6 Reasons Your Small Business Will Fail (And How to Avoid Them)

Forbes reports an even more grim statistic, based on Bloomberg research, that of every 10 businesses, eight fail within the first 18 months. What are the reasons businesses fail to thrive, given a 50/50 chance of survival and assuming a product or service for which there’s a demand? Let’s discuss six reasons businesses fail and some ways you can avoid business failure.

Six Reasons Businesses Fail 

1.  Leadership Failure.

Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff, or the vision to lead your organization. Perhaps your leadership team is not in agreement on how the business should be run. You and your leaders may be arguing with each other publicly, or contradicting each other’s instructions to the staff. When problems requiring strong leadership occur, you may be reluctant to take charge and resolve the issues while your business continues to slip toward failure.

How to Avoid Leadership Failure: Dysfunctional leadership in your business will trickle down and affect every aspect of your operation, from financial management to employee morale, and once productivity is hindered, failure looms large on the horizon. Learn, study, find a mentor, enroll in training, conduct personal research – do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business best practices and see which ones you can apply to your business.

2.  Lacking Uniqueness and Value.

You may have a great product or service for which there is strong demand, but your business is still failing. It may be that your approach is mediocre or you lack a strong value proposition. If there’s strong demand, you probably have a lot of competitors and are failing to stand out in the crowd.

How to Avoid Value Proposition Failure: What sets your business apart from competitors?  How do you conduct business in a way that is totally unique? What are your competitors doing better than you are? Develop a customized approach or service package that no one else in your industry is using so you can present it as a strong value proposition that attracts attention and interest.

This is how you build a brand. Your brand is the image your customers recognize and associate with your business. Your brand identity, including your logo, tagline, colors, and all the visible aesthetics and business philosophies that represent your company should be supported by your value proposition. It should separate you from the pack and present your individual perspective to your customers. Do everything you can to present that unique value proposition to your market so you can capture a market share and begin building your conversion rates.

To publicize your brand and set yourself apart, you will also need to step up your marketing plan and use as many venues as possible to present your brand to the public. You may be far better than your competitors but that won’t make any difference if your prospects don’t even know you’re in the game. Use social media, word of mouth, cold calling, direct mail, and other tried-and-true marketing techniques. Ensure you have a well-optimized online presence, develop lead generation and contact information capture techniques such as offering high-quality content on your site, a subscriber newsletter, and information giveaways.

Many have always believed that the best jobs are being a sports star or a celebrity. However, in reality, there are much more incredible jobs out there. Here we list just a few!

3.  Not in Touch with Customer Needs.

Your business will fail if you neglect to stay in touch with your customers and understand what they need and the feedback they offer. Your customers may like your product or service but, perhaps they would love it if you changed this feature or altered that procedure. What are they telling you? Have you been listening? Or is the market declining? Are they even still interested in what you’re selling? These are all important questions to ask and answer. Maybe you’re offering a product or service that is fallen well below trend.

How to Avoid Losing Touch with Customers: A successful business keeps its eye on the trending values and interests of its existing and potential customers. Survey customers and find out what their interests are and keep abreast of changes and trends using customer relationship management (CRM) tools. Effective use of CRM can help keep your business from failing.

4.  Unprofitable Business Model.

Akin to leadership failure is building a business on a model that is not sound, operating without a business plan and pursuing a business for which there is no proven revenue stream. The business idea may be good but failure may come in the implementation of the idea if there are no strategic guidelines in place.

How to Build a Good Business Model: Research and review the way other businesses in the industry operate. Develop a complete business plan that includes financial forecasting based on predictable revenue, strategic marketing, and challenge management solutions to overcome potential obstacles and competitor activities. Create a milestone chart with specific tasks and objectives assigned along the timeline so you can measure success, solve problems as they occur, and stay on track. A sound business model that incorporates best practices can help your business avoid failure.

5.  Poor Financial Management.

SmallBizTrends.com, a business news resource, offers this infographic which states that 40% of small businesses make a profit, 30% come out even, and the remaining 30% lose money.

You must know, down to the last dime, where the money in your business is coming from and where it’s going in order for your business to succeed. Your business can also fail if you lack a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis. Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure.

