Why Businesses Fail

Read this article twice. Once as if it is referring to your clients and prospects and again as it is about you!

We all know that businesses fail. Some fail early and others after years of operations. By analyzing why we can use that information to help ensure that the businesses we are associated with, keep  healthy and profitable. 

There is no shortage of sources of advice. While each organization or “expert” has their own thoughts on the importance of specific reasons, all appear to agree that ineffective marketing is on their list. Nehemiah e Community (a business coaching and training company) lists it at number 4 of their 25 reasons for failure. Fresh Books (freshbooks.com) has it as 17th of 20. Investopedia has a very short list of only 5 reasons businesses fail, and poor marketing planning or execution is on the list.

While other forces can impact a business causing failure including financial issues, poor management, declining markets, aggressive competition and a multitude of other possibilities, none of them are as easy to correct as ineffective marketing.

The first thing to understand is what exactly marketing is. The worst mistake a business can make is to do no marketing but the next worst thing is to confuse advertising with marketing. Many failed businesses did plenty of advertising but lacked effective marketing.

Nearly 50 years ago I authored a very simple description -  Advertising Informs - Marketing Motivates. For example, a restaurant that puts up a sign saying “Now Open On Mondays” is advertising. If the sign said “15% Discounts On Mondays”, that’s Marketing. 

If the marketing message were imprinted on a promotional product, people other than current customers would know about the special discount and be motivated to visit the restaurant on Mondays. 

This article was prompted by a discussion I had with an industry distributor who said he was not sure he was getting any results promoting his business. His logo/brand was imprinted on several items that he regularly got into the hands of business people. The imprint consisted of the company name, phone number, website address and a line that said “promotional products and corporate gifts”.

He certainly met the requirement of delivering a message but it was an advertising message that simply provided contact information. There was no “call to action” or compelling reason to do business. And there was no way to track the effectiveness of the effort. We did a bit of brainstorming and decided to do some marketing! He ordered cell phone credit card holders with his standard imprint and inserted a card  good for 15% discount on the client’s next project. 

Since this promotion was distributed (about 6 weeks had passed at the time of writing this article), projects with new and existing clients increased and the coupon redemption provided an easy way to track the success.

With the fundamental understanding that we are a media industry providing innovative message delivery rather than simply selling “things”, it becomes easier to develop marketing messages. For many years people in this industry have  thought that simply adding a logo imprint was appropriate. With your input, businesses will get much greater return on their investment when they are marketing rather than advertising.  

Important to remember is that while offering discounts is the easiest offer to make, it is not necessarily the best. Offers that provide extra value but that do not devalue the transaction are generally the better choice.  Offers such as adding a second color to an imprint, reduced shipping, faster production, overs at no cost, free design help, etc. are all well received and motivating. 

Once you explain the difference between advertising and marketing with your clients, many will want to get to work on a marketing program right away. So be prepared and have a few suggestions ready to grow your client’s business.