I have been in business and a serial entrepreneur since 1988 officially, unofficially I started in 1979 moving lawns, pulling weeds, and washing cars… So suffice to say I’ve been at it for a while. Even so it ceases to amaze me how very little some small business men and women actually know about business. One of the biggest things that frosts my hide is the lack of understanding of what is needed for marketing. I teach both graduate and post graduate marketing classes; from intro marketing to advanced marketing theories and there is one thing I do in all of those classes; I ask a very simple question. “When creating a marketing plan, what is the first thing you need?” I get a myriad of answers, I get things like:
Being in the marketing industry I have experience dealing with just about every type of client there is and one of the biggest problems that I have seen with small businesses is that they are often unorganized, they are not goal oriented and they went into business without any solid goals. It doesn’t matter what size your business is it is absolutely imperative that you have a strategy, a strategy that should be created prior to opening your doors for business. I have seen too many people decide they were going to go into business and let’s be frank, anyone with a hundred bucks and a ball point pen can start a business; you go down to the county recorder’s office, you fill out the paper work for a fictitious name, you pay the fee, you go to your bank and open up a bank account and Ta Da you’re in business. If only it was that easy, it’s not. Below are the statistics of small businesses that started and businesses that closed between 2000 and 2004. These were years prior to the recession when the economy was in decent shape. As you can see nearly as many businesses close their doors each year as new businesses open their doors.
Starts and Closures of Employer Firms, 2000-2004
e = Estimate.
Sources: U.S. Bureau of the Census; Administrative Office of the U.S. Courts; U.S. Department of Labor, Employment and Training Administration.
I have dealt with hundreds of small businesses over the years who want to advertise and when asked what their marketing budget is they answer that they don’t have one, or ask what their quarterly or yearly sales goal is and you get the deer in the headlights look like I suddenly started speaking Latin. If you do not have a strategy you will very likely fail. Period. Having a business without a strategy and aimlessly spending money without any structured goals is like buying a car without an engine. It won’t work. Think of your business as a large piece of machinery with many different parts, all those parts need to be oiled, tuned, and maintained and before plugging it in and flipping the switch; engineers need to calibrate it and make sure everything’s been done right. The biggest mistake that I see from small businesses is the lack of a strategy, including a marketing plan and budget. Regardless of the size of your business it is important to create a roadmap of where you are, where you are going and where you want to end up and then to create a plan for getting there. Without this you are just bouncing around without any direction hoping that something works, and don’t get me wrong sometimes people get lucky, sometimes, but the majority fail because they did not plan ahead. In business, planning is everything.