Three Ways to Prepare for Business Success.

According to a 2022 Industry Canada Report, on average, after 5 years, 65% of businesses started are still in operation. That number further reduces to 45% by year 10. This means that 5.5 out of 10 companies started, disappear on or before their 10th anniversary. That's an astounding 55% failure rate.

Since 2020, Canadians have witnessed a high percentage of entrepreneurs and independent business owners forced to shutter their businesses.

In many respects, the recent Covid-19 Pandemic and the current economic outlook are the culprits for the rising operating costs of doing business. Particularly, labour costs and raw materials have increased significantly. In addition, transportation costs, fuel and inventory prices have skyrocketed due in part to the present supply chain.

Along with federal and provincial political mandates, these were the stressors for businesses resilient enough and fortunate enough to survive these disruptive times. They are now content with greatly decreased profits or just happy to break even.

On the surface, the primary reason for the high number of failing businesses is that they simply run out of money. I repeat companies fail because they run out of money. However, the cracks in their foundation begin well before the brutal realization of financial collapse.

How does it happen? How does it get to the point whereby financial decisions (all business decisions are financial ones) can no longer be made?

Although there may be several causes of a business's permanent shuttering, consider the following three ways to prepare for success and to avoid being an Industry Canada statistic:

#1 - Stay in Touch With Your Customers

Your product or service is not meant to please you, it is meant to please your customer. Remember, a business's main purpose is to offer solutions to customer problems and not just a business's products.

Understand your customer's real pain and provide a meaningful solution. Are you having conversations with your customers to find out what they seek from your business, from your product or service? Are you satisfying your customers' wants and needs?

In the long run, this two-way communication will build customer loyalty, create goodwill ambassadors and foster growth. Client dialogue is vital and tweets don't count.

#2 - Declare Your Uniqueness and Real Value

While it is true that educating the client can be a long drawn-out process and an expensive marketing methodology, it is very necessary if you're determined to differentiate your business from your primary competitors.

Seek first to understand your target market and then develop your business's value proposition. In turn, spread this message to your customers and help them understand how and why your product is different and better than your competitors.

"Why should your target customers buy from you and not your competitor? What's in it for them?" –Business Planning Specialist

Why should customers prefer your solution to the problem? Start with this question as a fun exercise for you and your team at the next meeting. Ask them the question: why should the customer buy from us and not our competitors?

Create a list of all the differentiation points that set your business apart. This proactive exercise will help create your business's unique value proposition.

Let's for a moment reflect upon those businesses that depended on walk-in customers during the 2020 and 2021 mandated lockdowns when walk-in trade was not allowed and at other times permitted only at incremental levels.

Many businesses, especially those in retail and food service, needed to adapt. They quickly introduced a variety of ways to meet their customers' needs including online ordering; order pick-up arrangements; order delivery and more. Many realized the importance of web presence and e-commerce stores (which they may not have had previously).

Businesses unable to adjust, or modify their business model and did not uniquely address customer satisfaction, forced their enterprise to extinction. Those that did exist today.

#3 - Conduct a Market Share Analysis

The third consideration has little to do with any pandemic or economic downturn issue, but rather, with how well you have conducted your business research.

From idea to launch, several important decisions are made. Undoubtedly, some of those decisions will have had a direct correlation to business sustainability.

Is there an ability in your business model to generate sufficient revenues and adequate profits? In other words, are there enough customers that seek out and need your product or service for the business to overcome Industry Canada’s horrid 55% failure rate, and to support your ongoing lifestyle?

Your answer evidenced by your research must be unequivocally YES.

Do the Research - Plan for Success

No doubt these are challenging times for all start-ups and small independent business owners. Regardless of the economic environment, it is essential to examine the importance of a comprehensive business plan inclusive of a sustainability study, a competitive analysis, and a market differentiation/unique value proposition, to help propel your business.

Tip: Keep it simple and get back to basics.

Complete an environmental study on your industry as a whole; including a Primary and Secondary Competitive Analysis; and an Ideal Customer Analysis (Target Market).

Ioannis John Anagnostou is the owner of businessMD. businessMD is an expert small business solutions firm offering bespoke and high-spec business plans, targeted marketing strategies and other business-related documents, helping Canada’s micropreneurs and independent small business operators find business success. Let’s Talk http://www.bizMD.ca