It’s been estimated that 8 out of 10 small businesses fail within the first 18 months. It’s a new year; will yours be one of them?
At Capital Alliance, we certainly hope that yours isn’t. In fact we’re here primarily to help your business survive by providing one of the most vital elements that can make or break a business—access to capital—more on that later.
Another way Capital Alliance helps is by providing a wide variety of information that is useful for business owners, whether it be over the phone with one of our Financial Consultants or right here on our blog. In our first blog post of the New Year we’d like to talk about 6 things that you might be doing that could be harming your business. If you’re guilty of any of the following, you could unknowingly be contributing to the eventual failure of your business. Recognize these mistakes early and you will be able to make corrections and take a huge step to keeping your business healthy for the long term.
Failing to Take Advantage of New Marketing Strategies
The good old reliable phone call isn’t close to being obsolete just yet, but with so many new ways of reaching out to someone, answering a ringing phone is starting to garner a reputation for being a somewhat obtrusive nuisance that annoys many people. Culturally we’re becoming accustomed to more subtle forms of communication that don’t necessarily demand quite as much immediate attention as a ringing phone does. An ever increasing amount of people are starting to prefer being marketed to in ways that allow them to digest and react to your marketing message at a time that is more convenient to them. New school methods such as SMS broadcast, email, or social media advertising are gaining significant popularity as a result. Don’t stop using the phone by any means, but increase the effectiveness of your marketing strategy by taking advantage of all the new ways available to get your communications to the masses.
Taking Your Customers for Granted
Always keep in mind that your customers are your business’s lifeblood; if it wasn’t for them, your business would fail more or less instantly. It is highly recommended that you make it a priority to really know and love your customers. Loving them is pretty simple; showing appreciation to your customers is fairly straightforward. But do you really know them?
Most business owners will probably say that yes, of course they know their customers. Assuming that you already know everything about your customer is an attitude that can be detrimental to your business. Adopt an attitude that there is always more to know about your customers; you’re always in a position to learn more about them. Customer tastes change often and very quickly, and your competition is constantly doing whatever they can to lure them away from you. So know all you can about them, and show your appreciation for their patronage.
Spreading Yourself Too Thin
A small business owner that starts out operating their business by themselves knows how this feels. And for those that still do, this advice is largely for you. You already know that it’s an unbelievable amount of effort to run your own business. You may have even quit a 40 hour a week job just to end up putting in 70-80 hours into your own business. And that’s not necessarily a bad thing because you most likely stopped doing whatever it was you were doing for a living before in order to pursue something that you loved doing more. When you spread yourself too thin, many times it is because when you operate your own business you’re the only one responsible for the boring day to day minutiae that must be done; having to perform tiresome tasks that take you away from the core activities that you love so much that drove you to even start the business in the first place. This may cause you to lose sight of why you started your business in the first place , and you may start to dread it instead of love it. And business owners that have one or more employees are not immune to this; these business owners may still be understaffed and end up taking on much more than what is recommended.
So what’s the solution? The conditions may not be right for you to hire full-time employees, especially if your business is just starting out. But there are affordable alternatives you can take advantage of. Temp agencies might be a solution if an unmanageable workload is only a short-term problem. And the internet has spawned numerous freelance contractors that can help you with things like marketing and basic accounting at a very cost-effective price.
Improperly Managing Employees
Let’s say that your has business grown to the point where it does make sense to hire employees. No matter how good your vetting process is, over time you will most likely end up with a mix of two general types: good employees and bad. How you handle each type can make or break your business. You should always strive to keep employee morale positive and take legitimate employee concerns seriously. This will help keep your good employees happy and working efficiently. Correct or remove bad employees from the equation as quickly as you can identify them before they negatively influence your good employees. As they say, one bad apple can spoil the bunch.
Over-planning and Under-executing
Having well defined plans is essential to the success of your business, but taking the time to map out every single minute detail in order to create the ‘perfect plan’ can be detrimental. Launch a plan that’s more like a general framework rather than complete step-by-step guidelines in order to execute it quickly while leaving room for customer feedback. Customer feedback may cause you to re-think carefully laid plans immediately, so taking more time to get every detail defined would therefore be wasteful. And wasting time when planning, with respect to customer’s quickly changing needs and preferences, will significantly increase the chances that your plan will be obsolete by the time you get around to launching it.
Some business owners start a small business and can become rich, but very few rich people start a small business, which means that financing a small business can oftentimes become a challenge for the business owner that does not start with access to significant amounts of capital. Even businesses that are legitimate, healthy going concerns can require an infusion of cash from time to time in order to grow, and in some cases, just to survive when something unforeseen happens, such as the loss of a major client. And in the latter case, what institution is going to lend to a business whose decline and failure is a looming possibility? Don’t wait until it’s too late to try and secure funding.
Waiting until it’s too late isn’t the only complication that can keep a business from being approved for a much-needed business loan. As we’ve talked about in our blog before , banks are increasingly hesitant to lend to small businesses. They just don’t find it profitable to underwrite these types of loans anymore — and at the peril of small business too, which is widely considered to be the backbone of our economy since it provides more than half of all our country’s jobs and nearly two-thirds of all net new jobs over the past 45 years.
As you may already know by now, Capital Alliance is the solution to this problem. We’re in business to help businesses attain funding. Where banks refuse, we approve.
If you’re in need of capital, don’t be the business that waits until it’s too late; contact us today .