your money so that you can go without a paycheck for a year or two, fund your first year of working capital and have an emergency account for your household.
  3. Examine Your Skills: Look at what skills you have and what skills you need to run your particular business.  Be honest when making your list of skills. If you are not sure about them, ask three people close to you what they think are your best skills. You might be surprised by their responses. Update your computer skills while you are still working; particularly start working on your social media skills. You can always grab a copy of my ebook How to Become a Social Media Ninja to give you a head start. You might also want to learn accounting software or Adobe Photoshop to help with things you’ll need to manage in your business.
  4. Who’s Your Paying Customer?  As you are making a go/no go decision about your new business idea, think about these two questions: Who are your customers, and why will they buy from you?  You must identify a niche customer.  As you are starting in business, you will have limited time and limited resources. I suggest you develop a marketing plan before the business plan to make sure there is a viable market for your product or service. If you can’t answer these questions, then you need to go back to the drawing board and come up with another business idea.
  5. Develop Your Business Plan: You must plan for success; it will not just happen to you. You need to write a business plan, so that you can think through how you are going to run your business. It is very helpful to think through what happens when a sale is made and how many sales you will generate each month to meet your revenue goals. Don’t be one of those business owners who spend more time working on their logo than on developing a business plan. Use business plan software such as www.enloop.com to get started. Then, enroll in a business plan course to finish it. Check out http://www.bplans.com for hundreds of sample business plans that you can review for free. Don’t forget to use your business plan to run your business; in fact, it should be updated every 2-3 months to make sure your business is on the right track.
  6. Launch Your Business While You Are Working: Ninety percent of all small businesses get business from referrals, which means the person in the cubicle next to you is likely your first customer or first referral source. Take the next twelve months to build and reconnect with your network, research your target customer, and make sure you define how you will be different in the marketplace.

Work out the kinks in your business model while you still have a paycheck, if you can. You’ll be glad that you took the time to plan before jumping out there full-time in business.

Are you thinking about starting in business in 2013? What are you struggling with in your planning?

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She writes a weekly column for the New York Times, and hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for today’s entrepreneurs. She also publishes a resource blog  http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works and the ebook How To Become a Social Media Ninja: 101 Ways to Dominate your Competition Online.

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SmallBizLady’s 5 Favorite Posts of 2012

By on January 1, 2013 in Become Your Own Boss Tips, Business Inspiration

ME 4 200x300 SmallBizLady’s 5 Favorite Posts of 2012I blog for the people. I have wanted to be a professional writer since the 8th grade, and I feel blessed and privileged that I am able to live my dream. I love telling great stories about small business owners who work hard every day. My mission is to end small business failure so am thrilled to share all I know to help you succeed as your own boss on this blog. My occupation is also my passion. 2012 has been the best year of my life and career. I had the opportunity to fulfill a lifelong goal to become a writer for the New York Times, I have worked with a dozen new Fortune 500 companies on social media consulting projects and I travelled to Lyon, France to participate in the World Entrepreneurship Forum. Here are my 5 favorite articles that I have written this year. Enjoy.

How Twitter Changed My Life NY Times June 8, 2012:  My Twitter activities have helped me make money online and offline, develop lifelong friendships and find some of the best staff members anywhere. It’s all about understanding the Twitter rules of the road. You must listen first, add value to the conversation, and then build your community — all before you can create commerce. As a matter of fact, if you do the first three really well, you will not need to sell at all. Your target customer will beat a path to purchase your product, book, services, workshops or whatever you sell. It’s all about engaging in conversations that add value for your target customers or cause.

5 Things You Could Do Today To Generate a Sale. May 1, 2012:  The most common question I’m asked is, “How can I generate more sales in my business, store or restaurant?” After counseling so many people, I thought that it would help more people if I just wrote it down. You all made this post one of the most shared last year.

10 Best Productivity Apps for Small Business Owners Oct 15, 2012:  When you hang your shingle and open for business, you immediately take on at least 10-14 different roles in your business. It’s easy to become overwhelmed, but there may be a better way to do some critical tasks. Think: technology to the rescue! These are my 10 most favorite apps that will make you a lot more productive. Many of them are free, some charge a small fee, but all are worth the investment.

12 Ways to Use Video to Grow Your Small Business Aug 6, 2012:  Video is going to be huge in 2013. Everyone needs to figure out how to use video messaging in their businesses. YouTube is the second most searched site on the internet. If you want to stay relevant online with your small business, you will need to start using video as part of your ongoing content development strategy. Video can also give you a competitive advantage in the marketplace.

If Pinterest is Your Interest July 26, 2012:  Pinterest is the fastest growing social networking site. If you are targeting women customers or have great images, Pinterest could be worth adding to your marketing mix in 2013. It’s a content sharing social media site that allows members to “pin” images, videos and other objects of their favorite events, hobbies, interests—you name it—to their pinboard. You can follow and like other people on Pinterest, as well as browse their pinboards to share your interests. Powerful visuals are a great way to attract clients.  You can also receive inspiration from others’ pinboards and discover new things. As a small business owner, you can use the popular site to brand and market yourself in innovative and creative ways.

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is America’s #1 small business expert. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing to fulfill her mission to end small business failure. She writes a weekly column on social media for The New York Times. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also the bestselling author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works and her latest ebook How to Become a Social Media Ninja; 101 Ways to Dominate Your Competition Online.

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