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5 Reasons Why Most Small Businesses Don't Grow

5 Reasons Why Most Small Businesses Don't Grow

About 30% (one-third) of businesses will survive their 10th year in business.
— https://www.fundera.com/blog/what-percentage-of-small-businesses-fail

As I am writing this post, I am in my eleventh year of owning and running a martial arts instruction business with two locations. In no way do I feel that I know the secret equation to breaking the code to running a successful and profitable business. I do know that I have experienced many failures and have absorbed a wealth of knowledge to this point. I also know the learning process is infinite based on the fact that everything in life evolves with time. Accordingly, here are five reasons why most small businesses don't grow.

business hats

1. The owner wears too many hats

“Work on your business, not in it.” Anyone who has had any interest in learning how to start and run a successful business has most likely read the best-selling book, E-Myth by Michael Gerber. In the book, Gerber discusses the problem of business owners spreading themselves too thinly. This is a simple concept to understand, but most business owners do not follow it. This issue is usually the case because of two reasons:  the owner is a control freak, and the owner does not know how to manage people effectively. For a business to run independently of the owner’s direct actions, the owner must delegate various tasks to the right people. This only happens when the owner is willing to give up control. As a small business owner who is a control freak by nature, this is no easy task. But it is crucial. Once the owner can release control, then the next key step is effectively managing the people who take on the tasks. Again, this also is not an easy task. Not only is every human being on this planet unique from the next, but each person is also motivated in different ways. The vital job of the owner is to seek education and learn how to keep the staff motivated and on task.

This issue is usually the case because of two reasons: the owner is a control freak, and the owner doesn’t know how to manage people effectively.
business computer

2. Bad marketing

I am just going to put this out there bluntly. Most small businesses’ websites SUCK. And when I say “SUCK,” I completely mean it with everything that I am. Times have changed, and access to the internet is almost more readily available than drinking water in some areas of the world. A business’ website contributes to  a critical element that leads to the customer conversion process: the first impression. Just before I started writing this post, I was searching for a local landscape company. As most people do in the 21st century, I started my search by “Googling” “landscape” and my city. As I started clicking through the websites, my first impression for most of the sites immediately soured after viewing their site. While some people are not as neurotic as I am when it comes to design, most people appreciate good design on a conscious or subconscious level. The design a business chooses for their website or anything else for that matter is like the clothing on a person. Whether we like it or not, in business, a person’s first impression is based on the appearance of the other person. Wear a well-made, custom tailored suit and earn the first impression as intelligent, classy, and successful. Wear a suit from the 1970’s with a jacket that doesn’t match the pants and imagine what kind of first impression that will create. A company’s design must match its brand, and most importantly, must appeal to the target market. This concept is simple, but the problem usually arises when the owner, who has no clue what good design is, makes all the design decisions relating to the company’s brand. I could also talk about the functionality of the website and how it is not properly set up to capture leads, but I’ll save that for a future post.

A business’s website contributes to an extremely important factor of the lead to customer conversion process; the first impression.
systems picture

3. Sloppy or non-existent processes and systems

Answer the phone. I cannot stress how important this simple task is. For a potential customer to pick up and dial the phone number of a business is HUGE in today's automated, technology-focused world. Through this world has emerged people who have zero patience and want everything NOW. So if this potential customer decides to call a small business and they don't answer, they will move on to the next number on the Google search page. I have heard business owners make the excuse that they were busy when the phone call came in. My answer to that is finding someone to answer the phone. If it is not in the budget to hire a part time person, then that business owner should go back to their 9-5 job. There are also many options out there for a centralized answering service at an affordable price. My point is there should be a system or process for EVERYTHING relating to the business. From answering the phone to replying to emails to completing a job from start to finish, there should be a step by step instruction manual. This not only ensures consistency but allows the business owner to move away from the day to day operations and focus on important things like GROWTH. A common reason owners don't do this is, "it is easier or faster for me to just do the task myself." Although true, the problem with this is the owner has to do the task again and again and again. The amount of time it takes to create a system or process is initially more but nothing compared to doing the task a thousand times.

My point is there should be a system or process for EVERYTHING relating to the business

4. Wrong people in the wrong seats

One of the best books I would recommend all business owners read is Good to Great by Jim Collins. One of the biggest takeaways is the importance of putting the right people in the right seats in the business. Finding the right people is one of the most difficult parts of growing a business, but it is essential for taking sales to the next level. The core of a successful business is the people who run it. This is more the care in the service industry since the product is essentially the staff.  When the right people are in the right seats, there are no issues of self-motivation or self-discipline. Each staff member is passionate about their role and most importantly, the mission of the company. Having the right people will create a positive culture, promoting excellence and innovation, which is vital to continued growth. One of the biggest mistakes I have made as a business owner is keeping the wrong people in the wrong positions for too long a time. The hardest thing to do is to remove the wrong person from the team when the risk of losing business is present.  A thriving, profitable, growing business is built around a team of the right people in the right seats.

A thriving, profitable, growing business is built around a team of the right people in the right seats.
time management

5. Not prioritzing time

As a business owner, it is very common to get stuck in the cycle of constantly putting out fires and losing the battle to "time stealers".  My top choice on time management, The One Thing by Gary Keller, stresses the importance of putting all your energy towards the most important thing required to taking the next step towards achieving big goals and dreams. But most business owners do not do this. As mentioned before, they are either putting out fires, stuck in pointless staff meetings, cleaning the facility, micro managing staff, browsing the internet, going to two hour lunches, watching Youtube videos, answering emails, answering the phone (or not), and the list of time wasting activities goes on and on. The business owner must step away from the business and view it from abroad. The small, time wasting tasks must be delegated to dependable staff so the leader can steer the ship in the right direction. Set big goals and work backwards from there. The majority of the owner's time should be spent on the big things that will make the most impact. 

The majority of the owner’s time should be spent on the big things that will make the most impact.

Growing a small business can seem like an impossible task. I cannot count the number of days where I felt completely burned out and questioned myself. But then I wake up the next day and get back to work. As a leader, it is vital to identify your strengths and weaknesses. Ask yourself this question, "What can I do that most people cannot do?" Focus your time and energy on the answer to this question and delegate everything else to your team. Know what you know and know what you don't know. Don't try to do everything. Entrust the books to a professional accountant. Hand over the design and marketing to an expert. Assign the administrative tasks to a person who enjoys that type of work. Stick to what you know and become an expert on that topic. Now get to work and take action.

Today I turn 35. Here are the 6 most important things I’ve learned as a business owner.

Today I turn 35. Here are the 6 most important things I’ve learned as a business owner.