Small Business Tips

6 statistics small business owners need to pay attention to, and how to avoid becoming one

6 statistics small business owners need to pay attention to and how to avoid becoming one.jpg

If you are a small business, no doubt you’re worried about the statistics that indicate you could fold up any time within the next five years. But it's not all bad news. The latest findings from a US Bank study have revealed the reasons why most small businesses fail during this time. So why not take a look at these six statistics and see how you can avoid these pitfalls.

1. Small business cash flow problems are responsible for 82% of failures

Poor cash flow management is one of the main reasons most small businesses fail. Your cash flow is generally an indicator of your business’ viability and takes into account your income minus your expenses. You can identify if you have a cash flow problem by running regular cash flow statements. To be viable you should be experiencing positive cash flow overall, especially in your operational activities. Cash flow issues can be caused by things such as late payments from customers and squeezed margins, but identifying them will help you put provisions in place so you can continue to operate and make you more likely to be given future funding to promote expansion.

2. Not having enough cash when starting up results in failure for 79% of small businesses

Many businesses forget to budget for what happens after they’ve opened their doors. To avoid running into this problem, you need to budget for at least enough cash to run your business for six months after you start trading. As a rule of thumb, you must be able to run your business for at least one year without expecting funds from sales.

3. Lack of thorough research and planning leads 78% of small businesses to fail 

A well-developed business plan makes it possible to run your company with a coherent and strategic vision. On top of that, by researching your industry, local/national economy and competitors carefully, you can anticipate problems and learn from others who are succeeding. It’s never too late to start identifying your threats and opportunities.

4. 77% of small businesses don’t succeed due to improperly pricing their products or services 

Avoid the temptation to severely under-price your products or services in the hopes of increasing trade. While you may think you are undercutting the competition, you can actually make your business unsustainable in the long run if you aren’t making enough of a profit to operate on. When setting prices, be sure to account for all your expenses in providing the product or service, rather than just plucking a number out of thin air. 

5. An over-optimistic attitude to potential sales and cash flow puts 73% of small businesses in danger

Optimism can give you the perseverance to succeed in business. But don’t confuse it with ignorance. Careful planning and understanding of your industry will help you avoid huge disappointments. It’s better to err on the side of pessimism by taking into account any issue that could go wrong and planning for those eventualities, such as losing a supplier which could impact your cash flow. 

6. 70% of small businesses fail because they do not consider their problem areas and fail to seek help from experts

Every business has a weakness. Is yours lack of branding, business acumen, a broad customer base, or limited financial reserves? Take a long look at your business and be honest about where the problems lie. Next, identify the experts or training which can help you overcome them, whether it’s enlisting the help of a marketing firm, narrowing down your target customer, building strong business relationships or finding alternative sources of revenue for times when working capital is low. 

If you need financial support to ensure your small business makes it through its first five years and beyond, we can help. At LVRG, we fund America's small businesses by providing working capital and cash flow solutions. Talk to us any time and see how we can be of help to your business.

 

Small business owners survival guide when everything seems stacked against you

How to survive as a small business owner in today's world, when everything seems stacked against you.jpeg

If you own a small business you may be feeling like you are working against a number of forces and no one is in your corner. Does it feel like you're paddling upstream, without an oar? if so, you're definitely not alone. These days, customers are never satisfied, most people want everything for nothing, vendors are no longer willing to work with you on payment terms, and overall you just feel disrespected. Then you have the challenges of people not wanting to shop in store, because they'd rather sit at home on their phone and shop online. Oddly enough, many consumers like living in areas with vibrant, bustling downtown small business districts, yet they simply refuse to spend money in the small businesses within them. Add to that the inherent challenges of running a sustainable small business, such as managing cash flow, stocking inventory, hiring competent help, and maintaining sufficient working capital; many small business owners these days are ready to throw in the towel. Many, already have.

First and foremost, the right financing can help your small business have the financial security you need to focus on overcoming the challenges in today's marketplace. With the current environment of difficult customers and a lack of loyalty, you will need to devote a lot of effort and attention to clearing those hurdles in your effort to succeed. Don't let your cash flow management issues hold you back from dynamic growth and success. Historic data shows that 82% of all small businesses will fail due to lack of cash flow, poor cash flow management skills, and/or poor understanding of cash flow. Historical data also shows that 70% of small business owner fail from not recognizing, or ignoring what they don’t do well, and not seeking help from those who do.

Competition isn't killing your small business, you are!

Dealing with this reality can make you feel as though your efforts are all for naught, but when you find your niche, such worries can disappear. There is a market segment that is interested in developing relationships with their service providers, but to attract a loyal clientele there are a few imperative steps. Yes, it is true that today's market is beyond cruel with so many consumers simply gunning for the lowest price, or the fastest deliver; but that doesn't have to be your reality!

