Common Pitfalls of Growing a Business
Are you sick and tired of working hard in your business and feeling like you are going nowhere? Growing a business is a struggle. The bills keep coming in but sales aren’t happening. You need revenue and you need it fast. You almost wished you didn’t start your own business in the first place. All of a sudden you feel like a lonely entrepreneur. You feel trapped and don’t know what to do. Here’s why.
The Lonely Entrepreneur
You find yourself working in a 9 – 5 job which is going nowhere. You hate the boss and feel disconnected from your work. It’s not your passion yet you turn up day after day for the paycheck dreaming of the day you can get out of this rut. Then one day you have an entrepreneurial seizure and start your own business.
Doesn’t it feel good to fire the boss? Instead of exchanging time for a paycheck and getting passed over for promotion, you are now the boss. Growing a business is your new goal. You get to work when you want and better still keep all the profits. You can now set your own deadlines without a boss looking over your shoulder and giving you that look. You know the one – THAT LOOK!
Instead of doing all the work and the boss keeps all the profits you now get to call the shots. Take long vacations whenever you want and only work when you want to.
Or so you thought.
You discover – it’s not that easy being an entrepreneur and business owner. Then reality sets in – growing a business isn’t quite what you expected. You become overwhelmed wearing multiple hats having to do everything yourself. One minute you are the receptionist, then the accountant. Next, you are in charge of sales and marketing, social media, and keeping your website up to date and not enough time to get it all done.
Because you are trying to be everything at once, the overwhelm gets worse. You find yourself not doing anything well. All you wanted was to use your technical skills, you know, the thing you’re good at. Your passion or what you trained for. Your qualifications and expertise.
You start to worry about cash flow. How are you going to pay your bills as you also begin to worry about where your next sale is going to come from. But sales and marketing is not your strength. “Who me – be a salesperson… NEVER! I’m not going to push my products and services onto people.”
You start to question did you make the right decision to go into business in the first place?
Lack of cash flow puts you under so much financial pressure then doubt sets in leading to poor decision-making. Your relationships at home become strained. Your friends and family don’t understand you are serious about making this business work even if that means working all hours of night and day. They told you not to do this – then you think about what they will think if you fail.
Working long hours your relationships begin to break down – no time for friends, no time for family, no time for yourself. Instead, you stick your head in the sand pretending everything is OK. You tell yourself – others can do this – why not me?
You have a sudden thought – you need help. I’ll employ someone and more hard facts come to mind. Additional overheads – managing people – argh…..To cover these additional overheads you need more revenue.
At times you feel like you are on the brink of success – or is it a failure? All you can think about is what can do you do to stay on track and achieve your business goals.
Sometimes you might feel like you are drowning with no one to help you out wondering what you should be doing next.
The worry becomes worse and you need immediate sales to generate revenue to pay your people – to pay your vendors, to pay your bills, and even pay your rent or mortgage. You might be tempted to discount your products or service to get immediate sales on the board. So you quickly fire off a few adverts in the paper to get cash flowing through the door.
But it doesn’t solve your problem. You just wasted money on advertising that didn’t work. Finally, you realize you need professional help from a mentor or business coach to help dig you out of this mess and prevent burnout.
Entrepreneurs Need Help to Grow a Business
Does the story of the lonely entrepreneur trying to grow a business sound familiar. There are very few business owners and entrepreneurs out there that don’t’ go through all or some of these scenarios at some stage in their business. The key to growing a business is to invest in the right people. People who can help you in the areas of business you aren’t so good at. The areas of business that are critical to success.
No business leaders and entrepreneurs can do it all by themselves. Learning to run a successful business as you go along is way too painful. This approach can be very costly, personally, and professionally. From time to time, you need help. That might be in the form of a mentor, business coach, advisors, consultants, and employees.
The Key Reasons for Not Growing Your Business
Did you know that 80% of those who go into their own business will fail in the first 18 months? Of those that do survive another 80% will fail or close within five years. There are many reasons for this the most notable are the following.
The reason many business owners and entrepreneurs struggle to grow their businesses because they are far too operational. Wearing so many hats they find themselves working IN their business not ON their business. It’s critical to look at the strategic markers that help to grow a business.
Poor Cash Flow
Sales are the lifeblood of any business because this is what brings cash through the door. Without sales revenue flowing steadily, it’s hard to grow a business. The problem for most business owners and entrepreneurs is that don’t understand cash is king and profits top gross revenue. You need both and it is understanding the four ways of growing a business will change this.
