With the world more accessible than ever before, many blue-sky thinkers are taking the leap into business ownership.
But the harsh reality is that around 80% of small and medium businesses (SME’s) cease trading within the first five years leaving devastated owners with regret over years spent financially struggling and sacrificing family time for little reward or even an ongoing debt burden.
Unfortunately, many of the remaining 20% still in business never reach their full potential, trapping their owners into being “self-employed” always working at the coalface, and falling out of love with the original dream of their business providing fulfilment and financial freedom.
The Trinity Advisory Team of Accountants and Business Advisors have seen it all. We know how difficult it can be to start and successfully grow a business. We've defined a list of the main reasons why some entrepreneurs fail at launching or growing a profitable, successful business.
This is possibly the biggest reason why businesses fail. They create a product or service before they define who their customers are and what they want or need.
As Simon Sinek states in his book titled ‘This is Marketing’, “The Lock and the Key: It doesn’t make any sense to run around looking for a lock to open. The only productive solution is to find a lock and then fashion a key.”
So, spend some time working out who your niche market is. Talk to prospective customers; find out if what you want is what they want. And find out whether those customers are willing to pay you an adequate amount for it.
It’s a common mistake when you are first launching a business to try to do everything yourself. After all, you're a small outfit and have limited funds.
Many entrepreneurs are great at that one thing they do. But when it comes to developing a successful company, they don’t necessarily have the skills or the time to manage all aspects of running a business. You know, answering the phones, managing the accounts and doing the sales and marketing – all while doing that thing you do best.
As you start to grow and gain more customers, you need to think about scaling your business early on so that you can continue to service existing customers and bring onboard new ones.
The best entrepreneurs surround themselves with amazing talent. If you don’t surround yourself with good people, you’ll end up being a sole proprietor at best and you’ll never have the resources to grow.
Many entrepreneurs have a great product or service, but is it unique to the market? This is a common issue, particularly for the service market where they may be hundreds of companies offering a similar service.
For example, Rod and Sue own Trinity Advisory. It is an accounting firm that also offers Business Advisory and Coaching Services. Trinity Advisory’s target audience is Small to Medium Business Owners who want to take their business to the next level. The business's unique selling point is that they develop a partnership with their clients, they visit them on-premises and meet with them regularly. They actively look for opportunities to help their clients grow, providing true business advisory and coaching services.
What is your unique selling point (USP)? What are you offering your target audience that solves their challenges better than anybody else? Once you’ve defined your USP, then you can start to craft your messaging that will attract more of your ideal target audience.
While most business owners know how important it is to develop a strategic plan, they may not know where to start or may struggle to carve out the time required to develop one.
Put simply, strategic planning allows you to take your company vision and convert it into measurable priorities that your teams can easily and effectively action. It is your roadmap to the future success of your business.
The benefits of developing a strategic plan for your business are all-encompassing from setting the right KPIs for your business, improving revenue and profit margin, better managing cash flow and resource planning, to managing your customer relationships and building company culture.
When starting in business, landing on a successful marketing strategy requires a lot of trial and error. But how do you know what’s working and what is not?
Many businesses fail to track and measure their marketing activities, and this is one of the easiest things to get right. Ultimately what you need to know is which lead sources generate the most revenue. This starts with tracking and measuring where each and every lead comes from and then right through the customer journey.
You can do this using a simple database or Customer Relationship Management (CRM). There are some great free CRM systems available on the market nowadays, so there is no excuse for not tracking your marketing efforts. It’s as simple as asking a new lead ‘How did you hear about us?’ and then recording the information for later analysis.
When you start to see results, it’s a good idea to hire a marketing specialist or agency who can take the reins for you and keep the momentum going.
Perhaps your initial business model lead you to success, but if you are not evolving with the market’s needs, you run the high risk of being left behind.
When Rod and Sue from Trinity Advisory first started their business, they began as your average Accounting Firm offering Accounting and Taxation advice with Bookkeeping services. Over time, Rod saw a need in the market for genuine business advisory and coaching services and so their business model has changed over time.
The lesson is to do your research on your industry and the market you serve. Look out for market trends. Learn how your competitors are thriving and incorporate what you find. This will help you stay ahead of the curve.
It costs money to run a business, so it’s important to effectively manage your cost and create healthy processes that cost less over time. Here are just some of the things you can do:
By eliminating these risk factors, you're well on your way to success without falling victim to the intimidating 80% fail rate of small
businesses in their first year of operation.
Trinity Advisory is not just an accounting firm, we specialise in Business Accounting and Coaching for SME's. If you’re a small business owner who needs help determining your target niche, crafting your unique offering, scaling your business and growing your profits, then get in contact today to learn more about our Business Coaching Program.