I have noticed a disturbing trend since I began directly engaging with small business owners via social media. Specifically, it has become more apparent to me why many small businesses do not make it to the 5 year mark. Forbes.com Contributor, Eric Wagner, wrote an article covering the reasons why 8 out of 10 small businesses fail. Everyone knows the typical reasons, including the fact that many just run out of cash. However, the number one reason I believe that small businesses fail is COMPLACENCY. Why complacency?
It is very easy to stick with what you know, rather than developing alternative income streams when times are good. Business owners who have spent untold amounts of time, money, and energy on building their current client list can get comfortable when profits appear somewhat stable. They may decrease the amount of marketing that they do to focus on client service, and because time is a limited resource, they may very well cease doing any business development at all. When the business cycle shows a downward trend, which it inevitably ALWAYS does, and profits start to slide, many owners go back to doing what they know best…. and pray that it works.
At my firm, we recognize this tendency toward complacency and steer our clients toward avoiding this trap at all costs. As we coach our clients on winning strategies for bidding successfully
on contracts, this is always at the back of our minds. Specifically, we want our customers to thrive even when people stop buying and credit lines are cut. Yes, governments do cut contracts, but Jerry and Sue down the street will run out of cash well before your federal or state government. Government contracts provide an amazing buffer that small businesses need to keep their local economies stable, their institutions funded, and most importantly, their businesses solvent in even the most challenging times.