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Why are American’s Small Businesses Failing at Such Alarming Rates?
Author: Mary Eule

Copyright 2006 Mary Eule

Certainty versus Myth

84% of American companies have below average marketing programs, with the vast majority of these coming from the small and medium-sized business sectors. Although business pundits have a variety of theories on the root causes and the direct impacts, they usually agree on two important things:

1. Developing and utilizing sound marketing strategies and tactics (i.e. marketing programs) provides all businesses with the maximum leverage for attaining their objectives, and

2. Companies that execute marketing programs based on a written strategic plan are far more likely to be successful than those that do not.

Why do Most Small Businesses Fail?

This is a bit like asking a coroner why someone died… While the short answer may be that their heart stopped beating or their brain stopped functioning, there are thousands of potential underlying contributors. It is much the same in this instance.

However, a few things are certain when a company ceases “to be” unexpectedly… Someone(s) made poor choices. The actual errors themselves are much less important than understanding why so many very intelligent people cannot build and sustain successful businesses.

A company’s failure can usually be traced directly back to its founder’s mindset. Ultimate success in anything has much more to do with your attitudes and beliefs than any one tactical error or overwhelming event – even though this may be given as “the official cause of death”.

Given this, it is logical to assume that small business owners/managers fall short of their goals because they do, in fact, commit serious blunders which produce poor, or devastating, results… However, in order to at least stop the bleeding (hopefully there’s still enough time to cure the “patient”) you must understand and address the root problem, not band aid on a malignant tumor!

The obvious question then is: Why?

Because their Actions are based on... Decisions... formed by Attitudes... supported by a philosophical belief in… MYTHS!

We all make mistakes… some of us more than others. But it’s the wise person who seeks counsel. So after many years in the strategic marketing profession, I have compiled my very own list of the four “worst of the worst” marketing myths and blunders they cause. They are:

1. Marketing is just another word for advertising

This is perhaps the most common marketing myth and must be debunked right away if you have any hope of accomplishing your business goals.

A belief in this myth necessitates a view of marketing as a tactical function rather than the series of cross-functional processes, approaches and activities that it really is. Yes, advertising (marketing communications) is an essential component of your overall marketing plan, but it is not THE plan – and ideally should account for only1-2% of your entire marketing efforts.

If you devote all of your attention and efforts on advertising activities (e.g. ad copy, sales channels; websites; media, etc.) you’re putting the cart before the horse and are missing critical issues that may be having a negative impact on your business.

Advertising should never be substituted for the marketing process as a whole. No amount of advertising is going to make up for shoddy workmanship; rude employees or an unpleasant customer experience. It’s like building a house of cards… it may hold up for a little while, but it most certainly will come tumbling down.

2. Perception is not reality This is one of the hardest concepts for business owners to accept. They waste countless hours trying to convince unyielding clients to accept their version of reality, which often prevents them from communicating their unique benefits; alleviating significant flaws and/or ignoring golden opportunities.

It is vitally important that any one who has responsibility for growing a business or organization understand and embrace this critical tenet. It does not matter if outside perceptions are factual... because consumers behave based on decisions formed by attitudes founded on their beliefs, which are often subconscious.

This has particularly dangerous consequences when companies are forced into an undesirable place primarily because they fail to communicate their unique benefits. Thus their “inside reality” is aware of their distinguishing qualities but “outside perceptions” are clueless.

In other words, the public may look at your business; your competitors’ businesses; and/or completely unrelated businesses and view them identically, good or bad. This means that they base their purchase decision solely on price or convenience. Why? Because they don’t have any other information! {pagebreak} 3. It is not important to know what you don’t know…

This myth is the most pervasive, far-reaching and detrimental myth of them all! It is an equal-opportunity fantasy whose believers are corporate CEOs; entrepreneurs; male and female; young and old; rich and poor; tall and short; moms and pops; etc.

It is also the most difficult one to correct because the “patient” doesn’t know he/she is ill! It serves as the foundation for prejudice, ignorance and failure and influences all of the sufferer’s decisions and behaviors – personally and professionally.

Ironically, this myth often serves as the very basis for becoming an entrepreneur in the first place. Michael Gerber, in his classic book, “The E-Myth”, says that most small businesses are started by technicians (folks who are proficient at some skill) who have an entrepreneurial “seizure”.

Just because they know how to do the work of the business does not mean that they know how to run a business that does that work. For example, just because a hair stylist knows how to cut hair, does not mean he/she can run a hair styling business.

This is a classic case of not knowing what you don’t know. For instance, any business run in the U.S. today has to understand how the following business requirements (just to name a few) impact them and how they must comply on a daily/monthly/yearly basis:

• Payroll taxes
• Workmen’s compensation
• Local and State Income Tax Laws
• Local and State Sales Tax Laws
• Business Licensing
• Profit and Loss Statements
• Overhead Expenses
• Financial Reporting Requirements
• Employee Management
• Human Resource Regulations
• OSHA Regulations
• Social Security, Medicare Benefits
• Withholding Taxes
• Actual costs of running a business
• Quarterly Tax Payments

The problem arises when technicians assume that all they need to know is the work of the business, not how to run a business. The actual costs of owning and operating your own company are far greater than the expenses associated with your rent, office furniture, utilities, etc.

Because of this many small business owners never earn a true profit…one that allows their business to grow, and provide them sufficient income to enjoy the lifestyle they envisioned when they began.

4. The more you do, the better you’ll do

By nature, entrepreneurs are more action-oriented and idea-rich than others. For the most part, these are good traits. However, they often act as a catalyst for ‘crossing the line’ and heading straight for lack of focus, prioritization and the ever-common “doing-it, doing-it, doing-it” rut.

Let’s face it, most of us feel like we have way too many things to do every day… a belief that is exacerbated by owning/operating a small business! Couple that with the pervading notions that “If I’m not working, I’m not worthy” and/or that rapid growth necessitates doing even more, you’ve got real problems. Why, I bet you even know of some people who think that if they just work harder and longer at anything, they’ll eventually make it! This is hooey.

In order to develop a sound strategy, which we all know is critical to the success of your business; you must learn what’s important to do, and what’s not. I love the analogy of a fire hose… If you turn it on, full power water goes everywhere, and you won’t even be able to get a small cup. However, if you turn it down to a trickle you’ll much more able to handle what you need.

So, if you think you’re going to fix your business in any meaningful way solely by employing the latest hot marketing gimmick or developing a web site, think again. That’s the easy stuff!

Article Source: http://www.myarticlepub.com - Free Reprint Articles

Mary Eule, president of Strategic Marketing Advisors, is an experienced marketer and entrepreneur who uses her expertise to help small, medium and large businesses achieve profitable growth by understanding and using solid, well-thought-out marketing methods, systems and strategies. Ms. Eule is a credible award-winning speaker and certified Guerrilla marketing coach, who weaves humor throughout her engaging seminars, e-books and teleclasses. She draws on her ‘real-life’ experiences as an owner of a small giftware company; corporate executive; co-founder of a successful telecom start-up; and a marketing consultant for businesses of all sizes. Along with partner, David A. Scarborough, she recently co-authored the much-touted, soup-to-nuts marketing book, Mandatory Marketing: Building Your Business with Loyal and Profitable Customers. She received her undergraduate degree in journalism from the University of Maryland and earned her master’s degree in marketing from The Johns Hopkins University. Visit her website at: www.StrategicMarketingAdvisors.com to learn more. Business Ph. 843-851-2118



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