Small businesses have been given the chance to compete with business giants, and despite stiff competition a lot of them still stay on top of their game and continue to provide exceptional products and services that are on a par with industry standards. But not every small business is lucky. There are several things that cause their early demise, which can be prevented if only small business owners are armed with the right know-how and strategies to flourish in their industries.
Here are some of the reasons why small businesses succumb to competition within the first few years.
Failure to Study the Target Market and Customer Buying Habits
A feasibility study is important before going head first into business. This will determine if the venture will be received positively by your target market, and if potential customers’ buying habits will be favorable. Offering products and services without prior analysis will most likely result in failure.
This does not only pertain to managing your employees. This is also concerned with how you manage any small business partnership agreements, for example with external experts. If accounting is not your strongest suit, hiring a financial expert will help your small business in the long run. Positive cash flow must always be maintained, and debts should always be paid on time, and personal and business finances should not be consolidated.
Inadequate Anticipation of Competition and Technological Advances
Being complacent in business is a big no-no. You should always be on your toes regarding future competition and how you can best keep your customers loyal to you. Technological advancements, on the other hand, are very rapid. One moment a piece of machinery is useful and the next it is rendered obsolete. Being financially prepared for development is crucial.
Bad Pricing Strategy
Costing should be undertaken way before you open your venture. There are times when small business owners fail to provide an effective pricing strategy, which leads to big financial losses, which in turn can cause a business to go bankrupt.
Conflicts with Partners
If you have a small business partnership, a harmonious relationship among your partners is imperative. A lot of partnerships have gone bankrupt because of differences between owners and failure to resolve these differences to save the company.
These things can be avoided with proper planning, adequate knowledge and skills as well as dedication to make the business a successful one even if there is a lot of competition. To ensure the success of your small business, you can look into these things that can help you be the best in the industry, even if you are competing against big businesses. Success is not measured by how big an enterprise is; it is measured by how business owners know how to dodge obstacles that come their way.
Here’s how to stay afloat in business
Researching about the market you are planning to enter will allow you to learn about current market trends, buying habits of potential customers and viability of business location. Competitor practices should also be studied so you can get an edge over them when you start your business. Time and effort are your friends when it comes to research.
Technological developments are introduced at a very fast pace. If your business utilizes machinery, computers and other modern equipment, you should factor their regular upgrade into your financial planning. This will aid you in staying relevant and up to date. Hardware is not the only upgradeable aspect in your business. Skills and knowledge are also needed to be enhanced periodically.
Take Care of Employees
There’s a saying, “take care of your employees and your employees will take care of your business”. It has been proven time and again that satisfied employees are more than willing to go the extra mile for the success of the company. This will reflect on how they deal with customers, which in turn will give your company positive feedback. Taking care of your employees involves giving them good benefit packages aside from industry-standard wages. Invest in their skills development and your business will reap the rewards later on.
Build a Personal Connection with Customers
It’s a domino effect; satisfied customers will put the good word out about your business, resulting in more customers and more profits. Building a good relationship with your customers goes a long way. When people enter a store frequently, they expect to be recognized by the staff and be given prompt and courteous service. The same goes for first timers. You must extend the same courtesy for new and returning customers. Paying attention to them and how they do business with you will not go unnoticed.
Don’t Go Underpriced
In an attempt to outdo competition, many small businesses opt to offer their products and services at very low prices, unwittingly resulting in losses, which is only good for the customers and not the business. Don’t worry about setting the same prices or even slightly higher than your competitor; invest in other aspects of the business to make customers patronize you, such as good customer service.
Recognize Strengths and Weaknesses
The ability to determine one’s strengths and weaknesses is one way of ensuring business success. Strengths must be strengthened further, and weaknesses must be identified and how they can be turned into strengths must be worked on. Ask for feedback and suggestions from your employees, after all, they are the ones who deal with customers on a daily basis. Learn from mistakes as well. Turn them into lessons and strive hard not to make the same ones again.
It has become possible for small business owners to succeed in their chosen industries even if the market has already been saturated by competitors, both big and small. Opportunities help these small ventures to get a competitive edge, and they should be taken full advantage of. A lot of startup companies seek help from funding institutions, and you too can look into these financing opportunities if your capital is not enough to start your business.
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