Are the first-year businesses in your community struggling? The challenges are huge for new businesses.
If they’re brick and mortar establishments, you probably have an answer to that question right away. But how are the indies doing? How are the startups without a physical home or the solopreneurs doing?
According to the U.S. Bureau of Statistics, 20% of first-year businesses fail. By their fifth year, 50% fail. That’s kind of discouraging but with the help of the chamber and ensuring these new companies know about the assistance they can receive, that number can be reduced.
If you’re currently helping assist new businesses to combat the most common reasons they fail (and marketing that), fantastic. If you’re not, here are a few things you could be doing.
Biggest Problems Facing First-Year Businesses … and How Your Chamber Can Help Solve Them
1. Cash Flow
Cash flow is probably one of the most common problems for first-year businesses. There is likely a lot of money going out when they first start a business and getting it to come back in from customers can be a real stretch.
Cash flow, or cash flow as an excuse, can also be a reason why first-year businesses don’t always join the chamber. That extra couple of hundred dollars can feel like a whole lot that
Chamber solution: obviously, you can’t personally help every new business with cash flow, but you can bring in a cash flow expert (maybe a member?) to offer a free seminar or lunch and learn to help them plan better and get paid faster.
2. Finding the Right Customers
A lot of business owners these days make the mistake in thinking the entire world is a great customer for them. They have a “we can help/serve everyone.” That’s simply not the case. Some customers will always be better fits for a business than others just as some employees are better suited to join a team than others.
Plus, today’s personalized marketing approaches require niching your audience, at least to some degree so you can speak to their needs. Chambers have to do it with members and businesses should identify who they’re trying to reach. The sales conversions are simply easier and quicker (helps with cash flow too) when they find that ideal customer or client.
Chamber solution: Again, you can solve the problem with education with
You can also help by explaining how to grow a referral network, inviting them to your next networking event, or introducing them to other solopreneurs or startups.
3. Delegating or Outsourcing
When you first start a business you either want to do it all yourself because you don’t have a network you trust yet or you don’t have the money to pay others to do it for you. Eventually, it occurs to most business people that they can’t do it all. To take their business to the next level, they hire help or employees. But growing too quickly can mean they out punt their coverage/cash flow and end up in the red.
Chamber solution: Again, education can help here. Whether it’s a formal lunch and learn about how to find inexpensive online help (like virtual assistants) or a session on “the importance of understanding what your time is worth”, you can help them navigate this challenge.
Another solution for them is to act as a connector. Many people are shy about hiring help online because they don’t know the people and if they will really deliver as promised. The chamber is in an ideal position to connect local freelancers that could help these startups and entrepreneurs with the small services they require. This makes you incredibly valuable to both the startups and the freelancers, who might not otherwise think they need the chamber.
You could even create a freelance services directory as a non-dues revenue opportunity. This could be open to solopreneurs and local freelancers. You could charge for placement or create a special
Freelance types that could be a good match for local businesses include:
- graphic designers
- audio specialists
- virtual assistants
- PR people
If you work with an incubator in town, make sure people know about it and the services it offers. If you have a large population of freelancers in your town, you could host a meet and greet to introduce them to one another. Sometimes their clients may ask for additional services that they don’t cover. Helping them build their “network of knowns” helps make them able to bid on bigger projects, which then, in turn, makes them avid supports of the chamber.
4. Work/Life Balance
This is difficult for most business owners but those just starting out have a really hard time knowing when it’s time to shut down for the evening. Starting a business can mean working for half the money and twice the time compared to working for someone else. But it’s a labor of love. Still, burn out is very real and the chamber can help.
Chamber solution: bring in a work/life balance coach or productivity specialist to talk to members or use “job burn out” or “work/life balance” as a theme topic at your next networking event. Just as you might have a theme for a party, organizing your networking event around a common theme or business struggle can give networkers something new to talk about rather than “What’s your name and what do you do?”
A themed networking event invites people to share their experiences around the theme, thus creating a richer exchange. This is a terrific idea for introverts who hate small talk. They can immediately connect over something more interesting to them.
Again, there’s often a gap between starting a business and growing one. Many entrepreneurs start out on their own and at some point realize they can no longer do it solo. But the person or people they hire can be very costly for the business. Hire the wrong person and you have just trained someone who won’t be with your company long-term. So how can you help them find and recruit the right type of people?
Chamber solution: make the introductions. Make sure your new business is introduced around and explain to people you meet that they’re hiring. If you have a lot of companies in their position, it may be worth it to create a job board for members and people in the community. This can be a non-dues revenue opportunity for you and makes you an even more valuable part of the community. It also drives people to your website.
Also, keep tabs on the types of skills your employers need and can’t find. This can open up discussion about future job force planning and education with government groups and schools.
6. Keeping Up with Changes
While this may not be a reason a startup will go out of business the
Between Google’s algorithm/search engine optimization and social media changes, there’s always something new to learn in digital marketing. It can be quite exhausting. With researching/keeping up on best practices and implementing them, a business person can reach the brink of exhaustion.
If they have a team to handle it or a dedicated person, or agency taking care of digital marketing, it may be very doable. But if they’re on their own, they made need some help.
Chamber solution: Your programming, member contacts, and staff can be a big help to startups that are just putting it all together. Posting is one thing but best practices seem to change all the time. Keeping up with them is something you almost have to schedule and dedicate a certain amount of time toward on a regular basis.
Some chambers assign keeping up with changes in digital media to a staff member who then pushes out content and tips in the newsletter or email blast. Keeping members up to date on changes and best practices can be an invaluable service for them. Think of theSkimm that delivers a news digest to its subscribers each morning. You too could create a weekly or monthly update of skimmable social media changes, tips, and best practices.
Nearly a quarter of all new businesses fail in the first year of operation. Aside from not having a good business plan, there are a lot of other problems they face. While some you can’t directly affect in your chamber role, others you can fully support.
The key to helping these startups and first-year businesses understand the value behind chamber membership lies in providing services of interest to them to help them grow. And then marketing those services so everyone knows how you can help.
These suggestions might not work for every chamber. If you don’t have a lot of startups or solopreneurs in your area, it might not be worth it to grow your offerings around them.
However, new business failure rates climb after the first year. Then they’ll need you even more.