What is the number one reason a business will fail?
If you asked the average entrepreneur or analyst this question they would give you a single simple answer- undercapitalization. For many seemingly “in the know” professionals, the biggest scourge in the world of increasing sales to a profitable level lies in companies that either don’t spend enough capital, or simply don’t have enough capital, to build the infrastructure and to reach the growth level they need to sustain indefinitely into the future. Sounds reasonable, right?
But just because undercapitalization sounds like a “reasonable” excuse for small business failure, that doesn’t mean it represents the actual reason most businesses fail. Most businesses fail because they aren’t able to recover from one of the myriad PR disasters they may encounter.
Simply put- if your business runs into a problem, nothing will cure that unfortunate occurrence better than performing the right PRtactic. Just look at the host of problems PR can solve… problems that no amount of capitalization could ever touch:
- Your customers need to know your product or service exists in the first place before they’re going to buy it. Not only that, your customers need to develop and retain a positive impression of your product or service. Online PR provides the opportunity to spread awareness and to cultivate and maintain a positive impression of your product, resulting in both initial and continued sales.
- All of your customers need to know you care about them and want their business, which means you need to produce a varied PR strategy that targets a wide variety of demographics, including different races, ages and economic levels. Many minority or under-represented groups will feel marginalized if you don’t make an active PR effort to engage them.
- The same is true for your employees. If you want to attract and retain high quality employees then your company needs to have a positive reputation within their communities. Your business needs to be seen as an organization that produces valuable products and services and that performs extracurricular activities denoting its standing as a positive corporate citizen. If you fail to perform this PR work then individuals and communities won’t consider your business a positive or prestigious place to work, which means you will attract a lower quality, less dedicated worker base.
- Potential customers and employees aren’t the only groups you need to convince of your organization’s value. If you fail to perform effective PR work then other businesses won’t want to work with you, eliminating the possibility of performing mutually profitable joint partnerships. Ineffective PR efforts will also sully your reputation with insurance companies and financial lenders who will label investing in your company “high risk,” resulting in unfavorable terms when you need to borrow from them. Finally, if you fail to craft and maintain a positive public perception then journalists are likely to craft and maintain a negative public perception of your organization, making any future PR efforts that much harder to perform.
Remember- the sooner you begin to cultivate a positive public perception the better. Waiting to start your PR efforts until you need to apply for insurance, or expand your organization, or increase your customer base, or push through favorable governmental action, or go public as an organization, or solve any number of common company problems, misses the point entirely. You must build your positive public perception before you need to leverage it, not the moment trouble starts knocking on your door.
The article is shared by Jason Phillips; a small business MBA graduate who likes to write to maintain high tech pr relations with their customers.