25 Places Your Small Business Can Fail

by Jim Smith on May 29, 2017 · 0 comments

25 Places Your Small Business Can Fail

25 Places Your Small Business Can Fail

 Here are twenty-five places where your existing small business can fail in this changing economic climate. If any, or worse yet, several of these are happening to your business, you need to get advice from a small business counselor. Check your local chamber of commerce or your local Small Business Development Center or local office of SCORE, if you’re in the USA, to see whether free counseling is available for you.

1. Business plan

Your business plan is several years old and has never been revisited.  The changing economic climate has rendered your initial assumptions no longer valid.  It is now time to modify the plan and rerun the financial projections.

2. Your favorite customer

We’ll agree that this is the small business customer who brings in the most revenue and profit and gives you the least trouble.  You would like the majority of your customers to be like this one but you are not sure of the profile of this particular customer.

3. Your target market

This is the market that you want to sell your products and services to and it includes the set of those favorite customers defined above. Identifying the target market is an essential step in the development of your marketing plan.

4. Profitable products

Some products have high profit margins and also have high inventory turnover.  These are the products that you want to concentrate on moving.

5. Inventory turnover

Your inventory turnover is a measure of the number of times your inventory is sold or used in a time period such as a year.   You would prefer to turn the inventory as many times as possible because you are then not tying up excess capital in unsold inventory. 

6. Your business credit cards are maxed out

Using a business credit card to fund your small business is very risky.  If you fall behind on your payments and your credit score can get zapped.  If you try to pay just the minimum each month, you could create a hole you’ll never get out of.  You need to use your business credit cards responsibly so you can shore up your cash flow.

7. Cashflow

The amount of cash or cash-equivalent your company receives or gives out by the way of payment(s) to creditors is your cash flow.  If this is a positive number at the end of the period, then you have enough cash to pay your bills.  If this number goes negative, you are forced to borrow cash to be able to pay expenses.

8. Vendor terms

Most vendors give discounts for your paying their invoice within a certain period (typically 30 days).  If you can pay attention to these terms then your payables can be better managed.

9. Accounts receivable

Accounts receivable is the money owed your company from customer to whom you  granted credit.  If it’s too high because you are too lax in collecting what’s owed, you may soon be struggling to find the cash to pay the bills.  If it becomes too low, you may be unwisely harming customer relationships or not offering competitive payment  terms.

10. Marketing campaigns

Every marketing campaign has a budget you need to estimate your return on investment of that campaign.  You need to think through and estimate the results for the important metrics of the campaign. How many people were exposed to the campaign creative, how many took action and what is needed to move those to become customers.  In the end you need to know the number of units sold and the profit from each of those.

11. Listen to your customers

There’s nothing that is more effective for improving the quality of your product or service than listening to your customers.  Just asking customers what they think or feel is a good start.

12. Market Prices

The price you charge for your product or service is one of the most important business decisions you make. If the price is set too low, it can limit your business growth.   If it is set too high, it could cause serious problems for your sales and cash flow.  Prices and sales levels should allow your business to be profitable. You need to understand where your product or service stands when compared with your competition.

13. Your value to your customers

If your  customers don’t perceive that your offering is worth what they’ve paid for it, they’ll take their money to a competitor who offers better value. Understanding what customers value and what drives them to do business with you is critical to your success.

14. Why do customers buy a particular product

Your answer to why customers buy a particular product or service may well be because of its high quality, its functions, its price or the accompanying customer service. It is crucial to understand what is really unique about what you’re selling that makes people come to you?

15. Sales and closing the sale

You must start by helping your customers identify their needs and then demonstrating that your product or service offers an affordable solution that addresses those needs. With that foundation, a good closing will help you cement the deal and grow your business.

16. The competition

You need to know who your competitors are, and what they are offering.  This helps you to make your products, services and marketing stand out. It enables you to set your prices competitively and helps your small business to respond to rival marketing campaigns with your own initiatives.

17. Why are you better than your competition

Your value proposition (VP) tells your customers how you provide value in a way that nobody else does.

18. Your website.

Your website design needs to be responsive or that you have one website that is coded to adapt to all screen sizes, no matter what the device the website’s being displayed on. You also need your website content to reflect thwe business your are in and the keywords and phrases to reflect the business problems that your customers are thinking about.

19. Search Engine Optimization.

SEO  is the process of getting traffic from the “free,” “organic,” “editorial” or “natural” search results on search engines.  When people google your company or your product, you want your name to be at the top of the list.

20. You spend money on advertising but can’t tell if it is working

To measure the effectiveness of your ad you need baseline data like your store or website traffic before you ran the ad., your sales volumes, and the sales increase for the products or services you advertised.   If you aren’t measuring, you’re probably throwing money away.

21. Most of your business comes from a couple of large customers

If you let one or two customers become too large a part of your business, they can effectively own you.  If you don’t do what they require you can end up losing a substantial percentage of your revenue and profit and it will be extremely difficult to recover.

22. Product displays and product placements.

There is a definite science to placing products in your retail stores, and the better you are at doing it, the more sales and more profit you will make.  In today’s digital world it is also very critical to place products correctly on web displays or in social media posts.  Remember that your web site or social media page is just another outlet of your physical storefront.

23. You neglect to share your passion and your vision with your employees

In every communication with your employees, you should share your passion for the mission and vision of the organization.  When employees see how engaged and committed you are, they  believe in the organization as much as you do.  You want your communication to prove that you care about the products or services you offer as well as your employees, and your customers.

24. You and your employees do not operate as a team

Your employees must be able to work together as a team to ensure success for themselves and your small business.  It is your job as the owner and chief executive to be the team leader and ensure that employees are working effectively and efficiently as a team.

25. Your location is hard to get to and you have minimal foot traffic

The presence and movement of people walking around in a particular space is called foot traffic. The higher the foot traffic the more the chance of more visits to the retail space and more possibility of higher sales.  In today’s digital world, foot traffic translates to web traffic and the more people who visit your site or your social media pages, the better the chance to convert some of them to sales.

If you can think of any other places that you know of and that I have neglected to list please leave a comment.

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