Running and growing a small business seems glamorous to outsiders, but those who are actually doing it know how stressful it can be. In fact, 30% of new businesses fail within the first two years of operations, and 50% close shop in the first five years. Even for the legacy small businesses, many have experienced long-term plateaus in their growth. As it turns out, there are some pretty specific reasons many owners find it hard to succeed at growing a business. In order to know how to grow a small business, you must first understand the five reasons why businesses stop growing.
5 Reasons Why Businesses Stop Growing
1. Failing to Adapt
The internet has completely changed the way people conduct business. Chances are, your customers use the internet nearly every day to make purchases, do online research about products, etc. Even if you don’t plan on selling online, it’s important not to ignore the power of digital marketing today. Most Americans prefer to shop online, and the number who do so will only continue to rise as younger generations grow up in an internet-dominated world. Despite this, 46% of small businesses do not have a website, and 35% feel their operation is simply too small to warrant one.
But not having a digital presence can stunt growth in a major way. If you’re not able to post your address and contact info online, you reduce the chances to grow your business quickly because many potential customers won’t even be able to find you. Also, just having a website isn’t enough. You need to provide customers with a positive, user-friendly digital experience on their computers and on their mobile devices — 88% of online consumers are less likely to return to a site after a bad user experience. This is critical to keep in mind as you create, manage and maintain your online presence and is one of the top reasons why businesses stop growing.
2. Not Focusing on Customer Service
Often, entrepreneurs are so caught up in the day-to-day tasks of running a business that they fail to focus on the people who keep the company in business — the customers. Research shows that 86% of consumers are ready to pay more for a stellar customer experience. Customer service for small business owners is incredibly important these days, and if you’re out of touch with your customers, you can’t provide them with the service they need.
Engage with your customers more through direct contact, social media, feedback surveys, and other avenues. Use plain language to ask about their experience and help them understand your product or service. Consider getting a virtual receptionist for your small business to better handle the customer service side of your business. We hear all the time that poor customer service is a prime indicator why businesses stop growing.
Related eBook: The ROI of Word-of-Mouth: How Better Customer Service Increases Small Business Revenue
3. Overlooking the Competition
Competition can provide valuable insights to help you grow your business. You can’t be better than the competition if you don’t clearly understand what they offer and how you compare to them. To gain a better understanding of your market, you can do a simple SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, Threats. This helps you identify which aspects of your business are working and which areas might be lacking. From there, you’ll have a better understanding of where to focus your energies.
4. Failing to Plan for Cash Flow Issues
Having insufficient operational funds can sink businesses so fast that many can’t recover. Unfortunately, new business owners often don’t realize how much cash they’ll need to get started. And, even if they do, they might not account for all the issues that may arise. The COVID-19 pandemic is a great example of this: The impact of falling sales devastated many companies. It’s not always possible to plan for such an unforeseen crisis, but those who had a little cushioning have been able to ride out the period with less difficulty than others.
Also, as your business grows, so do costs. If you’re spending more than you’re taking in, even for a condensed time, it’s difficult to pay the bills. To maintain cash flow while you grow your business, you may need funding. It’s wise to learn about the different business loans available and pursue the ones that make sense for your situation.
For example, a business line of credit is a good option for funding expansion or getting access to more cash during unpredictable operating cycles, such as the pandemic. Another option is a term loan that comes with a specific repayment schedule. These often have low-interest rates and are ideal for small business growth initiatives, like building a website or opening an additional space.
5. Always Looking for New Customers & Not Nurturing Current Customers
Looking for new customers is important and essential to business growth. But if you’re focusing all your energy and marketing dollars on new leads, you’re not paying attention to the most important people — your current customers. Repeat business is the lifeline of any small company. Regular customers don’t just show up and help your business when sales are low. They are the ones driving business profits because they spend more, and more often than new customers.
According to an Adobe report, about 40% of a business’s revenue comes from repeat customers, who represent only 8% of all visitors. For context, it takes five new customers to equal the amount one repeat customer spends in an average transaction. Are your current customers happy with your customer service? Do they feel nurtured by you? You will always need to look for new clients, but returning clients are the ones who deserve your attention right now because they will keep you in business and help you grow.
Resources to Help Grow Your Business
It’s commonly accepted that growing a small business is one of the hardest things you will do in your life. It takes time and time is the one thing we will never have enough of. As a former small business, we truly value your time so we only want to provide you with resources that help you grow.
With that being said, check out 4 Game-Changing Benefits of a Virtual Receptionist… this 5 minute read is well worth your time. You will be amazed at how much of an impact a virtual receptionist for small businesses can make.
