The Myth of Small Business Failure
Even hard work and perseverance don’t guarantee your business will survive
“I guess having my own business is better than working for someone else. At least I get some perks for being the boss.”
That is what I used to tell myself years ago when I owned a business in another industry. Like everyone else, I had good days and bad, but I didn’t like to think about the future. Besides, I figured it was best to focus on the day at hand or there would be no future to worry about.
Unfortunately, what I didn’t know caught up to me. After eight long, exhausting years, I decided enough was enough and closed the doors.
As I look back now, I see what happened. Though it’s critical to focus on each day, it is also important to think about the future and to plan for it. If I’m honest about what happened years ago, I would have to admit my plan for the future boiled down to one word: hope.
Now I see it all the time — business owners who think if they can keep the doors open long enough, everything will be okay. But it doesn’t work that way at all.
The Real Reason for Business Failure
Most of us have heard that if we can survive the first few years in business, our chances for success increase. In today’s society, startups are risky ventures that come and go as quickly as Top-40 hits.
But a little research reveals that staying in business for a year, or even a few years, isn’t that difficult. It may surprise you to know that the longer you’re in business, the more likely you are to fail — and there is proof.
According to the U.S. Bureau of Labor Statistics, only 20% of businesses close down after one year. A whopping 70% survive through year two.
This is in stark contrast to what we have heard about small business failure rates.
Now, for the truth:
Seven in ten small businesses close their doors by year 10.
You would think that after ten years, these grizzled veterans would know how to survive in the market. Yet 7 in 10 of them find themselves pinned to the mat crying “Uncle!” after a decade of shedding blood, sweat, and tears to make their dream a reality.
But the reason they call it quits is not always obvious.
They had a great idea. They worked hard. And most of them did fantastic work.
So why do these business owners finally decide to throw in the towel?
Because they realized their businesses weren’t giving them the joy and freedom they envisioned having when they started.
Most small business owners work hard, run ragged, and make sacrifices to keep the dream alive.
And things go well for a while — until they realize they rarely ever get to live the dream they have been chasing.
Most think if they can keep going long enough, they will be able to hire more help, raise prices, or take a little time off. But that day never comes.
It’s never easy or convenient to commit the time and money to grow your business. And the longer you’re in it, the harder it is to let go. That is why it is so important to start planning for the future as early as possible.
Why Will Your Business Fail?
In a survey of 101 small businesses, respondents gave the following reasons for failure (the number reporting expressed in percentage):
- No market need for their services or products (42%)
- Ran out of cash (29%)
- Did not have the right team running the business (23%)
- Were outcompeted (19%)
- Pricing and cost issues (18%)
- Poor product offering (17%)
- Lacked a business model (17%)
- Poor marketing (14%)
- Ignored their customers (14%)
Are you currently struggling with any of these? If so, you run the risk of becoming a statistic.
But the good news is your business doesn’t have to suffer an end like the ones in this survey.
If we examine this list, it’s possible to condense the reasons down further. The common denominator for many of these problems is rooted in one primary issue.
This ONE THING Can Help You Avoid Business Failure
Have you ever wondered why some companies are able to charge more and thrive while others fight for the next sale?
Somehow, these elite businesses manage to develop a reputation for excellence, quality, and value. They are the crème de la crème, severing as a model for all others in their niche.
Many people think these companies achieve this because of good timing or luck. But this how they did it.
It’s because they did things their competitors didn’t. They remained consistent while following an intentional, results-driven process.
The good news is you can do this too.
With a brand strategy.
A brand strategy is a plan comprised of specific short- and long-term goals designed to differentiate a business from its competitors.
Branding helps position a business as the ideal choice in the minds of their customers. They deliver higher perceived quality and value. They also stay true to their brand promises throughout the entire customer experience.
This requires diligence, determination, and discipline. But aren’t these the usual ingredients for most success stories?
A brand strategy can be the one thing that helps you avoid business failure.
Business owners often become distracted with the latest marketing “hack” to get sales. These are tactics like social media ads, marketing systems, SEO tricks, and discounts. They may work for a few weeks or even a few months. But eventually, they quit working or an algorithm shuts them down altogether.
Shortcuts only work until everyone else finds out about them and starts doing them too.
Premium brands use time-tested strategies that have helped successful companies grow for decades. These work as well today as they ever have, maybe more.
To build a successful brand, you must find what works for you and leverage it to grow your business.
There is a target audience out there right now looking for your products and services. To attract more buyers, create an offer they can’t refuse. Develop a message that gets them excited about your business and meet them where they are.
Many business owners jump straight into marketing, trying to make as many sales as they can. Unfortunately, they haven’t built an irresistible offer that will thrill their customers.
Premium brands build powerful offers and create messages that attract better customers. But most of all, they deliver on a high level, every time. That is why they thrive while other businesses scratch and claw for the next piece of the pie.
Premium brands build offers and create messages that attract the right customers. That is why they thrive while other businesses scratch and claw for their piece of the pie.
Now, let’s look again at the list of reasons for business failure. From that list, we can identify no less than six that could have been avoided with strategic branding.
1. No market need for their services or products. Branding positions your business as the ideal choice in the mind of your customer.
2. Were outcompeted. Branding leverages your strengths and defends weaknesses to set you apart from competitors.
3. Pricing and cost issues. Brand differentiation increases your business’s perceived value. This makes price less of an obstacle to overcome.
4. Poor product offering. Branding uses the power of story to connect with your audience. It also helps you build a fantastic offer that delivers on many levels.
5. Poor marketing. Branding lays the foundation for marketing. as a result, many businesses have seen revenue increase by as much as 23%.
6. Ignored their customers. A brand strategy is customer-focused, making it impossible to ignore them.
It could be argued that the other three not listed (ran out of cash, did not have the right team running the business, and lacked a business model) could also have been avoided with a brand strategy.
Many business owners think that if they keep showing up and doing the right things, everything will be okay — one day. But that day never comes.
The longer you’re in business, the more likely you are to fail. To avoid that fate, you must find a process that works for you. A brand strategy can help you do that.
Until next time,