Top 4 Reasons Businesses Fail to Grow

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The reality…

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• Only 5% of companies will ever reach $1 million in annual sales

• Only .08% will ever reach $5 million

Source: Chet Holmes author of The Ultimate Sales Machine: Census Bureau

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Business stagnancy in the U.S.

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• Only 30% of businesses survive and only 10% of these businesses grow

• This means, 90% of all businesses become stagnant!

Source: Office of Advocacy of the U.S. Small Business Administration adapted from the Bureau of the Census Economic Survey

Where are you?

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A common theme

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• 60% of businesses that became stagnant listed poor marketing as a critical contributor

• 50% of these businesses rated themselves “low” or “very low” in their marketing skills

SOURCES: U.S. SMALL BUSINESS CONTRACT # SBA-95-0403, PAPER FINANCIAL DIFFICULTIES OF SMALL BUSINESS AND REASONS FOR THEIR FAILURE (1998); D. BRADLEY III & H. MOORE, “SMALL BUSINESS BANKRUPTCY CAUSED BY LACK OF UNDERSTANDING OF BUSINESS ENVIRONMENT AND CONSUMER NEEDS,” SMALL BUSINESS ADVANCEMENT NATIONAL CENTER, 1997; . REDEFINING BUSINESS SUCCESS: DISTINGUISHING BETWEEN CLOSURE AND FAILURE, SMALL BUSINESS ECONOMICS, AUGUST 2003

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Tough marketing decisions

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• 6 out of 10 business executives lack confidence in their marketing decisions

• 6 out of 10 feel their marketing could be more effective

SOURCE: “HP SURVEY REVEALS TOP U.S. BUSINESS MARKETING CHALLENGES,” BUSINESS WIRE, FEBRUARY 2008

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Advertising can prevent stagnation

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Source: Advertising during Times of Economic Uncertainty.” American Business Media – Association of Business Information Companies; 2008 Forbes Magazine, June 2008

A McGraw-Hill study examined nearly 600 businesses from 1980 - 1985 and found:•Companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise

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A Case Study

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• To cut costs, U.S. milk ads were pulled in the early 1990s

• Sales went unchanged for 12 months

• Then… sales began plummeting at alarming rates

Source: Marketing Daily Commentary, April 2, 2009, Wasting Money on Advertising by Gray Hammond

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The reality behind the cost-cutting decision

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• Millions were lost and it took 18 months for sales to rebound!

• Apparently, it’s important to constantly remind buyers… “Milk Does A Body Good”

Source: Marketing Daily Commentary, April 2, 2009, Wasting Money on Advertising by Gray Hammond BROOKS, D. & SEE, E. “THE SALES THREATS THAT CAN CRIPPLE MARKETING: YOU CAN'T CONTROL GAS PRICES, WEATHER OR COMPETITION-BUT YOU CAN REACT,” ADVERTISING AGE, JUNE 16, 2008: MARKETING INSIGHTS – REF. HARRIS STUDY 2008

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