You want your business to grow, right?
There are many reasons why small businesses stay small. Perhaps the owners do not know how to expand. Maybe there is too much competition in the area. Or, the market is saturated.
Did the business owner fail to do the research ahead of time? Often the problem is less clear than that.
Most businesses can fit into one of the following four categories:
- Level 1 – At this level, there is a single point of failure. The founder. A tiny business, usually without any employees, it doesn’t make enough profit to be a sustainable business. Most companies start like this. A business that will succeed in the long-term should strive to move forward from this stage quickly. Most companies fail at level 1.
- Level 2 – The business makes enough profit to be reinvested into the business or paid to the owner. At this stage, there is usually enough revenue to hire the first few employees. Most companies that survive, but stay small are operating at level 2. There is nothing wrong with level 2. You can be happy owning one or even two level 2 small business. It takes an entirely different way of thinking to reach level 3.
- Level 3 – The business owner managed to scale the business. A business can only get to this point if the business owner is willing and able to delegate. Most companies never reach this point. Scaling requires systems. Most entrepreneurs are focused on putting out fires instead of creating systems. Without systems scaling is impossible. Scaling requires a different way of thinking. This is very difficult for many entrepreneurs. Systems make the business founder(s) redundant.
- Level 4 – Large businesses with revenues over $100 million. At level 4 the entire business is built on systems from sales to accounting to customer service. At this level, everyone is fairly easily replaceable. The business is a machine. Instead of being dependent on a hero figure like the entrepreneur, the system is the hero.
Major reasons why businesses stay small:
#1 – Not putting yourself out there
Trying to be modest is an admirable quality, but you have to push it a little in business. If you downplay your business, others will too. You need to be singing the praises of what you do to anyone and everyone. Getting people talking is how to encourage word-of-mouth sales. Chat with people you meet everywhere. And don’t forget social media. You can instantly connect with potential clients/customers in a major way.
#2 – Not knowing where you want to go
You need to have a bigger picture of your business. Don’t just focus on the day to day running of your business. Where do you see your business in the future? Do you want to branch into other areas of service or products? You need to visualize what you want. And, here’s the biggie…write it down. Make your plan as clear as day. Create the steps you are going to take to get there. If you don’t have a vision, how are you ever going to change what you are doing? If you don’t have steps to take, you will be floundering around in the dark. So, take a few days to brainstorm where you are going and how you’re going to get there.
#3 – Wasting time on trivial tasks
Now that you know where you’re headed think about your day to day priorities. Many tasks get flung in your direction as a business owner. The easy thing is to spend a lot of time being busy with tasks. But busy does not mean productive. It is crucial not to waste your time on tasks that are less important. Some tasks feel urgent, because of a deadline. Are these tasks important? Review your “bigger picture” plan. Ask yourself if the task on your to-do list will move your business toward the bigger picture. If not, scrap it or delegate it.
#4 – Fear based pricing
You may have started your business thinking you should keep charges low so people will buy. But when you declare the value of a product or service, that is the value people believe it has. Be open to up your prices. You have more experience now and know how to provide a good service. Why not reflect that in your prices? Don’t just study what you’ve been earning, project what you could be earning. Don’t avoid change out of fear, in pricing or anything else. Lack of change is another reason why businesses stay small.
#5 – Working yourself to death
The final reason why businesses stay small is that entrepreneurs often think they have to do it all. In the beginning, it’s a rush to be doing your own thing, and you will find yourself working (or thinking about working) all the time. But this is not sustainable. On an airplane, you are told to place an oxygen mask over your face before helping others. In business, you have to look after yourself first, too. Only then will you maintain your health and sanity enough to push your business to the next level. Don’t forget about delegation. There are writers, accountants, and virtual assistants readily available online 24-7. You should be thinking about outsourcing tasks or passing them on to your staff at all times.
#6 – Incorrect amount of risk
There are two kinds of risk in business. Both of them are dangerous for different reasons. There are business founders who take on too little risk. They invest too little time or money, and they never quite reach their goals. Some entrepreneurs take on too much risk. When you take on too much risk, it might be impossible to recover.
Although there are some reasons why small businesses stay small, they are easily avoided with a little bit of effort.