According to Fundera, 20% of small businesses fail in their first year. That's a bad enough statistic as is, but what if you found that 30% of businesses fail in their second year, and 50% fail after five years? But wait, it continues to get even worse! 70% of small businesses fail within 10 years of being open.
Why is the failure rate so high for small companies? Honestly, a wide range of answers can be given here, and we could be here all day. Instead, let's focus on a few things that the majority of small businesses can and should improve upon. In doing so, perhaps this can help to reduce the failure rate - or, at least, reduce your business's chance of failing.
A lot of small businesses aren't good at interacting with customers. Whether this is online or face-to-face, there's just a lack of interaction between you and the customer. It makes the customer feel less valued while interacting with them does the opposite. This is something the bigger companies do really well - they respond to customers on social media, interact with them, and make them develop more of a bond with the business.
Customer interactions will lead to customer loyalty, but that's not the only way to keep people loyal. There's definitely a case for small businesses spending too much time and attention on acquiring new customers, and not enough focus on retaining loyal ones. Gaining new customers is important, but it loses its value when you keep losing customers at the same time. In simple terms, you gain 100 sales in a month, but none of the customers buy anything next month. Instead, you find 100 new customers and make 100 sales again. If you retained even as little as half of the initial 100, you could've made 150 sales in the second month from the loyal customers and the new ones. Then you retain 50 from the new bunch again, and suddenly you have 100 sales from loyal customers before thinking about getting new ones in! The bottom line? Customer loyalty needs to be improved upon.
So many small companies are stuck in the past, only accepting one or two payment options. There's no excuse for this anymore - accepting numerous payments is affordable and easy. With things like merchant services by NorthAmericanBancard, you can get point-of-sale solutions to accept multiple card payments in your business, or set up your online store with different payment gateways. The more options you provide, the more sales you will close. Loads of consumers will depart from a sale if the right payment option isn't available, possibly even paying more for the same product elsewhere, just because they made it easier to pay.
Small business owners need to improve on these three aspects of their company. If you manage this, you'll be in a better position to ensure your company isn't one of the 70% that fail within the first ten years of opening.
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