In my last post I discussed an article that I read recently on ‘BusinessKnowHow.com’, which outlined the 7 key reasons why small businesses fail. I provided my personal reflections on reason number 1: ‘starting a business for the wrong reasons’ and offered some possible solutions for getting your business back on track if you have lost sight of the importance of offering real value to your customers.
In this post I will discuss reason number 2, which sites poor management as one of the primary reasons why small businesses fail.
Why Small Businesses Fail – Poor Business Management
Firstly, let’s consider what ‘business management’ entails. When managing a small business there are many functions where attention is required. For example, there may be a need to consider product development, finance and marketing. You may need to manage a team of staff and stakeholders. You will invariably need to train staff and lead them so that you can get the best out of them. This may be a challenge for someone without any business experience.
The real question is, should you acquire these business management skills before you start your small business, or do you hope to acquire them as you build your business? It is important to take stock of the skills you already have, but be honest about where your weaknesses are, so that you can overcome them. We will look at some of these aspects of business management in more detail.
Why Businesses Fail – Management of Products and Services
The essence of many businesses is to provide products or services to a consumer. This can present its own challenges, because if you have a product based business then how will you manage your stock levels? Who will be responsible for ongoing future development of your products? If you provide a service, then how will you make sure you have enough clients without overloading or overcommitting yourself? It is likely that these problems can be overcome with sufficient planning, forecasting and tracking, but these are all skills that need to be acquired.
If you are considering starting a business, then an alternative might be to sell someone else’s products. This removes the burden of product development. You might be able to purchase wholesale products and sell them at retail prices to make a profit. Then you would only need to learn how to manage your stock levels effectively.
The direct selling industry may offer yet another alternative where you act as an affiliate for another company that provides products or services. For me, this is the ideal small business as you are not responsible for developing any products. If you partner with a company that deals with the shipping, then you may not even need to handle any products! You do not need to worry about monitoring stock levels, storing products or packaging and dispatching anything in this instance!
There are many home businesses with Direct Selling companies offering these benefits. For more information, please use the link below:
Why Businesses Fail – Management of Marketing Processes
Marketing plays a massive role in any business. If you are unable to share the benefits of your products or services with others, then how will they know if they want to buy them? What’s more, if you can’t even get your message in front of potential customers then how can you expect to make any sales?
I personally believe that one of the biggest misconceptions of small business owners is that simply having a good product is enough to get customers. It couldn’t be further from the truth! You are probably more likely to get customers if your product is bad, but your marketing is good, rather than the other way round!
Another fallacy is that having a website alone will generate online sales. I can assure you that, irrespective of your niche, there will be people online who will be competing with you. If you don’t learn effective internet marketing strategies, then don’t expect to see yourself on page 1 of Google! My Internet Marketing strategy of choice is Search Engine Optimisation (SEO) which you can learn more about using the link below:
Why Businesses Fail – Training and Managing People
Let’s assume you are able to manage the production of your products and you are able to forecast your product sales. Let’s also assume you have facilities to stock products and have processes for stock control, packaging, distribution, etc. On top of all this, you have found effective ways to market your products and you are getting a decent volume of customers to place orders.
At some stage you are likely to want to take on staff, so that you don’t end up being owned by your business. You will need to teach your staff how to manage all of the essential business functions that you have learned and developed, but do you have the experience to teach others? What will you do if your staff do not share your enthusiasm and motivation?
You will not only need to be an effective teacher and trainer, but you will also need to learn to become an effective leader. These are all challenges faced by small business owners, but they are not insurmountable. You may need to help your staff to see your vision, or find new and innovative ways to incentivise them! In my last post I spoke about the importance of focusing on making your customers lives better, but perhaps you can you also come up with ways to make your employees’ lives better in the process!
Business Mentoring – A Path to Success
One of the most effective ways to succeed is to model others who have already achieved what you hope to achieve. Is there anyone who would be willing to coach and mentor you on your journey to success? You may need to give up equity in your business, but surely it is better to align yourself with someone who has already faced the challenges that you are going to face and has already walked the path.
Another reason why I am a huge advocate of Network Marketing is because there are many training tools available to new Associates, which have been developed by successful leaders. When someone truly has a vested interest in your success, you will be amazed by how committed they are to helping you to succeed!
All of the business management challenges discussed in this article have been faced by traditional small business owners, but many of them do not even present themselves to individuals who chose to start home based, Network Marketing businesses (product development, processing of sales, packaging, shipping, etc. are all taken care of). Those obstacles that do present themselves can be overcome due to the high levels of peer support that are nurtured by Network Marketing companies. The business model and the compensation plans encourage teamwork and collaboration rather than competition.
There are world-renowned entrepreneurs including Donald Trump, Richard Branson and Robert Kiyosaki who have openly endorsed these types of business opportunities because of the low risk and high income potential that they offer. What better reason to see what Network Marketing could offer?
For more information about the Network Marketing company that I personally represent, please use the link below: