In the vast majority of cases, those running small business have one goal that stands above all others – to get bigger. Whether they do or not though is quite a different matter. If you are looking to expand your small business, then the figures for new business failure might not make for very encouraging reading. The majority of new businesses will have failed after the first couple of years, and a sizeable proportion of them fail almost straightaway. For many of those businesses, immediate failure might have seemed, in retrospect like a blessing. This is because the ones which fail after around four of five years do so after a period of stagnation. What we can take from this, then, is that stagnation does not mean a business that does not grow, but a business that is waiting to, sooner or later, die.
But why do businesses stagnate? fastFACTR, a company offering invoice factoring for small businesses in just this position, stress that there is no one reason businesses stagnate, and so you should be aware of all the ways it can happen.
The Danger of the Careful Approach
Perhaps there is actually one overriding reason businesses stagnate – caution. This is understandable given the failure rates of new small businesses. Of course, there is a way to be careful and not to stagnate. Expanding too quickly can be just as much of a problem, getting you expensively in over your head.
Furthermore, given that learning from mistakes on the fly is pretty difficult and that ignorance of the market is one of the major reasons for business failure, there is much to be said for the cautious approach. Nevertheless, overly fastidious attention to small details runs the danger of business stagnation, which is a delayed death sentence.
Main Reasons for Stagnation
So, what are the things which most often lead to stagnation for small businesses? Here are the most important things to look out for and thus avoid:
Inadequate Customer Engagement
Customer engagement is a pretty broad term, so it’s worth considering what it means. Proper customer engagement most often takes the form of good customer service, rewarding customer loyalty, inspiring trust among customers and asking for feedback. These are all vitally important for a successful business of any size. You need to think of customer engagement as becoming more intimate with your customers. Encouraging their loyalty and trust, treating them well (customer service), and asking for feedback are all ways in which you and your customers get closer. The reason your business is stagnating could be that you simply do not know what your customers want, so ask them.
Insufficient delegation, or to put it another way, trying to do everything yourself. There is a misconception with small businesses that this is perfectly possible and the temptation to do so springs from a desire to keep costs down. Nonetheless, while you might think you are managing everything adequately now, you might be making it impossible for your business to get any bigger.
You Don’t Stand Out
This an age-old piece of marketing advice and it is one of those business maxims that will always apply. However, there is confusion about how to stand out – in marketing, products, price rates, what? If you do not stand out, this could put a ceiling on your customer appeal, in turn leading to stagnation.
Ultimately, the best way to prevent the stagnation of your small business is simply to have a long hard look at it, and to notice when the stagnation is happening in the first place.