The 5 Most Dangerous Marketing Mistakes Made by Small Business – How to Avoid Them

Many of the businesses I’ve worked with, usually have a singular issue that dominates their marketing woes. After a few years of doing this, I’ve figured out the most significant marketing areas that plague the majority of my clients.

An overview of the situation.

U.S. small businesses employ more than half of the private sector work force, produce more than half of private sector output, fill niche markets, innovate, and contribute to the competition in free markets. Small business drives the economy in most if not all of the developed countries in the world.

Small businesses are overrepresented in business turnover; that is, they have relatively high rates of company startups and closures. The life span of the average small business is still three to five years.

Small businesses give individuals the chance to achieve their own versions of the American Dream, and allow entry into employment by individuals and demographic groups who might otherwise be shut out of the labor market.

Small businesses pay a disproportionate amount of the taxes while receiving less than equitable state and federal support than larger businesses in the U.S.. Call me biased, but I think we need to fix that problem in my country.

Because the small business system is based on individual initiative, owners may not start with the right business education and experience. They most often start on a shoestring and do not market themselves adequately in the beginning.

When I tell startups that a good rule of thumb for them to follow is to invest up to 20% of their expected annual revenues in order to jump-start their business, many begin to realize the full implication of what they’re getting themselves into.

The danger signs.

Let’s take a look at the 5 most dangerous business trends to avoid. If you find that you’re currently making some of these errors, admit it, make a note of it and get ready to fix it.

Here are the top 5 reasons for business failure:

1. Incompetence (46%)

2. Unbalanced Experience (30%)

3. Complacency (12%)

4. Lack of Experience (11%)

5. Neglect, fraud, or Disaster. (1%)

It makes sense to avoid the usual pitfalls before working on improving your income. Because the biggest challenge to small businesses today is Incompetence. That does not mean the business owner is stupid, just that they don’t have the proper business education to keep themout of trouble.

Hard on the heels of Incompetence (46%), is Unbalanced Experience (30%), Complacency (12%), followed by Lack of Experience (11%), in the specified field of business, and finally, Neglect, Fraud, or Disaster (1%). These are the leading causes of failure in business today.

These five opponents to your profit margin must be carefully monitored if you want to do more than just make a living in your business.

Incompetence

Let’s start with incompetence. We aren’t saying that people who start businesses are dumb. We mean that they usually start with very little competence in business affairs. They might be experts in their field but not in the complexity of running a business.

The proof of that statement is that 46% of all business failures are caused by a basic misunderstanding about what it takes to run a business.

Take a look at this list and burn it in your memory. These are the leading causes of failure in businesses today. Notice that being stupid is not on that list.

The good news is that incompetence can be beaten out of you with knowledge and experience.

Unbalanced Experience

The second major cause of failure is unbalanced experience. If you just got out of dental school and are extremely talented in your craft, that’s great but if you don’t have a head for business, then you may not be ready to take on that challenge at this time.

Let’s look at a few of the causes of unbalanced experience.

These are usually caused by ad hoc business practices or inconsistent application of policies and procedures.

Complacency

Complacency usually occurs during the mid phase of the business cycle when owners and mangers are doing well but not keeping up with current trends and competitive measures. They are simply coasting. Usually these businesses are doing a marginal job at marketing but relying on their credibility and history for sales.

The entrepreneurial spirit is replaced with lethargy and mediocrity. Competition soon overtakes them and the marketplace makes them obsolete.

Lack of Experience

11% of the people who go into business do not know their market well enough to survive as a viable operation.

Neglect, Fraud, or Disaster

There is that small minority of businesses that suffer from fraud and disaster. A mere 1%.

Bonus Threats – Taxes and Inflation.

Another enemy of business is one that we rarely see coming. If you analyze your income and you’re growing by less than 10% a year, you’re going backward. Real inflation is usually higher than the government estimates. For obvious reasons. They have a vested interest in keeping the numbers slow. Your business has to live in the real world.

Along with inflation you’ll also deal with the various taxes and fees that have to be paid. These don’t seem to go down each year; just the opposite. They all take away from your bottom line.

Let’s look at the odds for a moment. The NFIB estimations are grim at first glance. Remember that the majority of small business owners do not get an education in business before they open their doors.

That is why they wake up one day to realize that they are making little or no money regardless of how much they bring in.

The bigger you are, the easier it is to succeed.

The fewer the employees, the greater your chances of failure! The facts lead to some interesting conclusions. Those businesses that can maintain a large staff tend to have systems in place to give direction and purpose to its employees. That in turn leads to greater income that does not rely on the business owner’s direct input. The business owner is now free to grow the business instead of working in the business.

So you see that the main cause of business failure is redeemable. We can, through proper education and planning, take care of this problem. If you are in trouble financially, you should seek immediate financial counseling. You may be able to get help from your local SCORE program or the SBA in your town.

If you take the time to study the mistakes of others you’ll have a greater chance of success.