America’s greatness is not built on the huge corporations of Amazon, Apple, and Google. It’s built on the small businesses of this country, which make up 99.7% of all business in the US.
The chances are you run a small business. But without huge corporate profits, you face a great number of challenges.
We’re going to show you how you can overcome some of the most common ones.
Cash Flow Problems
Did you know that 82% of small businesses fail because of cash flow problems?
That’s not a failure in a business concept. It’s a failure as a result of poor money management. Many bigger clients only pay invoices after 90 days, so it can create a big problem.
And it’s a surprisingly simple problem to avoid. Knowing your regular expenses and understanding when money is arriving can save your business. A simple spreadsheet is all you need for this.
Finding Customers
Finding new customers is a problem for household names, so it’s definitely a problem for small businesses that don’t enjoy that brand recognition.
The fact is 80% of businesses fail after five years because the customers aren’t coming in and they aren’t paying what business owners need to stay afloat.
The way to solve this is to be more specific in your marketing. Craft your image of the perfect customer and market with them in mind.
Stop Customer Churn
Customer churn is the rate at which a new customer enters and an existing customer leaves. Reducing customer churn is the mark of a company that creates brand loyalty. And in the long-term, this is the essence of success.
Research shows that increasing customer retention by 5% can increase profits by up to 70%. These are huge numbers we’re talking about.
Focus on creating relationships with your customers.
For example, build an email list. Concentrate on social media channels. Spend time interacting with your existing customers and listening to their concerns.
Focusing on Quality Over Growth
Quality is always important but becoming a perfectionist can ultimately cripple a small business. Some entrepreneurs spend so much time and money on perfecting a product instead of growing their business that they go broke.
Your product doesn’t have to be perfect. You can provide updates later. The important thing is to create an acceptable, marketable product and get it into the open so you can start generating revenue.
Protect Your Credit
Failed businesses rarely collapse in a blaze of glory. It happens slowly. 30-day payment periods turn into 90-day payment periods and then the game of “Who can we avoid paying for longer?” begins. It’s a slow decline that eventually sees your credit getting destroyed.
This isn’t an argument against credit. It’s an argument against credit for the purposes of survival.
Again, this is where good financial management comes into play and learning how to budget effectively, as well as building up your cash reserves.
Last Word – Every Business is Different But…
Every business might be different, but the reasons for failure usually fall into the same category. Look at these five problems and jealously guard against them.
What’s the main problem facing your business?
