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Strategic-Planning

Why New Businesses Fail

I was a Yellow page consultant for nearly 25 years and spoke to thousands of businesses during that time. We received what were called, ?New Ins,? or ?New Connects,? throughout the campaign. They were companies with newly connected business phone lines that presumably were just opened and needed a contact. They didn?t always want advertising, but received at least a complimentary listing in both the white and yellow pages. Therefore, when I got one of these companies, they got my full attention and a phone call.

So we would meet and I would do some fact finding about their business. More often than not, I was surprised to find out that they lacked a business plan. They had no idea what to expect over the next several years: no short or long term goals, marketing program, customer tracking system, or follow up procedures. Instead, they open their doors and expect the customers to come in droves to buy their tires, soup, or whatever they were selling. When I suggested that they need to advertise to get the ball rolling, they might respond with one of the following:

(a) We spent all our money on the building, etc. and there?s nothing left.

(b) We?ll be relying on word-of-mouth for our advertising.

(c) We already have a sign in front of the store. Isn?t that enough?

(d) We have a website and that will take care of us.

(e) We?re going to print flyers to stick on windshields of cars in the area.

(f) Advertising is over-rated, we need customers instead.

(g) If we make a bunch of money this year, we?ll try a small ad next year.

(h) We?ll have lots of sales and discounts. That should do the trick.

There are probably too many more to remember, but I?ve most likely heard most of them. The business person honestly believed every one. So, I would give them their free listing and be on my way. A year or so later, I would get the disconnect order for the same phone number, meaning they were out of business, By now, you can guess what a business needs to survive. It begins with planning and money, and plenty of both.

Actually, it wouldn?t hurt to have a great product or service, but that?s not essential. Many terrific businesses get by with average goods and services that are promoted well and backed by good people. But, by far, having a viable business plan that includes a realistic budget for a marketing program, goes a long way. I discovered that most new businesses underestimate their expenses while over estimating their income. Be conservative and figure your costs on the very high side and returns very low. Then if you?re wrong either way, you?ll be pleasantly surprised.

Finally, never be content with the number of customers you have and promote, promote, and promote some more. Businesses fail because they are unwilling to adapt to changing conditions or relax too much. Always be thinking of new, creative ways, to attract and retain customers and I won?t be getting that dreaded disconnect notice regarding your business.

Jeffrey Hauser was a sales consultant for the Bell System Yellow Pages for nearly 25 years. He graduated from Pratt Institute with a BFA in Advertising and has a Master's Degree from Monmouth University. He had his own advertising agency in Scottsdale, Arizona and ran a consulting and design firm, ABC Advertising. He has authored 6 books and a novel, "Pursuit of the Phoenix," available at amazon.com. His latest book is, "Inside the Yellow Pages." Currently, he is the Marketing Director for thenurseschoice.com, a Health Information and Doctor Referral site.

Jeffrey Hauser

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