Under-promise and over-deliver

Many service providers and small business owners believe that telling their customers what they want to hear is a good business model. However, studies and general common sense reveal that being upfront and honest with one's customers is the best way forward. If you are a small business owner, it is important to always meet the needs of your customers. Yes, this does sound obvious, but there are many small business owners who overpromise and then, sadly, underdeliver. When you keep your clients' expectations at a reasonable level, you are more likely to delight them and exceed their needs. 

In today's ridiculous marketplace, where Amazon is undercutting everyone and wiping out entire industries by an excessive magnitude, keeping the customers who want more than the best price is essential. Once you find your performance niche, you will need to market yourself to the people who are most likely to appreciate your services and products. No one likes to be undercut, or lose customers who are chasing the lowest dollar, but when you are able to delight the customers that matter, you are more likely to grow a vibrant and thriving business.

Know your customer

The best way to develop trust with your customers is to listen. When you hear their feedback and then adapt to their needs, you will forge relationships that last a lifetime. It can often feel like you are just spinning your wheels and providing services that no one appreciates. When you feel like this, it is so easy to feel burned out and unappreciated. If you are putting your best efforts forward and striving to outperform your clients' expectations and still feel like you are coming up short, you may wonder if it's worth it. Before you throw in the towel and give up on your dream, it's important to take stock and do the research on your target customer. 

When you find out what your preferred customer is looking for, it is akin to striking gold. Once you recognize who your best customers are, it behooves you to strive to meet their every need. When you are feeling like the whole world is against you, the best remedy is to reach out to the people who appreciate your products and services the most! Don't let the price shoppers get you down, focus instead on the clients that are there to appreciate and embrace your business. 

Relationships are key

Once you have recognized the people who are the right fit for your small business model, the next step is to court them and encourage their loyalty. Are you offering perks for your regular clients, or expanding your product line to better suit their needs? Yes, today's consumer environment is beyond cutthroat, but that doesn't mean that there isn't room to grow your business and give your current customers a reason to keep coming back.

Forming business relationships in this digital age

When you are able to attract the customers who are looking for service and not just the best price, you will begin to build trust with them. Trust is the foundation for a continuing relationship that benefits both sides for the present and the future. Relationships that are based on trust are able to withstand price fluctuations and variances in the marketplace. 

When you are focused on providing the top-quality service and products that your best customers and clients expect, you will be able to rise above the penny-ante price chasing that is killing so many small businesses. If you are feeling like your market is filled with customers that are doing nothing but wasting your time, your best strategy is to rise above them and serve the customers who are worthwhile, and will help you meet your future business goals.

Get your financial house in order

If you are a small business owner and are aware of all of the pitfalls that today's business environment holds, you know that now, more than ever, it is important to have your financial house in order. If you are lacking in working capital or other business funding, it is imperative that you find a financial partner that can help you get through the tough times that almost all small business owners face. Same thing applies, as what's mentioned above, it's best to choose a real small business finance company that you can establish a long term funding relationship with, and not some fly by night lending website selling fast small business loans. When you find the right small business lending partner that is able to provide the small business loans and working capital that you need, it can feel like your worries disappear overnight. 

Don't overlook the peace of mind that proper financing can provide in this cutthroat business environment. When you are a small business owner who knows that your product or service is exceptional and is ahead of the pack, the right funding can help you to reach the right customers. Don't let the typical issues that come with cash flow management when running a small business hold you back. The right financing can make the difference between stagnation and exponential growth for a small business owner. 

Don't let cash flow variances get you down

Almost every small business that has been in existence for more than five years understands that there are going to be many cash flow variances from month to month that can be discouraging. It is difficult to rely on small business cash flow when there is such a strong variance from month to month. This variance is just one more challenge of owning a small business and is something that must be overcome. if you are looking to face this challenge head-on, consider a small business loan that can help you to even out these month-to-month discrepancies. 

Are you a small business owner who is struggling with managing cash flow? LVRG is here to help you get the working capital you need to succeed today and well into the future. Contact LVRG today and find out more about our small business loans and how they can increase your viability!

- Guest post by: Charles Barr (Co-Founder & Director of LVRG)

 

Competition isn't killing your small business, you are!

Competition isn't killing your small business, you are!.jpg

First and foremost, competition only exists when you’re doing the exact same thing as everyone else. And if that’s the case, you have major challenges on the horizon.

