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Why Small Businesses Fail, Hurt and Suffer

This morning I was talking to a career professional (solopreneur) who asked me how others in the industry are doing in this economy.  You would think a sour economy and lots of layoffs and unemployment would be good for their business, but that’s not necessarily true.  People are tighter with their money, more cautious on their purchases, and more inclined to DIY.

I shared two observations I’ve had over the years as I’ve seen small businesses start, thrive, fail, stumble along, etc.  There are two things I consistently see with this type of industry, but it could very well apply to your business or your industry.

First, too many solorpreneurs underprice their services. One of my favorite comments after an industry conference is “I’m going to raise my prices!”  I don’t hear “I’m going to gouge my customers!”  What I hear is “I’ve been undervaluing what I bring to the table, charging wrong, and I now see that I can and should fix it.”

I think the biggest problem is people charge for an outcome based on the number of hours it will take to deliver it. They are in an “hourly” billing mode, without regard to the VALUE of the outcome.  Don’t get stuck in an hourly billing mode… think about your VALUE.

Second, many solopreneurs don’t understand how to get new clients, and keep a healthy pipeline. Really busy right now with clients?  What if it all dries up, and your prospects all say no?  Keep a pipeline full… be creative, get in front of your prospects, help evangelists talk about your stuff.

No one is every so busy that they can afford to stop marketing.  Maybe they change their marketing techniques, or they put in systems to manage high demand, but don’t stop marketing. Ever.

Think about it… does this apply to your business?

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