In meeting with another entrepreneur yesterday, we explored the trends in small business and start-ups. Many, including top politicians, believe small business is the backbone to our economic recovery. So why are so few resources made available to these folks? Sure, there are economic development resources, SCORE resources and the like; but these tend to be focused on concepts of business ownership…not the blocking and tackling. 90% of independently owned small businesses fail within 10 years – here are some alarming statistics:
-78% lack a solid business plan
-73% are overly optimistic about sales
-77% are not pricing products/services properly
-70% don’t recognize/ignore weaknesses, and don’t seek help
The revelation is the huge gap in education, tools and assistance from experts offered to the entrepreneur/small business owner who does not have the capital (or revenues) to qualify. We’re not just talking about raising capital; rather, we’re talking about the wherewithal that small and start-up entrepreneurs should have to succeed.
The 3 most common issues we see of business owners…of all sizes is as follows:
1. Time Management
2. Marketing & Advertising
3. Cash Flow
If I were to add a 4th category it would be infrastructure. But these top 3 issues are mostly linked to a lack of understanding or ignorance of how to acquire the right customers. A recent Nielsen / Ernst & Young study put the failure rate of the introduction of new U.S. consumer products and services at an incredible 95% or more. Such expenditures can devastate the finances of a company. After the goals are in place for the business owner, the Strategic Plan hits the concepts necessary for the business owner to live. However, the Tactical Plan is the difference maker. The tactical plan addresses the bucket of $$ and bucket of time the entrepreneur/business owner has, and how and where they will be invested. These are the specific action items that, when delivered, fulfill the goals and objectives.
A prudent start for business owners/entrepreneurs is to read The E-Myth Revisited. Another good read is Guerrilla Marketing. And another is Get Clients Now. While many good ideas for tactical planning are covered in these books, the idea is for the owner to extract the most beneficial tactics that will indeed result in acquired customers and revenue growth.
For small and start-up business owners there typically is very little capital to invest in campaigns or channels such as direct mail, SEO, TV, radio, etc. So the bucket of $$ to be invested each month must be directly associated with channels that will get you in front of the right types of prospects, and the bucket of time to be invested will follow suit. There’s a limited amount of time in each day and every bit of time spent on non-revenue generating tasks will cause pain…sooner or later. For a recent client we outlined a specific campaign to grow by sending personal letters to the top 100 existing customers and prospects. This required little time and little monetary investment, but is a very effective tactical approach.
I believe it’s necessary to create an aggressive, measurable marketing plan to increase your leads, improve your sales closing ratio, increase your average spend per transaction, and increase the transactions you get per customer every year so your profits increase exponentially. This is where the rubber hits the road and the small and start-up entrepreneurs need extraordinary focus and precision.
Oh, and most business owners/entrepreneurs need some assistance in creating and/or maintaining discipline with the plan. A coach is just what is needed!