Small business success is never guaranteed. As noted by Statistics Brain, the "best" industry for a small business is real estate: After four years, 58 percent of these companies are still up and running. The numbers are worse in other sectors. Less than half of all retail businesses survive the four-year mark, and only slightly more than one-third of information companies make the cut.
Even if the odds are not always in their favor, many small businesses do succeed. What's the secret? Well-executed initiatives from innovative organizations (read: those willing to take risks and try new things) will typically outperform the competition. In fact, the risks of thinking inside the box in various areas of your business can hinder you more than calculated risk-taking can.
Where to Start Thinking Outside the Box
Marketing, hiring and brand building are three areas where it may benefit you to be wary of conventional wisdom and practices. Here's why:
- Marketing: According to a recent Benzinga article, innovative small and midsized businesses (SMBs) are embracing a number of surprising business trends. For example, many are moving away from the conventional wisdom that original social media sharing is the best tactic for SMBs. Instead, they switch to paying for sponsored promotions. While that flies in the face of the notion that a dedicated employee can make an organic social impact, it also embraces the numbers. If your SMB has fewer than a million followers, your reach alone probably isn't enough.
- Hiring: Common wisdom says you need to hire full-time employees dedicated to your organizational mandate to succeed. With more Americans working from home or as freelance consultants, however, innovative organizations are thinking outside the box by hiring multiple part-time employees or freelancers to fill roles — a step that may, in turn, attract employees seeking higher levels of flexibility or specialization while reducing personnel overhead.
- Brand Building: Some SMBs began rethinking their brand strategy after the JOBS Act Title III was approved in October 2015. This new pool of resources lets small businesses target "micro investors" for the capital they need, on demand. Rather than justifying their mandate to large-scale venture capitalists, smaller companies can focus on their niche and attract like-minded contributors.
The Risks of Staying in the Box
With innovation returning measurable benefits, why do some SMBs still avoid going outside their comfort zones? Profit margins are a big reason. As noted by Chron, small businesses in certain sectors run very low profit margins. Wood manufacturers, for example, have average profit margins below 15 percent. Don't be careless; any innovative strategy should be well-conceived and backed by numbers.
SMBs put themselves at risk when they stay inside the box for two reasons. First, your competition isn't standing still. If one of their innovations transforms their customer experience or elevates their product, you may find yourself watching an SMB success story that isn't your own. Second, small businesses are born from the radical ideas of a dedicated few individuals. In effect, being an innovative organization is in your DNA, and choosing to opt out is fighting yourself and your business structure.
Want to beat the four-year failure cycle? Get back to basics, get outside the box and start innovating again.
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