In recent years, I have been working full-time while also taking care of my child, and in my spare time, I have been helping small businesses with their marketing consulting. My original intention was to help my friend’s business; his business was small and had quite limited resources and a lack of branding awareness and professional marketing talent. Then I worked for a boutique digital marketing agency and served 20+ local small businesses.
In Canada and the United States, small businesses account for the vast majority of the market (73.9% of businesses in Canada have less than 10 employees, and 88.1% of small businesses in the US have less than 20 employees).
Many small business owners often think that posting on social media platforms such as Facebook, Instagram, TikTok, and YouTube, making phone calls, sending promotions and discounts, and sending messages is marketing, and they miss out on many opportunities.
Why is it difficult for small businesses to grow? In addition to a lack of funding and sufficient cash flow, I have also identified that there are 13 reasons during my consulting process why small businesses remain “small.”
Small business owners are usually very hardworking and diligent. Many of them laugh and say that they are “working for themselves”. Many of them hold multiple roles, including financial managers, marketing managers, general managers, procurement, customer service, technical directors, and operations, to cope with various challenges and demands. In the initial stages, many small business owners need to work long hours, such as 60 hours per week, even over 80 hours. In such a complicated situation, they can only focus on the present and find it difficult to consider the long-term and future.
Narrow Vision: As mentioned above, many small business owners can only focus on the present and rarely have a 3-5 year or even longer vision. Moreover, they often only pay attention to local market competition. For example, during the pandemic, people had already become accustomed to online meetings, but one of my small business owners failed to timely use this trend to expand their business into the cross-time zone and cross-regional vertical markets. They still kept their attention within a 20-kilometer radius local. Although, in my opinion, their business can easily expand online.
Small businesses usually pay more attention to the B2C market because managing and following up on B2C sales is already quite time consuming, and they do not have the time and energy to explore the B2B market. However, in reality, they should also explore the B2B market for several reasons:
- B2B markets involve large transactions, and each order has a relatively high transaction amount, which can bring high sales and profits.
- Dealing with corporate clients is also easier to improve brand awareness; businesses can leverage the brand reputation and spread more widely and have a greater market influence. For example, putting the logos of successful case studies companies on a company’s website can easily tap into a larger market, which is a virtuous cycle.
- Compared with individual consumers, corporate clients are more likely to maintain brand loyalty, and the partnership cycle is usually longer. As we all know, individual consumers are easily attracted by other brands, and their stability with a company is not that long.
Small businesses are even less able to retain good employees: generally, small businesses offer lower salaries and benefits, lack promotion opportunities, and have less developed work environments and cultures compared to mature large companies. Often, small businesses are managed based on the personal style of the owner, which can easily cause employee dissatisfaction and turnover. Many good employees hope to have excellent colleagues around them, which can lead to mutual learning and personal growth. However, small businesses generally lack the resources and capacity to manage and train employees, leading to high employee turnover rates.
Small businesses often do not want to invest a lot in marketing: in the eyes of small business owners, marketing activities do not directly generate income like sales. This causes them to overlook the differences between market and sales.
During the first week of my work in the marketing department, the boss of the marketing department used a vivid analogy to distinguish between market and sales, emphasizing that both are indispensable. Sales are like the army of a business, which requires close combat and occupying territory, and is an important front person between the business and its customers, while marketing is like the air force, which requires market research, brand positioning, competition analysis, advertising promotion, and well-planned marketing strategies. After all, the air force cannot be randomly deployed, but once a strategic plan is well designed and executed, the range of deployment can be larger, broader, and more precise.
Small businesses like to do short-term promotions: After doing market planning, small businesses often have very short promotion plans, such as advertising on Facebook/Instagram for a month. If they don’t see any results, they will switch to other platforms. After trying a few platforms without success, they believe that these platforms are not suitable for their business, forgetting that the customer purchasing process takes time and requires understanding and trust before becoming a customer. Many small business owners hope that advertising expenses can directly bring in customers, but this idea is not realistic. They also do not consider the fact that when they buy something, they need to do research and comparison before making a purchase.
Small business owners understand their own products very well but not their customers. When customers often hesitate to make purchases, small business owners do not know why. They often view their products as their “precious babies” and forget that customers are not their biological parents. This mentality creates a gap that must be bridged by letting customers understand the value of the product.
