Small Business Blunders
Recent polls, articles and studies are showing a consumer shift toward buying goods produced here in the United States. The average consumer has become substantially more aware of the dollar and how purchasing foreign goods and services affect the sustainability of their local economies. This buyer philosophy is beginning to catch wind in the sails and momentum is building to think local first. Undoubtedly, this shift in buyer sentiment will challenge small businesses and corporations to understand, plan, and deal with an increase in demand. How businesses deal with increased demand will frame their success or failure in the coming years. Here we will discuss some common business blunders that stall business growth and customer retention.
The symptoms
Many of these blunders happen because a small business owner may not completely understand their position or what type of industry they are operating. Businesses operate worst in the extremes; either far away from or extremely close to capacity. Often, these symptoms happen because a business can feel the pressure and understands what needs to happen in order to succeed, but lack the understanding in connecting to the root cause. Here are some symptoms of a business who is not operating at optimal capacity:
ü Attention to detail fades — Invoices are stacking up, the time it takes to get back with a customer is increasing, inventory orders are being placed last minute, business has become overly reactive to demand
ü Capital spending increases — The business begins spending money on marketing, new product lines, staff and capital improvements.
ü Cash cycle increases — With the outflow of spending, cash cycle increases because the business is not seeing immediate returns on investment (ROI).
ü One month busy, next month slow — This cycle is indicative of a reactive business. Successful businesses have leads and business lined up versus reacting to what’s coming through the door.
ü Slow in new customer generation — The business begins relying heavily on past customers in order to operate. An increase or creation of rewards and incentive programs are usually a sign that a business is experiencing this symptom.
The blunders
As pressure mounts inside the business, management can feel that business is not flowing as naturally and freely as it has in the past. A business begins to assess their situation often coming up with the symptoms listed above. Then businesses begin making blunders to react to these symptoms. Below, are some blunders that small businesses begin making as they try to generate growth:
Ø Social media nightmare — Those businesses that are successful in social media were successful outside of this media first and then brought their following to social media. Many businesses spend far too much time and money in trying to generate new consumer growth in social media.
Ø Fractured focus — Businesses begin trying to fix everything. A common saying goes something like this “If you try to fix everything, you really fix nothing.” Focus is crucial in recovering a stalling business. Focus on one opportunity at a time.
Ø Incentives for everyone — A business derives the use of incentive programs to attract old clients or initiate word of mouth business. In nearly all circumstances, these programs are counterproductive to growth.
Ø Advertise everywhere — Marketing and advertising must be done with specific goals in mind focused on a specific audience at a specific place in time for a specific cause… well you get my point. Shotgun advertising is a waste of resources and the ROI is nearly impossible to track.
Ø New product lines — This is what nearly fails all small businesses, during a period of slow business, management will theorize on needing a new product to spark customer growth. New product lines involve marketing, research and development, research on pricing models… None of which a failing business can afford. If you want to sink the ship, try to launch new products when your business is stalling.
How to survive
In nearly all instances, these blunders are generated under the best of intentions. One blunder will lead to the next then the next and so on. For small businesses, education is key. If you cannot readily answer the following questions, chances are, your business is not leveraged as well as it should be.
´ What type of industry are you operating? (Perfectly competitive, monopolistic, oligopolistic, etc.)
´ What is your maximum capacity?
´ What is your largest business problem? (If you think you don’t have a problem, then you’re in even worse trouble).
´ What is your firms target audience?
´ What are your key differentiators?
Surviving in a growing economy is infinitely easier than trying to surviving in a collapsing economy. As the economy continues to recover and expand, keep an eye on the small businesses around you. Those that thrive have identified and overcome the symptoms outlined here. Those businesses that do not survive, without exception, fell victim to many of these blunders. Always focus on being proactive and remaining educated to the world around you.
Clark Lowe is President of Lowe’s LEAD Consulting. With over 11 years of operations experience ranging from the Marine Corps to Gap Inc. and Target, Clark offers unique perspective and innovative solutions for small businesses.
