|
|
|
By Barry Thomsen
Starting a small business sounds so easy: get a license, name, phone number and mailing and e-mail addresses. You'll get lots of orders, make tons of money and eventually sell-out for millions. But like getting married, it may be easy to get into, but becomes expensive and difficult to get out of if things don't go as planned. If you want to create a successful, lasting business, you must pay attention to what's going on and make necessary adjustments along the way.
Usually, when a business fails, it's due to a combination of factors that build up over time. Rarely does a problem occur that causes the doors to close in 30 days. Here are some of the reasons businesses fail. If you see any of these situations in your business, I suggest you take immediate steps to correct them.
- Poor customer care. Also known as customer service, this is probably the biggest fault of unsuccessful small businesses. Customer care is no longer a benefit, it's expected! And, if it's not received in a pleasant and professional manner, customers will spend their money where they receive better treatment.
- Insufficient marketing. Just opening your store or office, hanging out your sign and saying, “The line forms on the right” is not enough. You must advertise, promote and sell your business to your potential customers. You may have the best product or service, but you can't make money if no one knows about it.
- Owner attitude. Occasionally , you'll find a business owner who thinks that he or she is the king or queen and that everyone (employees and customers) must do his or her bidding. This attitude will ruin a business quickly.
- Poor employee training. Ill-trained customer contact people will frustrate your customers and make them wish they had gone elsewhere. Constantly putting people on hold or leaving them to attend to other tasks makes your company less desirable to do business with.
- Excessive spending. You don't need the latest model of everything when, many times, used equipment will do the job just as well. Lavish business trips and first-class hotels are not for a growing business; save them for your vacation.
- Owner neglect. If you're not a regular presence at your business, you're asking for problems. Even putting a competent manager in charge won't work unless you monitor him or her in person. Numbers alone won't tell you about customer care and training.
- Lack of business knowledge. If you're not running a franchise, you're on your own and you need to know business basics. Read books, take courses or get professional help, because operating a business requires more than just sales knowledge.
- Excessive salaries. Don't over-compensate your employees or yourself while trying to grow a business. Pay fair, marketable amounts to new employees and save raises and bonuses for outstanding performance. People should be compensated for reasons other than longevity.
- Obsolete products or services. If you're relying on the same products that you offered when you started the business, think again. How many people are still playing Pong, using 8-track tapes or wearing leisure suits? Get with the times and find or develop new products or services in your industry.
- Ownership change. The business is sold or passed down to relatives and they think there's a better way to make more money. Cutting services and selling lower quality products is not the answer. Customers have become accustomed to a certain quality level, and if it's reduced, they'll go elsewhere.
- No cash reserve. During boom times, remember to store some resources for the slow times. Invest unnecessary capital in a money market or mutual fund. It will be readily available to meet your needs when cash flow can't pay the bills.
- Inadequate product mix. Do your products complement each other and “wow” the customer? Do you offer items not easily found or displayed elsewhere or is it time to upgrade your merchandising techniques?
- Pricing out of line. Are you trying to make your fortune on a few unsuspecting patrons by charging outrageous prices? Customers will soon wise up and disappear. (This doesn't include being paid-for value-added services where you can justify a higher mark-up.)
- Losing a big account. A small business can't afford to put all its eggs in one basket—if you lose the basket, the entire organization will be in jeopardy. It's exciting to acquire a large account, but don't change your whole business over it and don't surrender to extreme price concessions. Build your company around small and medium customers—if a big order comes along, consider it a bonus.
- Tax problems. Taxes are a fact of life, so you might as well follow the rules and pay them on time. Falling behind on payroll and sales taxes can only result in government pressure, penalties and late fees. Over time, it can grow to an overwhelming amount that can sink your business.
You'll notice that competition and economic conditions are not listed. This is because they are part of “business as usual” for any endeavor. Seldom does a business close because a big competitor moves in, unless it gives up without trying to find its niche and get closer to its customers. In fact, competitors can make your business even better by calling your attention to increased customer care. Most business failures occur because of internal problems, not external. Maybe it's time to look inside your business and see if there are any monsters lurking around.
The following AMA seminars will help you lead your small business to success:
AMA On-site: Every one of AMA's 170+ public seminars can be delivered on-site. This flexible, money-saving option allows you to train ten or more people, when and where you choose, at a low cost per participant.
Author Bio: Barry Thomsen is publisher/editor of Small Business Idea-Letter and Small Business Advisor. For a free sample of the Idea-Letter, email: idealetter@aol.com or call 877-700-1322. On the Web: www.idealetter.com.
|
|
 |
AMA Learning Network |
 |
|
|
|
|
|
