Owning your own business; it’s the American Dream, right? Needless to say that launching a start up and making one successful are two very different things.
As many have discovered, growing a local small business is a HUGE accomplishment. A large part of this is due to the fact that 8 out of 10 entrepreneurs who start a business fail within the first 18 months. We’ve all heard the frightening statistics, so what challenges are successful small businesses overcoming in their local environment?
What challenges do entrepreneurs wanting to take a crack at sprouting locally face?
There are almost too many to name, but there are a few key challenges that if you’re prepaired for can give you a big advantage. Andrew Beattie provides some wonderful insight into 5 of the Biggest Challenges Facing Your Small Business. Three of the most critical being:
Client Dependence – If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business, but it can be difficult especially when the client in question pays well and on time. For many small businesses, having a client willing to pay on time for a product or service is a godsend.
Money Management – Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. In order to head off this problem, small businesses owners must either be heavily capitalized or be able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.
Balancing Quality and Growth – Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale this may mean not being able to personally manage every client relationship or not inspecting every widget. See full story on investopedia.com
The three issues listed above are three very common core issues. Moving past those there are literally hundreds of other challenges that local small business owners face from registering a business name and setting up your tax ID to the unique challenges of hiring employees. All of these things certainly play a part in becoming successful, but let’s take a look at what real SB owners have to say.
Real World Problems from Local Entrepreneurs:
One thing to point out here is that all of the following business interviewed started with a business plan with realistic expectations for not only making it through their first year but how to build their business for continued success.
1. Getting Customers
Getting customers is no easy task and how to get them is probably the number one burning question with any new start up. There are hundreds of ways to begin building a presence locally. Most businesses start by setting up all of their local directory listings and then begin looking at local advertising opportunities. The one good thing about local advertising is that it is much more affordable to saturate the market with your goods or services, the trick is finding out what avenue is best for your business.
Loren Clear, owner of Men’s HangUps, runs a boutique men’s clothing consignment shop and faced all the same challenges that small business owners run into. Like many, he tried various avenues to bring in new customers. After growing his business successfully the first two years he shed some insight into what he felt were some of the best things that he did to get new customers.
With a local store location is key, which is why I worked with other local retailers in my niche to create “Consignment Row”, an entire retail strip with each of our shops dedicated to men’s, women’s and children’s gently used clothing. This was a huge benefit to all of us for multiple reasons:
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Our three shops created a much larger visual presence than just one store.
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Customers who shopped at one store were more likely to purchase from our multiple shops.
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We were able to reach a larger demographic much more quickly via word of mouth.
Genevieve Keith, owner of Simply Smashing Events had some very creative ways to gain exposure and build her party and event planning business. Genevieve is not only a skilled event planner, she is one of the best PR spokesperson I’ve ever seen. Knowing that she had a limited budget created ways to get in front of her customers locally.
I’ve found that hitting the pavement and reaching out to other local businesses to find ways to utilize each other’s servcies has been very beneficial. I also take advantage of local events. If I can take part in local events that are attracting media attention then my business can draw attention from their marketing hype.
A good example would be when I reached out to the local news regarding DIY party planning tips. This was when there was a lot of news hype leading up to the Oscars, and I was able to get a featured spot each week for tips on how to host the best Oscar party from your home. This was great for my business and for the local new station who has had me back several times for events like Mother’s Day and Graduation.
2. Keeping Customers Happy
Getting customers and keeping customers happy are two of the biggest challenges for local business owners. Once you get them in the door how do you get them to come back, and more importantly; say good things about your business?
I’m sure you all know how important reviews are to any business and even more so to local businesses. Local citation from sites like Facebook, Yelp and Google can be a huge influence on whether or not someone will visit your store. Once you get someone in your store, your customer service has to be impeccable.
Patti Britton, who owns and operates Lasting Effects Permanent Makeup & Salon Treatments says;
My business has been built almost entirely by word of mouth. Aside from providing great service providing people with a great experience is the key to keeping clients coming back. Not only does it keep them coming back it makes them want to share their experience with friends and family.
3. Distribution
For local businesses selling locally produced products, challenges can be quite different. Companies like Apple Outlaw or Cheesorizo may be locally grown businesses but their success depends on sales from a much larger service area. Acquiring successful distribution is essential to having a successful product.
I’ve seen too many businesses with great products fail, because they had no plan for distributing their product. Launching a product is expensive and generating sales in volume is essential. Apple Outlaw is a great example of a local organic farm who had a plan in place before the launch of their new hard cider product. Capitalizing on connections they had already made with retail outlets for their fruit, they planted seeds and anticipation for their upcoming hard cider.
We had been planting seeds with many of our vendors to prepare for the launch of our hard cider. We were able to generate a lot of buzz with our existing retail vendors simply by keeping them in the loop with our new release. Ultimately, we knew the success of our product depended on sales in volume, so we also cultivated relationships with beverage distributors, partnering with one who has been placing our product throughout the Pacific Northwest steamrolling our popularity.
One of the things I love about Apple Outlaw is that they had a clear idea on how to bring their product to market and show initial sales and popularity to potential distributors, providing them with something tangible to buy into.
Do you need a “sales representative” rather than a “distributor”?
You may actually need someone to call on retailers orwholesalers to encourage them to carry your product. These people are called “sales representatives” and may work for several independent manufacturers (until you have enough volume of work to justify your own salesperson). Theyshow samples or catalogs that describe items the companies they representprovide.Their responsibilities vary widely depending on the industry, but finding a sales rep is similar to finding a wholesaler, so following some of the suggestions below will work when seeking a sales representative as well as a distributor. Get the full scoop on finding a distributor @SmallBusiness.com
If you’re thinking of starting your own local business, I’m sure you will find many of these same challenges and most likely a lot of new and unique ones, but hopefully some of these points from local business owners who’ve made it through successfully can help ease your transition.
Have questions, feel free to contact me.
