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Why Small Businesses Fail: 3 Top Factors

The path to small business success is lined with pitfalls. In fact, recent data indicates that 70 percent of owners fail within their tenth year of business. 

This begs the question – what is the best (and most sustainable) way to grow your business right now? It’s a difficult question to answer.

It goes without saying that creating a solid business plan is a mission-critical step you need to take to ensure rapid and sustained growth. During this process, it’s helpful to analyze those that have come before you. Start by taking stock of the major roadblocks that other business owners faced on their own paths toward small business success.

As an industry-leading point of sale (POS) system provider, we’ve worked hand-in-hand with business owners and managers just like you. During this time, we’ve had an amazing opportunity to learn more about the most common problems that business owners face when scaling their SMBs.

We’re here to share these insights with you. This article will cover three of the most common small business mistakes made by new business owners, as well as a few insider tips to avoid making those same slip-ups. 

Why Small Businesses Fail: Top 3 Mistakes to Avoid

To fast-track your business toward rapid growth, we recommend investing in a retail POS system that comes backed with a proven track record of success.

POS Nation offers a best-in-class point of sale system that comes with all the features you need to grow your business. Today, thousands of business owners and managers use our software to create powerful sales experiences. To learn more about our modern POS system, sign up for one of our free demonstrations – it’s that easy! 


Here is a list of the top three mistakes business owners make when scaling their SMBs.

1. Not Listening to Customers and Employees

In the flurry of creating a new business and managing day-to-day responsibilities, basic principles such as customer service and employee satisfaction can slip through the cracks. It’s a problem that thousands of owners and managers face.

One small slip-up in customer service can result in a public relations nightmare. Additionally, ineffective employee management strategies can make your team feel undervalued or unappreciated. Before long, your customers will revolt, and your employees will start walking out the door!

How to Maximize Customer Service and Employee Satisfaction

What is the best way to increase customer service and employee satisfaction effectiveness? Start by actively listening to and engaging with your customers.

What do they like about your small business? What do they dislike? Use customer feedback to refine your customer service programs. Be friendly, show gratitude, and respond quickly to their questions or concerns.

When it comes to employee satisfaction, happy employees drive the success of a small business. Require solicitation and use feedback from your employees to improve the workplace environment, employee procedures, and quality of benefits available to them. Simple, low-cost workplace perks can boost employee morale. Ask your employees for suggestions and adjust accordingly. 

Retail POS System Buyers Guide

2. Not Building an Online Presence

Many business owners and managers make the mistake of avoiding digital marketing. We get it – marketing online can feel overwhelming and confusing.

Today, small business success relies on building and maintaining a digital presence. Start by building a solid marketing strategy that incorporates all types of digital marketing activities, including social media marketing, blogging, and more.

How to Build an Online Presence

While physical advertising (think billboards or newspaper ads) makes sense for some small businesses, most invest heavily in digital marketing.

If you’re just starting out, we recommend taking it slow. Create a Facebook or Instagram account to boost your visibility online.

If your business gets hectic during opening hours and you’re struggling to keep up with informational requests, look into using an auto-response or chatbot to make sure that potential customers aren’t leaving frustrated without answers.

Next, learn from your competitors. Using search engines or hashtag research, check out how your competitors are marketing their products. For example, if you see that a similar small business successfully uses the Instagram stories feature to get customers excited about product releases, give it a try!

3. Not Focusing on Business Growth

Are you focused on business growth? How are you managing your growth goals? Do you have a growth plan? What key performance indicators do you monitor?

If you are not actively planning for your business to grow beyond its limits, you are asking for stagnation and, ultimately, failure. Additionally, failing to track and measure your KPI goals means that there are not clear markers or standards to reach for as you operate your business.

How to Build a Solid Growth Plan

To foster a growth-oriented mindset within your workforce, ensure that sales, customer service, and marketing management systems are well-equipped to support your customer base. In this scenario, implementing SMART goals is a proven, achievable way of planning for and managing growth goals.

  • S – Specific 
  • M – Measurable 
  • A – Attainable
  • R – Relevant
  • T – Time-bound 

Tracking your progress towards goals and adjusting based on changing market environments can help you plan for growth. Utilize business tools that can successfully grow with your business. Write a solid business plan that includes how your SMB will adapt to any possible changes that may occur in your industry or to the business itself.

How to Avoid the Biggest Mistake: Not Utilizing a POS Software System

So, what does your business need to succeed this year and beyond?

In most cases, it starts with investing with a results-driven POS system.


POS Nation offers a proven POS system equipped with powerful features and toolsets. Our software can help you keep track of inventory, bookkeeping, employee management, customer loyalty, and more. This will allow you to focus on growing your business, building high-value relationships with your prospects, and driving repeat customers to your growing business. 

As a suggested next step, we recommend downloading our Retail POS System Buyers’ Guide. We’ll give you all the must-ask questions needed to find a POS system designed to support your unique business. Are you ready to get started?

Retail POS System Buyers Guide


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