How to Avoid Financial Mismanagement: Use professional business accounting software to keep records of all financial transactions, including every expenditure and all revenues received, and use this information to generate profit and loss statements. This is valuable information that you need to run your business, know where you stand at all times, and keep it operating in the black. If you lack skill in financial management, consider hiring a tax advisor and professional bookkeeper or certified public account to help manage your financial affairs.

6.  Rapid Growth and Over-expansion.

Every now and then a business startup grows much faster than it can keep up with. You open a website with a trending product and suddenly you are inundated with orders you are not able to fill. Or perhaps the opposite is true. You are so convinced that your product is going to take the world by storm that you invest heavily and order way too much inventory and now you can’t move it. These are both additional paths to business failure.

How to Avoid Growth and Expansion Problems. Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Even well-established and successful commercial franchises such as fast-food restaurants and convenience stores conduct careful research and planning before opening a new location. They measure local and regional demographics and spending trends, future development plans for the area, and other pertinent issues before they move forward. You must do the same for your business to avoid failure.

Conduct thorough research to ensure the time is right and the funding is available for expansion. Make sure the initial business is stable before expanding to an additional location. Don’t order inventory you’re not sure you can sell but have a plan already in place to fill orders quickly should the demand present itself. The key to successful growth and expansion—and avoiding business failure—is strategic planning.

If 50% of new businesses fail, then 50% of new businesses can succeed. Starting a business is an exciting endeavor that requires a clearly defined product or service and a strong market demand for it. Whether you desire to start a new business or you’re already running a business, you must understand that success depends on careful strategic planning and sound fiscal management that begin prior to startup and continue throughout the life of the business.

Understanding the Difference Between a Bot, a Chatbot, and a Robot

Spindiv Kinetics | bot

First, let’s tackle the elephant in the room. Bots are not robots and they don’t symbolize the end of marketing or sales as we know it. The definitions of each of these terms help us understand why.

What is a bot?

According to Merriam-Webster, the definition of a bot is “a computer program that performs automatic repetitive tasks.” To expand on this definition, bots also act as the primary tool for automating interactions and engagement with website content on a large scale.

Bots on the internet is not a new concept. Search engines like Google extensively use bots, often known as web crawlers, to analyze content and index the web. The use of a bot in their case allows sites to be cataloged much faster and more scalable than humans could accomplish alone.

Like all technology, bots can certainly be misused. We see examples of this in internet attacks, spammy social media accounts, and the arena of online shopping reselling. These “botnets” tend to give bots a bad name and inspire negative, malicious connotations.

When thinking about bots, however, it’s important to maintain perspective. Bots are a software that are becoming easier to implement. They can serve a variety of purposes and what they ultimately accomplish is dependent on the humans that control them.

What is a chatbot?

A chatbot is a type of bot designed to interact with humans conversationally, based on its programming. They automate the process of interacting with your website visitors and social media followers in an attempt to create the best user experience. Ideally, this helps your site maintain the presence of a helping hand, even when you or your team can’t respond.

But it’s exactly this human-like quality of chatbots that makes them uncanny. It gives rise to notions of “creepy chatbots” and makes the differentiation between bots, chatbots, and robots even more important.

What is a robot?

The definition of a robot is diverse. A quick look-up reveals entries such as:

  • a device that automatically performs complicated, often repetitive tasks (as in an industrial assembly line) ex: the use of robots in car manufacturing
  • a machine that resembles a living creature in being capable of moving independently (as by walking or rolling on wheels) and performing complex actions (such as grasping and moving objects)
  • often: such a machine built to resemble a human being or animal in appearance and behavior
The similarity that connects each of these definitions is the emphasis on the physicality of robots. To expand on this, we can start to think about a robot as a physical machine designed to execute a physical job, based on its programming. Unless you’re in the manufacturing industry, this type of technology doesn’t necessarily align with what you’re trying to accomplish in the world of online marketing and sales.
So besides an appreciation for the nomenclature of different automation tools, what does understanding the difference between a bot, chatbot, and robot do?
It allows you to take a step back and see how each piece of software fits into the larger picture. Robots and bots currently operate in very different spaces. While machine learning and AI for one may inform the other, the purpose and use of each is unique.
Advances in chatbots don’t mean robots are taking over the world. The purpose of a chatbot isn’t to completely replace the humans on your marketing and sales team. Indeed, chatbots today should only be used in your marketing or sales efforts in areas that situationally make sense for your buyer persona and your content.
As people start to shift toward new ways of interacting and technology continues to advance toward new ways of automating, well, everything, it becomes increasingly important to take stock of all potential opportunities. You’ll discover some methods and conversion paths don’t perfectly align with what you’re trying to accomplish. On the flip side, you could uncover new ways of interacting with your website visitors and making their experience that much better.

