The SBA defines a small business as an enterprise having fewer than 500 employees. There are 28 million small businesses in America and over 22 million of them are self employed with no additional payroll/employees. About 543,000 small businesses are started each month in the United States, according to data from DocStoc. Some interesting statistics indeed. In the spirit of Halloween and all things spooky (do you have your costume yet?), here are 5 scary statistics about small businesses and some thoughts on how you can overcome them.
50-60% of small business will fail in 5 years. Information services businesses have a 37% survival rate. There’s so much on the web about why small businesses fail and how to make sure yours is not one of them. Assuming you’ve done the research on your product or service, have the funds to startup the company and keep it running until the money comes in, there are other things you should do to ensure success. In a nutshell, focus first on customers who have the pain your company can solve. Get to know your customers (more on that later). Also, stay in an industry where you have relevant experience. Make sure you’re in a business that capitalizes on your natural gifts and talents. Hire strong, treat your staff well, spend wisely, but don’t be afraid to take risks. As Ray Kroc, founder of McDonald’s said, “If you’re not a risk taker, you should get the hell out of business.”
For every month that a company does not communicate with their customers, they lose 10% of their influence. The truth is, most companies only talk to their customers when they want to sell them something. However, social marketing budgets will double over the next 5 years, so it appears that some companies are paying more attention. Consider setting up a methodical marketing plan that automatically sends information of value to your current customers to reinforce your brand. Send out weekly blog posts of interest in your field. Offer incentives for visiting your site often. Do what it takes to keep in touch with your customers as often as you can to ensure you’re at the forefront of their mind the next time they need the product or service you provide.
91% of the customers say they’d give referrals — but few companies ever ask. And here’s an additional stat: 68% of customers were likely to purchase after reading a review about a product or service. I know how conditioned I am to check out customer reviews when I’m purchasing a product or service. I look online, I ask my Facebook friends, I call my parents. It is absolutely critical for small businesses today to ask their valued customers for referrals because potential customers are listening! Each year, try asking satisfied customers for at least one referral. Publish case studies on successful projects that demonstrate challenges that were overcome. Keep business cards, thank you notes, and tweets close at hand. Be the company that asks their customers to help find people like them, and incent them to do so! And one more scary statistic: Only 41% of businesses realize the importance of mobile and online reviews. Don’t be a part of the other 60%!
The average company loses 50% of its customers every 5 years. The cost of replacing them can be 6-7 times more expensive. A common problem is companies who are too busy trying to get new customers to come in the front door that they let existing ones leave out the back door. The message is pretty obvious: Focus on your existing customers as much as you do reaching new ones. Implement simple customer appreciation programs, offer perks for long-time customers, seek their input and let them know you value them. And of course, provide the most amazing service so customers have no reason to leave.
50% of millennials use their smartphone to research products and services. If you’re not on mobile somehow, get on it! Optimize your website for mobile users. The easier it is for smartphone or tablet users to view your site, the more likely they are to make a purchase or leverage your services. According to Brian Alvey, chief scientist at Ceros, a cloud-based real-time web content authoring platform, “Mobile used to be the future of business. Mobile used to be a trend. Now it’s the norm. If you don’t adapt to mobile and quick, you could miss out on a prime revenue-generating opportunity, or even lose customers to competitors who already embrace mobile.”
Scary statistics but they don’t have to be. Learn from the numbers and make the necessary changes. Good luck out there and have a safe and happy Halloween!