Why Most Small Businesses Fail And How To Avoid It

David Tapang

Creative Direct & Founder

David Tapang Marketing

david@davidtapangmarketing.com

Since you're reading this article, I can only assume you have an idea and a dream. You found something to sell and began developing it into a product or a service. You rented the location, hired workers to make the product for you in the hope of fulfilling that dream. You had a friend build your website, you hired a "pro" to make packaging for you and thinking that everything was set to take off, you put it out on the market.


Awesome, you are on your way to making that dream a reality. The sales should just start rolling in right?


The next day comes, no sales. So you ask some of your friends to try it, they love it or think it's a great idea. Maybe some even buy a few or try your service and you've got your first "customers". You're hoping that they will tell others and the sales should just start rolling in but they don't.


A month rolls by and rent is due, salary is due, utility bills, subscriptions and business related costs become due. You pay them as you are "investing" into your business. I need more sales is what you start thinking. You put an ad on Facebook, you post to your Instagram and still no sales.


So you hit up everyone you know, telling them about your product or service. Some like it, some are not interested and some would never have use for it.


Another month rolls by with very little in sales and more overhead keeps piling up... sound familiar? You know you have a great product but the problem is no one knows about you.


If this sounds familiar, don't be alarmed, it's in fact extremely common. According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. A whopping 80% crash and burn.

Let's Compare What 3 Different Experts Are Saying.

Michael T. Deane / Investopedia.com / Ref 1
Melissa Horton / Investopedia.com / Ref 2
Eric T. Wagner / Forbes.com / Ref 3

Not Investigating the Market

Financing Hurdles

Not really in touch with customers through deep dialogue.

Business Plan Problems

Inadequate Management

No real differentiation in the market (read: lack of unique value propositions)

Too Little Financing

Ineffective Business Planning

Failure to communicate value propositions in a clear, concise, and compelling fashion.

Bad Location or Marketing

Marketing Mishaps

Leadership breakdown at the top (yes, founder dysfunction).

Remaining Rigid

-

Inability to nail a profitable business model with proven revenue streams.

References 1, 2 , 3

What Do They Agree On?


📈 Ineffective Marketing (4 citations)

  • Bad Location or Marketing
  • Marketing Mishaps
  • No real differentiation in the market (read: lack of unique value propositions)
  • Failure to communicate value propositions in a clear, concise, and compelling fashion.

📈 Business Model Failure (3 citations)

  • Business Plan Problems
  • Ineffective Business Planning
  • Inability to nail a profitable business model with proven revenue streams.


📈 Lack of Customer Research (2 citations)

  • Not Investigating the Market
  • Not really in touch with customers through deep dialogue.

📈 Underestimating Finance Need (2 citations)

  • Too Little Financing
  • Financing Hurdles

Need I say more? Most businesses tend to the business model, financing it (usually out of pocket) and did some customer research ad hoc (mostly because someone bought it once, so why wouldn't someone else). Marketing is the #1 reason why your business might be doomed.

Marketing should be at the top of your priority and budget list.


I recommend that businesses spend no less than 10% of gross revenue or your budget on marketing. How you spend that money is more important than just allocating it.

The other super key point is that most businesses have no formal understanding of what marketing is, the craft itself, the nuances, and the methods that get the most return in the short term, mid-term and long term especially in this digital world.

It’s not just about having a great ad, it’s more important to have a great strategy you can execute.


If you want to grow your business using Facebook, Schedule a Free Facebook Ads Strategy Session to help you get 20-50 new customers opportunities every month.

Disclaimer: David Tapang can not and does not make any guarantees about your ability to get results or earn any money with our ideas, information, tools, or strategies. Customers are defined as a potential customer, is within your serviceable zone, saw the ad, clicked on it, looked at the landing page, opted in, clicked to IM or call then typed their name, number and email. Nothing on this page, any of our websites, or any of our content or curriculum is a promise or guarantee of results or future earnings, and we do not offer any legal, medical, tax or other professional advice. Any financial numbers referenced here, or on any of our sites, are illustrative of concepts only and should not be considered average earnings, exact earnings, or promises for actual or future performance. Use caution and always consult your accountant, lawyer or professional advisor before acting on this or any information related to a lifestyle change or your business or finances. You alone are responsible and accountable for your decisions, actions and results in life, and by your registration here you agree not to attempt to hold us liable for your decisions, actions or results, at any time, under any circumstance. This site is not a part of the Facebook website or Facebook Inc. Additionally, This site is NOT endorsed by Facebook in any way. FACEBOOK is a trademark of FA

Disclaimer: David Tapang can not and does not make any guarantees about your ability to get results or earn any money with our ideas, information, tools, or strategies. Customers are defined as a potential customer, is within your serviceable zone, saw the ad, clicked on it, looked at the landing page, opted in, clicked to IM or call then typed their name, number and email. Nothing on this page, any of our websites, or any of our content or curriculum is a promise or guarantee of results or future earnings, and we do not offer any legal, medical, tax or other professional advice. Any financial numbers referenced here, or on any of our sites, are illustrative of concepts only and should not be considered average earnings, exact earnings, or promises for actual or future performance. Use caution and always consult your accountant, lawyer or professional advisor before acting on this or any information related to a lifestyle change or your business or finances. You alone are responsible and accountable for your decisions, actions and results in life, and by your registration here you agree not to attempt to hold us liable for your decisions, actions or results, at any time, under any circumstance. This site is not a part of the Facebook website or Facebook Inc. Additionally, This site is NOT endorsed by Facebook in any way. FACEBOOK is a trademark of FA