Why Small Businesses Fail? by Frank Pagano

Every so often I come across the small business owner with a relatively new company and no idea or focus on how they will market their goods or services. In my opinion, starting a business with no capital to invest in marketing is setting it up for absolute failure.

Then you have the small business owner who has a few dollars in their pocket. They throw money at every “marketing” opportunity that comes their way without vetting each one to make sure it is right for them. I recently met a young woman who started a bricks and mortar IT solutions company for consumers and small commercial businesses. When speaking with her, she mentioned needing a marketing plan, and I agreed. In fact,  I was impressed that she knew that having a marketing plan in place is a must have for a new business.  As I learned more, I found out that she had already signed up for an advertising campaign on the back of supermarket register tape.

Although I appreciated her gumption,  I was a little concerned with her choice of advertising vehicle. I am a supersaver, and I enjoy a coupon just like everybody else, however, in all my years I have never,  ever used a coupon on the back of the supermarket register tape.  I would more than likely pay more attention to an ad that was on my supermarket basket then to one on the back of register tape.  If you’ve noticed even the survey information that most companies now put on your sales receipt appears on the front of the receipt, not on the back. You see some time ago someone thought to leverage the real estate on the back of register receipt tape. However,  consumers are not falling all over themselves to use them. I am more likely to use the store coupons that the register spits out on a separate piece of tape than on the back. In fact, I use those printed store coupons all of the time as they often offer money off of my next store purchase. The offers are never any good on the back of the receipt.  Also,  many stores opt to include information on the back of the receipt to convey return policies.  Besides who holds onto supermarket register tape to use the coupons?

The small business leader in question says that she committed to advertising on the back of supermarket register tape for one year at $250 a month. For a start-up business, a $3000 commitment to one type of advertising opportunity is ill-advised.  If you do not have a large budget to begin with, your advertising decisions should be focused on the habits and needs of your customers as they relate to your business. In my estimation, this business would do well to be in front of homeowners on a regular basis because they provide a service that someone only needs – when they need it. So probably putting together a branded direct mail postcard campaign (yes this is old school but for certain business models it makes sense) over a significant period would be beneficial. Perhaps a postcard with a magnet business card hot glued to it so that folks can pull it off and put it on their refrigerator (real estate agents use this tactic brilliantly.) She also could’ve done a targeted online marketing campaign via Google or Bing ads to get people who are searching for her types of services in her target market area. A $3,000 budget would certainly go a long way on an online advertising campaign.

I leave you with this advice: small business owners should spend their advertising and marketing budget wisely and vet opportunities for a return on investment. Don’t commit to 12 months of anything. Try it out for three to six months to see if you get any leads or sales. Take the time to put in a special offer or mention codes so that you can track where your leads are coming from. When in doubt seek the help of the seasoned public relations and marketing professional who can provide strategy and guidance that can help you save money. I often provide PR and marketing engagements of three –six months with clients to help them get through some critical times in their business cycle.

I encourage all small business owners to invest some of their time and budget into marketing and communications to help brand their business and generate leads. However, don’t make hasty decisions that could hurt your business and more importantly your bottom-line.