How to Create and Execute a Successful Lead Generation Strategy

To highlight the importance of a powerful lead generation strategy, we are going to backtrack a little bit first. Are you familiar with the analogy of the professor who presented his class with the challenge of trying to fit rocks, pebbles, sand, and water into a jar as efficiently as possible?

By prioritizing the biggest items and placing them in the jar first, he was able to optimize the amount of space used. Your business should take a similar mindset when implementing lead generation tactics into your inbound marketing strategy.

The Rocks, Pebbles, and Sand of Inbound Marketing

Like the professor who challenged his class to neatly fit rocks, pebbles, and sand into a jar, your inbound marketing strategy consists of rocks, pebbles, and sand. Here’s what I mean by this.

What are the large rocks that are the most essential to your strategy? What are the pebbles that serve as secondary, supportive tools for your business? What small stuff or distractions are the “sand” of your business? Most businesses would argue that their customers are their “rocks.”

While it is indisputable to say that customers are essential to any business, I want you to instead think of them as the water that was used to finally fill the jar. The water was poured in only after everything else was firmly compacted in the jar. Your business can benefit from taking this same mindset in your inbound marketing strategy.

The 4 L’s of a Lead Generation Strategy

Your content is your rocks. Compelling content plays a huge role in generating leads. This includes the tools used to generate traffic, such as your blog, SEO, PPC, and social platforms.

Approximately 96% of business-to-business customers want content from industry thought leaders to inform their buying decisions. Creating compelling content is your key to establishing yourself as that go-to, educational leader in your industry.

You know what they say: you can catch a lot of flies with honey, but you can catch more honeys being fly. Try that cliche in a bar and it might end with a drink thrown in your face, but adapting that mindset in your inbound marketing strategy could not only improve lead generation rates but also increase the number of qualified leads your business attracts.

This article will focus primarily on the step that comes after your rocks are in place -– your pebbles, or the best practices for generating leads using your content. You will quickly understand how companies that are hopping aboard the content train are generating 67% more leads per month than those who don’t.

1. Lead Capture

Odds are that about half of your visitors will never return to your site if you do not adequately capture some bit of information from them. A working email address is the best thing a marketer can ask for here, but visitors are not always willing to give this kind of personal information up. Call-to-action buttons like “Sign up here” have practically become synonymous with “We are going to spam you,” which is why marketers need to find new ways to obtain this information.

Nicholas Kusmich, a Strategic Marketing Consultant and Facebook Ads Specialist, suggests a new rule of thumb for obtaining visitors’ information. Kusmich suggests 2 golden rules be taken into account:

  1. We must give before we ask.
  2. Every step of the marketing process (advertisements and promotions) must be valuable in and of itself.

Kusmich goes more in-depth with these concepts in his article, “2 Golden Rules for The New Era of Marketing,” but for now let’s focus on that first rule.

Can you believe there was once a time, many years ago, where the opt-in email box was practically a luxury? It meant all the information you wanted would be delivered right to the comfort of your home. “What a time to be alive,” we all thought. That day is now long gone. We now find ourselves fending off information from all angles.

Somewhere between installing pop-up blockers and dumping our spam folders, we made an oath to never “Sign up here” again. It is time marketers start gradually breaking down those walls that potential buyers have put up, by using new, mutually-beneficial opt-in methods to acquire their information. The best marketing method for this technique of “giving before we ask” includes using lead magnets.