Mark Cuban said, "there are 10,000 people doing the same thing, why would you want to be 10,001?" If you (as a small business owner) want to survive in today's overstuffed, ultra competitive business climate, it's absolutely imperative that you figure out a way to break apart from your direct competition and create your own niche.

Many small business owners fail, because they don't have a Unique Selling Proposition (USP) and they just get lost in the shuffle. The interesting thing about a USP is that this unique attribute, or feature, doesn't necessarily have to be unique to you, your product, or your service; you only have to create the perception that it is unique in the mind of the audience you are addressing. And if by so doing, you become the only one in your business category talking about your product's special attribute, you end up owning its uniqueness. A strong USP lets you to stand apart from competitors and actively focus your energy on creating things that cater to your ideal group of customers. A few simple fixes, and you'll hit the gas!

By answering the following questions you be well on your way to defining your USP, and the outcome with help you to convey key messages and position your brand in the wider marketplace.

Ask yourself…

  1. Why should your customers believe in your brand, product or service?
  2. What gives you the edge over your competitors?
  3. How does your business stand out in the wider market?

By answering these three questions you should be able to make a series of strong statements about your brand and how it's unique. If you can't answer them in specific detail, you better go back to the drawing board and figure them out quick. These statements will form part of your key message, which can be used to communicate your USP via your marketing, branding, and advertising strategies. Every part of your business, from letterhead, business cards, signage, brochures, website, apparel, marketing campaigns, email templates, etc., should all clearly validate your USP. Look, if you can't define what the heck you do and why you are different than everyone else, nobody else can either.

Would you do business with you? If yes, why? If not, it's time to make changes. You know your business inside and out, but potential customers don't. So, tell them what makes your business unique, and why they should do business with you? What "value" can you offer them and how can your product, or service, make a positive impact in their life? Think about what impacts your buying decisions, and integrate them into your business strategy. Bottom line, small businesses are imploding fast than ever before, because they are simply not unique. And until small business owners figure out a way to be unique in their space, they have zero chance of survival. There's no denying that we are in challenging times, and it's rough out there.... BUT, YOU CAN DO THIS!!!

Hope this helps a bit. We're here to help!

 

5 simple and super effective tips for growing your small business

5 simple and super effective tips for growing your small business.jpeg

If your small business solves a certain need in the marketplace, there’s no reason why it shouldn’t be profitable. However, as competition increases in your space, you may need to design a strategic plan to grow your business.

Here are five tips to help take your business to the next level.

Carry out research

Most businesses fail because owners don’t put in the time to research the market. Research can help uncover some of the needs of your customers have which are not being met. Without research, it may be impossible for your business to have a strategic advantage over competitors. As such, it’s vital for all sizes of businesses to dedicate time and resources to research every aspect of their business and industry.

Set goals

To successfully grow your small business, it’s crucial to set goals and try to achieve them. Without setting goals, measuring improvement in your business can prove to be a challenge. Goals help you and your team have a sense of purpose and direction. But it’s important to create goals that are specific, deliberate, attainable, reasonable and time-bound.

Delegate tasks

Delegating tasks and responsibilities is important when you’re trying to grow your business. Most business owners fall into the trap of trying to do everything only to end up burnt out. You’ll be more successful if you hire people to handle the tasks or responsibilities you are not good at.

For instance, if you’re not good at marketing, hire a marketing agency to do the work on your behalf. Even if you don’t have enough money, you can always hire independent contractors to get things done.

Increase your customer acquisition effort

Without a stream of customers flowing into your business constantly, you’ll struggle to grow your business. Dedicating time and effort into promoting your business can help you acquire new customers. But your lead generation efforts must be consistent for you to be successful.

Seek funding

Sometimes the best way to grow your small business is to seek funding. Acquiring a fast small business loan won’t be difficult if you have positive cash flow. Borrowing money can help you hire more staff, move to a new office, or simply stock more inventory, etc.

These tips can help you achieve growth in your business. Remember, if you don’t have a well-thought-out plan from the start, it’s going to be difficult to achieve consistent growth year in year out.

If you’re looking to grow your business, consider partnering with LVRG for cash flow funding. We're one of the leading fast small business loan providers in the US.

Contact us today to learn how our loan products can help grow your business.

 

Forming business relationships in this digital age

Forming business relationships in this digital age.jpg

Life as a business owner in today's digital age can be challenging, even on the best of days. It may seem like the future of small businesses is very bleak, with many independent owners closing shop due to increased internet competition, ever decreasing profit margins, and a future that seems very uncertain. While all of these negative factors are certainly true, there are still consumers who are looking for more from their shopping and services than the lowest price. Relationships are still possible, even as so many shoppers turn to the internet for their purchases and disregard all sense of loyalty as they search for the lowest possible price.

