Amidst the fears of what is projected to be a tough business environment, how, then, can small business owners cope? For SMEs, there is little room to wiggle. You are short on virtually everything, from manpower, and capital to time. And often, there is no cushion to fall back on. When you stumble, you will most likely go back to the drawing board. Put differently, there is no room for error for bootstrapping entrepreneurs.
As an aspiring small business owner and practicing market, I have long identified several pitfalls that can sink your dream and everything that comes with it. I would like to share this with you briefly.
1. Failing to document and implement your marketing plan.
Motivational speakers in the entrepreneurship space usually tell people to just do it! That’s perfectly fine. But to boost your chances of success, you need to put down a properly structured marketing plan. Over my professional experience, I have seen several businesses collapse because they failed to plan their marketing activities.
At the most basic level, a marketing plan provides a detailed breakdown of how a business will achieve its goals, from who your target customers are, where they are, how many they are, how you will get them, and the resources required to get them.
And when doing your plan, depending on the size of your business, consider delegating to other team members. A common mistake among small business owners is keeping all aspects of their business in their heads. From marketing to accounting, strategies, and processes, it’s easy to forget to commit to these parts of your business if they are not on paper.
2. Failure to understand your business environment.
An organization cannot exist or function “in a vacuum”. Before going into business, you must understand your operating environment, both at the micro and macro levels. At the end of the day, your success depends on how you will manoeuvre your business environment. Some of the factors you need to take into consideration include competition, regulation, technology, customer dynamics, suppliers, and distribution among many others.
These factors are crucial and can make a huge difference in how your business runs. Take the forex rate as an example. Two years ago, one USD went for about KES. 110. Today, it is KES 134 and rising steadily. If you are in the import business, or you import materials for production, you must be filling the brunt right now. Understanding the economic factors will allow you to plan well.
3. Lack of a clear customer value proposition
Have you ever attended an investor pitch? You are most likely to hear the phrase ‘disruptive innovation’. But when you take everything apart, it is just another me-too option. In some instances, the customer value proposition doesn’t come out well, if at all it exists. One of the classic small business marketing mistakes owners make is trying to emulate the success of another business by copying what they are doing to the last detail.
Today, customers are faced with so many options. To nudge them to your side, you need to make clear your product or service benefit. Don’t beat around the bush with unnecessary adjectives. Kenya’s real estate developers, for instance, can’t enough of the word luxurious. Saying that an apartment is luxurious doesn’t communicate the product’s value. Instead, features like, location, size, and number of bedrooms are what aspiring homebuyers consider to be important in their purchase decision.
4. Trying to sell to everyone.
It is entirely possible for your product or service to be used by anyone, but it is not possible to target everyone. When you crunch the numbers, you will find that a particular segment uses it more than others. By having a well-defined target market, you can focus your marketing efforts on a specific group of people whose problems your products or services can solve. You can further refine your strategies by developing buyer personas or profiles of your ideal customers that you can use to determine who to target, how to target them, and where.
5. Poor customer relationship management
Another common mistake among SMEs is thinking that one needs a constant stream of new leads for the business to grow. While this seems logical, existing clients can turn out to be silver bullets in netting more opportunities. Instead of focusing on transactions, focus on Customer Lifetime Value (CLV). It is the total amount of money a customer is expected to spend with your business, or on your products, during the lifetime of an average business relationship.
So, build a long relationship with your existing customers even as you look for new business. Consider special offers to existing clients, create additional products or services to keep customers engaged, provide excellent customer service that makes them feel special, and lastly, listen to and act their feedback.