Many small business owners pour their time and talent into their firm, building it from the ground up. However, it's not unusual for small businesses to plateau once they emerge from the incubator and become stable.
3 Causes of Small Business Stagnation
How do you prevent your business from becoming one of those that peak early and never reach their full potential? Here are three reasons your business might stall and how to sidestep each problem.
1. Your business is stuck in the status quo
The fix: Quite simply, some businesses stop growing because their owners get comfortable with where they are. In and of itself, that's not a problem. After all, not every business is going to be - or wants to be - an IBM, a GM or a JP Morgan Chase. That said, a business that's standing still risks being left behind.
Strategic planning can be your best friend when it comes to avoiding complacency. Without goals, a leader and his or her employees can too easily fall into an apathetic rut. Spend some time creating short-term, mid-term and long-term plans for your business.
Your original business plan is a good place to start. Have you met the goals you originally outlined? If not, why not? Assess any shortfall and brainstorm ideas to close the gap or consider whether your business plan needs to be revised altogether.
Goal-setting can help refocus and reenergize everyone from the small business owner on down. And be sure to celebrate along the way as you and your team achieve those goals.
2. Your business lacks capital
The fix: The old adage "it takes money to make money" is on the mark. If you don't have a healthy cash reserve or access to working capital, be prepared to watch growth opportunities pass you by.
Once you have your strategic plan in place, crunch the numbers to determine a price tag for your goals. Then consider where you can find the cash you need to implement the plan. You may be able to self-fund projects with business profits, or you may need to turn elsewhere and find money through small business loans, angel investors or even crowdsourcing.
The important thing is that you identify, in advance, how much money you need and where you are going to get it.
3. Your business is out of touch with current customers
The fix: Customers are the lifeblood of your business, and if you let complacency set in here, not only will growing your customer base prove impossible, you risk losing the customers you already have. With that in mind, answer the following questions:
- Why do your customers do business with you?
- How do they use your product or service?
- What other products or services do they use?
- Do they have a need you aren't currently filling but could?
- What are the latest trends in your industry?
- Will your product or service be relevant to consumers in five years? Ten years?
And don't assume you know the answers offhand. Connect with and listen to your current customers. Identify potential customers and find out what it would take to bring in their business, too. Then, don't be afraid to innovate and expand accordingly based on the feedback.
Small businesses don't necessarily have to turn into large businesses, but they do need to evolve if they want to remain relevant in a changing marketplace. Know what you want your business to achieve, know what your customers want, and then figure out how you are going to pay for it.
Growth and success are never guaranteed, but for any chance of attaining them, make sure to include these three key components in the mix.
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.
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