2. Lead Magnets

A successful client lifecycle requires optimizing the process for converting visitors into leads. Unfortunately, a hole exists between the traffic generation phase and the lead generation phase that often results in one-time visitors who neglect your attempts to capture their information and never hear from you again.

You can seal up that hole with lead magnets. Lead magnets are tools that provide value for your visitors in exchange for their contact information. Businesses use lead magnets such as email opt-ins, subscriptions, and social media follows to fish for some sign of interest from their site’s visitors.

The goal of this is to receive permission from visitors to follow up. Some examples of lead magnets include free:

  • Training video series
  • Free trial
  • Webinars
  • ebooks
  • Whitepapers
  • A set of bonus tips
  • An interview with an expert on a relevant topic

These free-of-charge educational tools will confide your visitors in your offering, allowing you to both obtain their email address and educate them on your business.

3. Landing Page Conversion Techniques

Another huge asset to your business when trying to convert visitors into leads are landing pages. This can be any page that someone lands on after clicking on an advertisement or other online marketing elements. It is also important to note that landing pages exist separately from your company’s website, and typically are used as a tool for a single marketing campaign.

A free, basic course on creating successful landing pages can be found on thelandingpagecourse.com. You can also learn lots of landing page tips and best practices from blog posts on landing pages. We will go over some of the basics of effective landing page design right now, but definitely check out those resources later on for a more in-depth breakdown of the different components involved.

Landing pages serve the dual purpose of capturing leads and warming up potential customers. Both of these are essential stepping-stones before moving a customer further down your sales funnel. Additionally, there are two types of landing pages:

Lead generation landing pages are used to capture a user/company’s information in exchange for something. This relates back to the concept discussed earlier, of “giving before we ask.”

Click-through landing pages are used to attract the visitor to the specific product or service that you are trying to sell. The goal is to educate your visitor with enough information that they proceed to make a purchase.

Landing pages have one call-to-action in mind. Instead of overwhelming visitors with information regarding your business and all the products and services you offer, it is essential that you narrow the focus down to one specific goal in mind. Be sure to cut out any excess information that isn’t essential to the campaign, and be sure to include only one form or call-to-action link for them to utilize.

The most important element of your landing page is that it delivers the promise that your ad source made. If your ad says “Get 50% off computers here,” you need to reassure the visitor as soon as possible on your landing page that you will deliver that.

One way to do this is to make the call-to-action on your ad source the headline on your landing page. Another way is to make sure the font, coloring, and images used in your ad are duplicated on your landing page to some degree.

4. Lead Scoring

Lead scoring is a component of marketing automation software that helps prioritize your leads according to their levels of engagement with your inbound marketing content and ultimately help you figure out who is ready to buy. It can also help you identify what they are interested in if setup correctly.

This technique is used to quantify interactions that prospects have with your content by assigning points for different types of engagement. An example of the different types of engagements and their point values might look like this:

  • Download an ebook – Add 5 points
  • Watch a product overview video – Add 7 points
  • Job role not a good match – Deduct 10 points
  • Fill out opt-in form – Add 7 points
  • Unsubscribe from a list – Deduct 7 points

Surprisingly enough, 79% of B2B marketers have not established a lead scoring strategy. Lead scoring provides your company with real-time feedback on how responsive your leads are to your marketing efforts. It can also indicate people who are ready to buy from you but haven’t yet been in contact with you.

This point-based approach to recognizing and analyzing a company’s hottest leads will save your business time and money when reaching your target market and capitalize on sales opportunities. With your hottest leads identified, your business can communicate with these leads confidently knowing that they are already aware of and interested in your business.

Lead generation plays a role in every business’s marketing strategy. Think about how many business’s sites you have visited since the dawn of the internet that you will never return to again. Not only did those businesses fail to capture your attention at that given time, but they failed to reconnect with you in the future.

This is a result of neglecting the lesson discussed in the jar analogy –– prioritizing the different elements of your marketing strategy so that a foundation is in place for you to build an efficient and effective approach around.

With your content in place, your business can begin using lead magnets, lead capture, effective landing page design, and lead scoring to optimize lead generation rates and create an overall better performing inbound marketing strategy.