When you explore the statistics on small businesses in the US, you find a lot to support the idea that small businesses are the backbone of the US economy. For example, a recent study shows that small businesses in the US total 30.7 million, employ nearly 60 million people, and account for 45 percent of US economic activity. In addition, the Bureau of Labor Statistics reports that between 2000 and 2019, small businesses created 10.5 million new jobs, which represents more than 65 percent of the new jobs created in that period.
While stats like those indicate that small business is thriving in the US, here’s one that is more sobering: 20 percent of US small businesses fail within the first year.
The common problems that small businesses face
Mark Kaley is a publicist with OtterPR, one of the top public relations firms in the US. For more than 15 years, Mark has provided business consulting services, including marketing and public relations, to small businesses. In his experience, all businesses have three things in common that have the potential to keep them from making it past the first twelve months.
“Throughout the course of my career I have worked with a wide variety of businesses selling a diverse array of products, from a tracking device to secure our nation’s ports to a stain pen to glasses-free 3D technology to an RFID technology for collectible art pieces,” Mark says. “They were all small businesses and all had three things in common: poor management, poor financing, and a product that may or may not get sold.”
While there are dozens, if not hundreds, of strategies that can be employed for addressing any one of those three issues, Mark believes that good PR can address all three.
“All small businesses face those three challenges and a solid PR plan will position the company to be successful,” Mark says. “It’s about brand exposure and name recognition.”
How PR empowers management
According to the US Small Business Administration, 81 percent of US small businesses have no employees. That means more than 25 million small businesses have one person running the show, trying to be everything from HR to PR. It is overwhelming and results in many critical tasks not being accomplished.
“When I say that all small businesses have poor management, I don’t mean that the manager, owner, or management team is incompetent,” Mark explains. “Rather, they are often wearing too many hats, acting as the sales team, the HR rep, and the CFO, among other things.”
In situations like that, it is critical and cost effective to partner with a professional PR team to implement a solid PR plan.
“With proper PR, the CEO no longer has to focus on the critical task of generating exposure and producing collateral materials to secure brand recognition,” Mark says. “PR firms have the tools and the talent to present the CEO as an expert and a thought leader who is steering his ship to financial success in the industry.”
How PR fixes financing
Small businesses are typically born when the founder puts up his own capital for seed money, possibly supplementing it with outside financing. To survive, that capital needs to quickly be replaced by revenue. However, the issues caused by poor management can result in the work that needs to be done to drive sales being left unattended.
“It is not a lack of desire or ambition, but a lack of being truly focused on the tasks of being the CEO and driving growth,” Mark explains. “A company needs sales and revenue to continue to exist. A company needs proper PR to successfully sell the product or service. With revenue from sales, rather than cash from investment, a company can continue its growth and expand while continually adding to the company’s coffers.”
How PR sells products
ECommerce has been a double-edged sword for small businesses. While it has provided invaluable tools for expanding a business’s reach into new markets, it also has multiplied exponentially the competition that must be overcome. PR provides a plan to get the products that need to be sold in front of the right audience in a meaningful and memorable way.
“You can have a product idea that is the greatest thing since sliced bread, but if nobody knows about it, then sales will be an ongoing struggle,” Mark explains. “You need brand recognition and eyeballs on your company. A properly formulated PR plan and strategy, executed by professionals, overcomes that problem.”
Small businesses are the backbone of the economy and PR is the lifeblood of small businesses. For those looking to break the one year barrier and soar through the first decade, make sure to leverage the tools that PR professionals provide.