One of my clients often said that their product was so good, but customers were reluctant to spend money to buy it. I asked them if they knew why the customers hesitated and why they felt that USD 650 was expensive. But they did not know why.
Parents understand that they see their own children as the most perfect in the world. This is a mentality where the product owner thinks their product is great, but customers don’t know what the value is, and what benefits it brings to them.
Small business owners only roughly summarize their competitors’ products and have insufficient knowledge of them. I found that they often only have confidence in their own products and services but have insufficient knowledge of their competitors’ products. I asked them to make a comparison chart between their own products and their competitors, and they thought that competitors were just cheaper in price or better at advertising. However, I believe that small business owners have not properly understood their competitors’ products. I once opened a competitor’s website and found that they provided a lot of high-quality content, which made potential customers feel that they would benefit greatly from purchasing their products, and they believed that this company was a leader in the industry.
Small business owners don’t know how to spend their marketing budget effectively. I know a small business owner who spends tens of thousands of dollars each year attending lectures and conferences but only makes people remember their name and doesn’t bring substantial sales. Nowadays, the audience is busy, and their attention is divided. Without follow up communication and interaction, attention will quickly shift elsewhere. The purchase process should at least have steps such as awareness, understanding, in-depth understanding, trust, and purchase. If an important step is missing, potential customers will be lost.
Small businesses are eager to make sales, ignoring branding and cultivating potential customers. Small business owners sometimes have a list of leads and start marketing campaigns without understanding the psychological process of purchasing. For lower-priced items like snacks that cost a few dollars, marketing is often easier, and customers are more likely to make a purchase. However, for more expensive items, buyers will pay attention to risks and returns. According to statistics, the higher the price, the more touch points are needed. Generally, there are more than 7 to 10 multiple touchpoints, such as viewing the website, reading comments, making phone calls, email communication, face-to-face meetings, on-site inspections, read reviews, and evaluating similar products. If they try to make sales in the early stages without taking these steps, they will miss potential customers.
Small business owners lack strategies to polish their own brands. Nowadays, products and services are everywhere, and the market is highly competitive. The daydream of small business owners is to venture into a blue ocean market with no competitors. In the real world, it’s unlikely.
Lacking personalization and differentiation is one of the reasons why many small businesses struggle to survive among so many similar enterprises. If everyone’s products are similar, then the only way to compete is by price. Sun Tzu’s Art of War says that it’s not about winning every battle but about winning the war in one decisive battle. Small business owners lack a deep understanding of their competitors’ products and don’t have the time and energy to improve their own products. Instead, they focus on competing with each other nearby or with whom they know, leading to exhaustion and preventing them from considering the healthy growth and long-term goals of their businesses.
Small business owners tend to focus on small customers, but this strategy may lead to a lack of employee skill development and hinder the growth of the company itself. For example, I worked for a small marketing planning company and found that 90% of the customers were small customers on a tight budget.
This resulted in the employees’ time and energy being spent on communicating with small customers. Due to limited profits, the company was unable to hire good employees, and the employees’ skills could not improve, resulting in a high employee turnover rate. Without high-quality employees, there are no high-quality customers, which leads to a vicious cycle of employees doing low-level work and struggling to provide high-quality services to attract large numbers of customers.
I put this last, but it’s the most important.
Small business owners don’t think good employees are one of their top important assets and will not try their best to keep the good ones so the company can benefit and be more successful with hard-working and intelligent employees. Some small businesses I worked with think it’s ok to lose an employee as the market always has people who are looking for a job so they can fill in the role quickly.
Or sometimes, the owners don’t care about the good employee enough and haven’t considered their top performer’s career growth, training and learning opportunities, and work environment. All top performers are eager to learn and grow to motivate their self-improvement standards. If the company does not provide those, it’s also easy for the good employee to leave for a better working environment.
The above is my observation on why small businesses are “small” based on my own experience.
As a small business owner, in order to succeed, there are a series of factors and reasons. It is necessary to have professional knowledge and management abilities to expand the business. At the same time, it is also important to pay attention to marketing, have corresponding marketing strategies according to different markets and customer needs, create a unique brand image, and attract more customers while retaining existing ones.
In addition, it is also important to continuously learn and adapt to market changes and improve and innovate products and services in order to meet customer needs and improve market competitiveness. Only with these factors and abilities, and by persisting and working hard, can small businesses have the opportunity to survive and develop in a highly competitive market and achieve success.