The biggest reason small businesses fail is scaling up prematurely, according to a Startup Genome report. Seventy-four percent of 3,200 Internet startups surveyed attributed their failure to spending money on non-essentials, such as extra staff, office space and marketing, before making sure their product fit their market.
 |
Report contributor to Forbes Nathan Furr, author of "Nail It Then Scale It," explains that premature scaling kills businesses because it consumes cash flow while limiting agility and the ability to adjust. Once you start hiring more personnel and investing in capital and advertising, you become committed to an expensive approach that may or may not work.
But how do you avoid this trap? How do you keep your staff small enough to manage but big enough to get the job done? One solution is to use business automation technology more efficiently.
Use Analytics Tools to Make Smart Decisions
Waiting patiently until you have a winning fit between your product and your market is key to avoiding the premature scaling trap, Furr says. Business analytics tools can help you achieve this by providing you with accurate information to guide your company's decisions without requiring you to deploy a large staff of analysts.
Over half of small businesses are now using predictive analytics tools for direct marketing, cross-selling and retention analysis, according to a TDWI Research report. Predictive tools let you spot marketing trends and predict buyer behavior, complementing tools like Google Analytics that let you measure performance.
Street Fight senior editor Stephanie Miles surveys some of the top analytics tools suitable for small businesses. These include Canopy Labs, which helps you shape marketing campaigns and sales offers to buyer behavior; IBM's Watson Analytics, which simplifies complex analytics into understandable terms for analyzing all types of data; and Stitch Labs, which helps you plan inventory purchasing decisions.
Streamline Your Payment Processing
Revenue is the lifeblood of any business, and today, generating revenue requires being able to accept mobile payments. In 2016, one in five smartphone users will be using their devices for purchases, leading mobile payments to triple next year, eMarketer projects. For your company to attract its share of this cash flow, you need a payment processing tool such as Sage Payment Solutions that lets you offer customers a flexible range of payment options. Accepting mobile payments also leverages your workforce by letting you collect revenue online without deploying additional sales personnel.
Automate Your Accounting
Sage also offers solutions to handle your accounting, another area where automation can help you economize your workforce. Accounting is essential for any successful business, but 46 percent of small business owners say it is their least favorite task, according to a TD Bank survey. Automation and outsourcing are the two best ways to lighten your accounting burden task without hiring a full-time bookkeeper.
Increase IT and Office Efficiency With the Cloud
After health insurance, Internet-related costs are the highest budgeting concern for most small businesses, a Sam's Club study found. In addition to Internet connection services, IT management can consume both manpower and costs. Computer infrastructure can also expand your office space and personnel requirements.
Using the cloud as a virtual office can help you in all these areas at once. It minimizes your on-premise space, equipment and personnel needs. The most popular cloud solutions small businesses will be adopting in 2016 are email, collaboration, and office and productivity tools, such as Gmail and Google Docs, according to a New Jersey Institute of Technology survey.
Manage Your Marketing
NJIT's survey also found that 52 percent of small businesses are moving their marketing to the cloud in 2016. Marketing is another area where automated cloud tools can maximize the productivity of a small work force. Social media management tools such as Oktopost help you coordinate the distribution of your content across your various social media profiles, while CRM tools such as Salesforce's Marketing Cloud help you manage your email, mobile, and social marketing and advertising.
Using tech tools to automate your business helps you ensure that you don't scale too quickly. These tools help keep overhead low and productivity high.
Related articles:
The Ultimate Guide to Startup Success