Why is it that 2/3 of small businesses fail within the first two-three years of operation?

One of the major causes for a company’s collapse is inadequate planning upfront, according to business consultant Les Ross, whom I first met this spring when he WOW-ed my SFSU advertising students with his Internet Marketing presentation.

Many students expressed their amazement at how web sites could be set up to operate on automatic pilot, maintaining customer contact and continuing to offer products and services for sale.

“Internet marketing allows the small guy to compete against the big guy — and not only compete, but outcompete — because there is no differentiation between a large business and a small one on the Web. Success is purely dependent first on the quality of the message and then on the follow-through. Product quality and customer service are essential.”

“The other remarkable thing is the ability to totally automate the entire sales and marketing process. It’s an effort to structure the system, but once in place, then it’s a process that builds on itself,” he explained.

Les has developed tools that allow a small business to grow under a structure that would easily allow its operational systems to evolve with growth. “Many small business owners put in basic systems and then when they reach a certain level, those systems cannot take them beyond that point, so the business stagnates or the owner must do a massive restructuring,” he said.

What typically is NOT planned for by many new companies?

They don’t understand their markets, according to Les.

“They run off with an idea that they think is so unique that no one has ever thought of it. And then, too late, they realize they are faced with stiff competition.”

In addition, many start-ups are inexperienced at financial planning and do not know how to identify the costs that their business will incur the first few years: “Coupled with inadequate marketing strategies, this is a recipe for disaster,” Les said.

Les is as excited as I am about marketing opportunities through social media platforms. That’s why he agreed to come speak to my class, and that’s why Les and I are starting a Social Media/Internet Marketing consulting business, which we are calling Performance Social Media.

“Some people think that you can only develop relationships face-to-face — and that you will never replace that experience. What they don’t realize is that the Internet offers opportunities to enhance your ability to offer information while you continuously build relationships.”

“With live exchanges, you have to manually follow up, and there is the danger that if you are overloaded, the necessary customer service actions for your ‘less important’ customers can be put aside.”

With an Internet marketing system, no customer ever falls through the cracks and feels ignored if you set up your system correctly to provide the information they want — it’s all on autopilot, according to Les.

Next post: In a PERFECT WORLD, how would you manage your Online/Social Media Presence?