Small business is the staple of this great country, the definition of “The American Dream”, and the biggest employment segment in the US. However, over the past 40 years small business has been struggling. Between 1978 and 2012 the number of companies less than a year old declined by 44%. Even more disheartening is the fact that new businesses are dying faster than they are being born. Meaning that not only are small businesses starting at a slower rate year over year, but the ones that are “closing up shop” are surpassing the amount of businesses opening.
The full explanation for why is beyond the scope of this post. But, as a brief outline, I will touch on some of the main causes.
- Big Box Stores: The big box stores achieved economies of scale. By having many locations and a large amount of buying power these companies were able to order massive amounts of product for a price lower than their competitors. Using that price break they could undercut the small stores and attract budget conscious customers. Beyond that, because of their sheer size they were able to take on the risk of having large inventories with endless amounts of products and becoming a “one stop shop”. Lastly, because of their massive income they had the ability to pay a premium for advertising and slowly suffocate their opponent.
- The Recession: While the recession is a more recent event, its effect is just as important – especially for millennials. Many millennials who are now “20 somethings” came of age during a time when many families were struggling to make ends meet. This gave them an inherent urge to save money, buy in bulk from large stores that offer tons of discounts, and shop for everything in one central location.
- Shopping Difficulty: One of the lesser talked about problems was the impatient consumer. During the past 40 years the consumer world has switched from “send in your proof of purchase and a check or money order and you will receive X in 8-12 weeks” to “free 2 day shipping”, “site to store”, and “guaranteed in stock”. We live in an instant gratification world where binging television and reading spoilers because we can’t wait to finish the 2 hour movie are commonplace. This created a struggle for small businesses that couldn’t afford to keep large stocks of items or provide free shipping on every product.
Things are changing
The winds of change are coming. As the recession becomes something that happened over 10 years ago people are beginning to purchase more. As debts are paid more disposable income is available. However, many people still hunt for the deal and want to get the best price possible – the biggest bang for their buck.
Big box stores are losing their glamour. While they are able to consistently provide the services they are known for (a large inventory of cheap items) they have slowly built an unhealthy stigma that many are struggling to break. Low wages, poor customer service, and cheaply produced products have become the center point for these stores and because of these issues many customers are taking their dollars elsewhere. However, it should be noted that for every big box store dealing with a stigma issue there is a big box store ready to take its place. So, just hoping that they whole system implodes on itself is not a good plan.
Lastly, because of the advent of the internet and the increase in transportation technology and logistics many of the instant gratification issues small businesses once faced have been eliminated. Shipping is becoming increasingly easier and more affordable and finding, purchasing, and re-selling products takes less effort than ever before giving small business a more level playing field with their bigger competitors.
You’ve got to market though!!
Big stores are getting sour reputations, the public is more willing to spend again, and sourcing and logistics is getting easier. So why are these businesses still failing? Why do small business owners complain about not getting enough business? Why??
The answer: Marketing. In my profession, I see three types of small business owners.
- The entrepreneur: This is the business owner that wants to shoot for the stars.
- The Willing but Struggling: This is the business owner that wants to do more, but doesn’t know how, doesn’t have a plan, doesn’t have the time, and is scared to spend extra money.
- The Un-Willing but Complaining: This is the business owner that is bitter that local businesses are struggling. They constantly complain that people no longer support their shop and can barely make ends meet – but express no real interest in fixing it. They simply want to ride the wave for as long as they can collect a paycheck. The drive and ambition that once motivated them to start a business has disappeared.
Each of these business owners can break into the market stronger than ever and begin selling or servicing more than they ever thought possible. If you see yourself as the entrepreneur you’re probably already marketing, but sometimes everyone needs help. Don’t be afraid to check your ego at the door and find help if and when you need it. You’ll thank yourself later!
If you are the willing but struggling my best advice that I can give you is JUMP! It may not be easy at first – but was starting your own business in the first place easy? No. Nothing good can ever come from playing it safe. The world moves way to fast and access to information and other sources is way too easy for you to play it safe and wait for the opportunity to present itself. As with the entrepreneur (a spirit that burns in you too) don’t be afraid to ask for help. Wondering how you got to the point where you’re over-worked and don’t have time to focus on anything more than keeping the business afloat can be discouraging. Overcome that discouragement and find someone that can help you market like you mean it and build your brand beyond your wildest dreams.
If you are un-willing the only thing that can fix your business is you. At one point in time you were an entrepreneur with a dream and a vision. As you began to experience mild success you may have moved into the willing but struggling category. Whatever the reasoning or event was that caused you to move from willing to un-willing needs to be overcome before you can ever regain your success and fire. As I said with the other examples check your ego and reach out to others for advice, help, and strategy. You would be surprised how many people want to see you succeed and are willing to help.
So now you’ve decided to JUMP and take the leap to propel your business to the next level – but what’s next? Chances are you will need some help. If you are a small business, you probably don’t have a marketing department and you don’t have the time to do it yourself. So, you can either hire an employee or a company to do your marketing for you. Either way you are going to have to spend some time and money on your adventure. After all, beginning a marketing campaign is similar to beginning a business. It takes money to set up everything, but if you do it right it will pay off more than you could ever hope.
Twenty Four Media is based in a small town. We love to help small businesses grow and realize their full potential. Want to chat with us about how we can help you go from a small town business to a business with a national sales funnel? We’d love to talk with you!