On the positive side, there are still aspects of owning a business that are based on the interaction between owner and customer, and cannot be replicated by online transactions. There are certain key foundation tenets that, once in place, can smooth the road to success and help you to stay in the black in spite of the many challenges that face small business owners today. Obviously, the rules of basic good business still apply, and when you are strategic in your planning and customer interaction, you can make progress in even the most challenging of situations. These tenets include high-quality service and products, communication, and the transfer of knowledge and expertise.

Small business owners can often feel overwhelmed by the modern sales and service environment, and feel that they are working to simply stay alive rather than succeed. From online competition to rock bottom pricing that eats into already narrow profit margins, today's independent business owners can begin to wonder how they are going to be able to squeak out a living as they juggle bills and expenses in an attempt to manage their cash flow. 

There are several important strategies that one can implement in order to rise above the limitations that are inherent in today's challenging marketplace. These tips can help you to increase your revenue and profit levels while helping you to remain true to the stated mission to serve your customers at the highest possible level of quality:

Differentiation

In today's competitive landscape, you have to give your customers a higher level of service than what they can find elsewhere. While this is basic business ownership 101, this attitude can sometimes be difficult to maintain when it feels like you are working for fewer and fewer dollars. Yes, there is a massive trend these days for consumers to chase after the lowest available price and disregard other more emotional and experiential factors. However, if you consistently provide top-level service and delight your customers time and again, you will gain a reputation that will serve you well with shoppers who consider more than price when making their purchase decisions. 

It may not seem like it, but many consumers do prefer to engage with purveyors and service providers with whom they have established a meaningful relationship. Take advantage of this reality and do more to reach the type of consumer that will be a loyal customer today and well into the future.

Relationships

Even as it seems like the buying public is simply searching for the lowest price available, and no one cares anymore about customer service or building a relationship with their vendor or service provider, there are still niches where that personal touch can make a significant and positive difference.

Forming business relationships in this digital age lvrg funding charles barr.jpg

If you are in the service sector, whether you own a salon or a restaurant, you have the chance to make a difference in your customers' everyday lives. Listening and responding to your clients' needs is an effective way to become a trusted provider and build a loyal clientele that will continue to come back again and again. Have you tried special "regulars only" pricing or creating loyalty rewards programs? Even providing your regular customers with special perks that are not part of a dedicated rewards program can help them to feel appreciated and part of a larger community.

Organic growth

As your business moves through the different growth stages of the business cycle, from start-up to established endeavor, it can be difficult to maintain organic growth, especially as profit margins can become razor thin. When you are properly capitalized and actively managing your cash flow, you will begin to see trends in your sales and profit margins, as well as areas for organic growth. By recognizing the areas where you are seeing the highest profit levels, you will be able to steer your business into those niches. Organic growth hinges on the pursuit of expanding known successes in a targeted manner, rather than taking a scattershot approach to your business. Constant analysis of your successes and failures will provide the necessary insight to discern the direction to steer your business for even greater success. 

Sufficient capital

LVRG provides business funding and small business loans to independent owners who are an established entity and are in a continuous growth mode. It is clear that in today's market, continuous growth is a necessity. Maintaining a healthy small business with a vibrant cash flow can be the difference between success and failure, whether your business is in year five or year seven. If you aren't actively managing your cash flow, your working capital is likely to be too low to maintain the continued growth approach that is necessary for success. 

Knowing when it is time for a capital infusion can mean the difference between stagnation and success, and as small business owners, if you aren't moving forward it is only a matter of time before you begin to slide backward. Concentrating on the business lines and products with the healthiest profit margins is one way to keep your revenues growing. Another is to expand onto the internet and offer your clients both a virtual and a real-world experience.

If you are an established business owner and are feeling like you are constantly treading water, the team at LVRG can help you to determine if additional capital funding is the right move to enable the future success of your business. We work extensively with frontline vendors and service providers, such as nail and hair salon owners, boutique owners and clothing designers, restauranteurs, craft brewers, and bar owners. Yes, it is easy to feel dismayed when members of your regular clientele continue to flock to the online marketplace seeking the cheapest price, but it is still possible to survive in these rough waters.

Contact LVRG today and learn more about our passion for helping independent and small business owners to succeed. We can address your capital shortfalls and help you manage your cash flow more profitably.

Forming business relationships in this digital age charles barr.jpg

Author: Charles Barr, Co-Founder & Director of LVRG Funding. Charles is highly dedicated to the genesis of professional development, social networking and civic engagement, with a passion for cultivating creativity, entrepreneurship and a spirit of community.