Bright Ideas # 75 - What are the odds…?

You’ve heard the frightening statistic that 90% of all small businesses fail within the first year, right?

Well now there is a big ol’ glowing ray of hope.

The SBA has updated their statistics to 44% of businesses making it past four years. That’s a failure rate of only 56%.

Still not great odds, but certainly good news for all us entrepreneurs (We must be doing something right!).

Of course, it’s still critical to understand the reasons why almost half of all businesses go belly up. Because you might as well learn from others mistakes instead of having to make them on your own.

If you’ve been reading my newsletter for a while, or you’ve picked up a copy of my f*ree report or e-workbook, you know that a failure to focus enough attention on marketing is one of the top four reasons businesses go under.

However, there are plenty of business owners who put all kinds of time, energy, and money into their marketing—and they fail anyway. Oftentimes it’s because they don’t have a realistic idea of what it takes to succeed.

I’ve found that most entrepreneurs greatly overestimate the number of new clients they can get, or sales they can generate. And they underestimate the amount they’ll need to earn to make their business a success.

So this week I thought I’d provide you with...

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Eight business and marketing statistics every entrepreneur should know
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1) It takes approximately seven times more time and money to get a new client than it does to turn a past client into a repeat or regular customer.

2) On average, a person has to see your ad at least seven times before they even notice it.

3) Your ideal customer has to see your ad or hear your offer approximately 16 times before they will even think about taking action (IE: placing an order, calling for an appointment, requesting a free report). And that’s assuming you’ve done a good job of targeting the right customers, offering something they want, and creating messaging that speaks to them in a powerful way.

4) Only about 4% of cold calls are successful. That doesn’t mean they result in actual sales, just that you are successful in moving the prospect to the next phase of your sales cycle, like, say, making an appointment to meet. So be prepared to experience at least 24 no’s before you get even one yes. Again, that’s assuming you’re well prepared and well practiced.

5) Most good websites these days have around a 2.5% conversion rate. So for every 40 visitors that come to your site, only one will take action or make a purchase. Of course, if you don’t have a good Website with well-written content and a clear purpose, chances are you won’t even hit that mark.

6) A 1-2% response rate is considered quite good for direct mail. In other words, for every 100 postcards or sales letters you send out, you can expect 1-2 people to respond…If, again, you’ve done your homework, sent your mailings to people in your target market, and written copy that makes them take notice—and take action.

7) According to BizStats.com, the average sole proprietorship can expect to make about 21% in net profits. So for every $50,000 you bring in, you should end up with about $10,000 after all expenses. Think about that when you are setting your rates and prices.

8) A 2005 survey by Wells Fargo and The Gallup Organization found that 57% of small business owners work six days a week; 20% work seven days; and 14% took no vacations.

Now that you know all these statistics, take a step back and ask yourself whether or not your expectations are realistic. If not, you probably need to rethink your business and marketing strategies to take these statistics into account. By doing this, you tip the odds for success in your favor.

©2002-2006 Success Stream. All Rights Reserved. www.success-stream.com

Do you have a marketing, advertising or writing question you’d like to have answered? Email me and you might see the answer in a future edition of Bright Ideas.

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