Not Understanding the Sales and Marketing Function
If I said to you you need to generate ten new sales leads by tomorrow morning what would you do? Most entrepreneurs and small business owners would say, “Stick an advert in the paper or online.” This is not a good strategy nor is it a worthwhile tactic unless it’s backed by understanding who your ideal customers are and what marketing channels will reach them effectively. Without this research, you could easily be burning money on marketing strategies that don’t work.
It’s all very well to attract new leads into your business unless you have been trained in the sales process you could be letting valuable leads slip through your fingers.
Poor Sales and Marketing Strategies
Not understanding the difference between sales and marketing will ultimately hold you back from growing a business. The marketing function is designed to create awareness and get leads at the top of the sales funnel. Once there, the sales function is to nurture leads down through the sales funnel until they pop out at the bottom as a paying customer. Even if you aren’t the designated sales and marketing person, it’s vital you understand how the sales and marketing functions work together.
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Four Ways of Growing Your Business
Assuming you have the foundations right, there are four ways of growing a business.
- Increase Profits
- Increase Transactions
- Increase Leads
- Increase Conversions
You can increase your profits by either cutting costs, or increasing your prices.
Most small businesses don’t have the ability to cut their costs. They simply don’t have the economies of scale a larger business has therefore cutting costs is usually not a good option for a small business.
You could increase your prices. Increasing your prices means you’ll collect more revenue from every purchase a customer makes. Assuming your volume, average transaction size, and frequency stays the same, raising your prices will bring in more revenue for the same amount of effort providing you already have a customer base.
The second way of growing a business is transactional where you sell more – to more people by increasing the frequency your customers buy from you by selling them additional products and services.
Increasing the average transaction size means getting each customer to purchase more by upselling. It’s called upselling. McDonald’s is very good at this – “Would you like fries with that?” The other tactic is by bundling several products and services together at a discounted price.
You can also increase the frequency of transactions per customer by encouraging them to purchase from you more often. Let’s say your average customer buys from you once a month, convincing them to buy from you once a week will automatically increase your revenue.
Increase Conversion Rates
The third is to increase your conversion rates which is the sales function of the business. One of the metrics you need to look at is how many qualified prospects do you convert into paying customers. If your conversation rates are too low, you may need to invest in sales training. Without people who understand the sales process or have been trained in sales – you will continue to have low conversation rates.
Did you know it can take five contacts or more to convert prospects into paying customers? Therefore the other aspect you need to look at is how often you follow up with leads.
You would have heard of the sales funnel – keeping the top of your sales funnel full of leads is the marketing function of a business. It’s critical to keep the top of your sales funnel full of leads because not all leads turn into qualified prospects ready to buy from you now. Depending on how well you manage the sales process, not all qualified prospects will turn into paying customers.
Here’s why you need to keep the top of your sales funnel full of leads.
Why You Lose Customers
No matter how great you are in business you are going to lose customers through something called natural attrition.
- 1 % leave because they die
- 3% will move away
- 5% find an alternative to your product or service
- 9% will do business with your competition
- 14% will be dissatisfied with some aspect of your service
- 68% will leave because of the way they were treated by someone in your organization
Can you afford to allow your customer base to wither away to nothing? Of course not.
Growing Your Business Through Lead Generation
Growing your business through lead generation is a common strategy used to pull new customers into the top of the sales funnel using all or some of the following tactics.
- Joint Ventures
- Strategic alliances
- Public Relations and Publicity
- Direct Mail
- Digital Marketing
- Other promotional activities
Digital marketing is the one area most entrepreneurs and business owners get tripped up by. Their best friend’s mother’s son has another friend whose uncle is in digital marketing and says, “Advertise on Facebook, start a Facebook business page, join Linkedin,” and the leads will roll in. NOT!
Taking advice from friends and family who mean well and have your best interests at heart doesn’t make them an expert in growing your business. Here’s why.
Digital marketing can become very complex if you don’t know what you are doing. For instance, just looking at paid advertising, do you choose, Google ads, Facebook Ads, Rich Media, Banner advertising, not to mention Retargeting, Sponsorship, Video, and others.
When it comes to social media – what platforms are best for you. Facebook, Instagram, LinkedIn, You Tube, or Twitter as an example. Then you must question what to post, when to post and how often to post. Therefore before embarking on any marketing campaign to grow your business, it’s critical to understand your market.
On a Final Note
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