There were about 146,000 business startups a year, and an average of 12,000 business bankruptcies per year from 1994 to 2004 in Canada. A 2004 Statistics Canada study on small business failure rates “Key Small Business Statistics – January 2005: How Long Do Small Businesses Survive?” found that the first few years were critical. While almost three quarters of small business startups survive the first year, less than one third of micro companies (less than five employees) were in business after five years.These statistics by themselves may be of little value to you directly. We know how many small businesses survive and for how long, but it’s far more important to know why some survive and others do not. There are a lot of studies on small business failure. Searching “reasons for small business failure” with quotations on Google will give you almost 700 results (about 38 million without!). “Why small businesses fail” will give you almost a thousand.The 1997 study by Statistics Canada “Failing Concerns: Business Bankruptcies in Canada found major internal factors of small business failure was management deficiency, financial management problems and poor marketing.The Small Business Administration study “Financial Difficulties of Small Businesses and Reasons for Their Failure” in 1998 found several causes of small business bankruptcy: outside business conditions (38.5%), financing (28%), inside business conditions (27.1%), taxes (20%), disputes (18.8%), personal calamities and other (32.9%)There is a wealth of information on this subject, but what are the common factors? There are four basic areas:External factorsExternal factors include new competition, your major client moving out of town, poor weather if you’re a seasonal business, or economic downturns. They’re often largely out of our control, and may be unique to your particular company, but there are often ways to mitigate them. For example, if you have a seasonal business, such as a landscaping company (at least up here in the cold north it’s seasonal) you could buy a bobcat to provide income during your off-season with snow removal. The bottom line is, have a contingency plan for external factors that could have a negative impact on your small business success.Lack of managementBig companies have the luxury of being able to hire several people to get all the jobs done that need to be done, but chances are you’re going to have to do it all yourself, at least for awhile. That means you’re not only going to have to develop your product or service, you’re also going to have to make financial, accounting, legal, marketing, human resources, and purchasing decisions.You may do some of these tasks very well, but it’s unlikely that you do all these tasks well, and even if you do, you might want to contact a lawyer and an accountant at the very least. And, research, research, and research some more, and when you’re done researching, find an expert or two bounce ideas off and give you solid advice.Lack of planningSmall businesses often fail because of lack of planning. Let me make a bold statement: the single-most vital part of your business success is your business plan. Why? Simply put, your business plan specifically and concretely lists your goals for the next few years. It spells out, step by step, how you’re going to meet those goals, and gives you something to measure your performance against at the end of your business year.Finally, a complete business plan helps you get financing and includes a marketing plan, which addresses lack of marketing and insufficient financing, two more often cited reasons for small business failure.I have one more thing to say about business plans. It does very little good to write a business plan, put it in a drawer and never look at it again. That same 1997 Statistics Canada study we talked about earlier found that successful small business owners refer to and revise their business plans often.Lack of marketingMost small businesses seem to think it takes a lot of money to market their product or service effectively. That’s simply not true. There are many ways to market inexpensively. You could use direct mail marketing which is as cheap as a stamp, or email marketing, which costs nothing. The point is, you need to get your product or service “out there” somehow. You may have the best product or service out there, something completely unique from anything else, but what good does that do if nobody knows about it?So there you have it–my thoughts on the main reasons why small businesses fail, and how you can avoid becoming a small business failure statistic by developing a contingency plan, consulting with experts, and developing and using a business and marketing plan.If you are thinking of starting a small business, I’m most certainly not trying to discourage you. I sincerely believe being in business for yourself may possibly be the most rewarding career there is, but a little knowledge can go a long way towards arming you against small business failure.

Do you sometimes feel like you’re on the road to nowhere trying to decipher online advertising opportunities? Well, you’re not alone. With all of the social media marketing, banner ads, article sites, ad words, blogs, podcasts, gaming, etc. it can be quite a daunting task to sort through the maze of available online advertising opportunities. So, here is some information to help you get started in this fascinating online world.Definition of Online AdvertisingWhat exactly is online advertising? Examples of online advertising include contextual ads on search engine results pages, banner ads, rich media ads, social network ads, online classified advertising, advertising networks, and e-mail marketing, including e-newsletters.With all of these choices which ones should your company dive into? Well, if you’re a novice in the online world, perhaps you should start small and send e-announcements to your customer database. This is a good way to stay in touch with your existing customers. If you want to enlarge your circle of prospects, then it’s very easy to offer an e-newsletter with an opt-in subscription. If you don’t have the staff in-house to accomplish this there are several companies that can help you develop your e-mail template. They also will maintain your database of subscribers and provide you a report of new and opted-out subscribers. They even provide you the HTML code so that you can place a sign-up box on your website.Competitive Advantage of Online Advertising vs. Traditional Print AdvertisingUnlike print advertising where your prospects have to wait for the magazine or journal to hit the streets before they see your ad, online advertising is instantaneous. So, it is a good way to promote special seminars that your company may be sponsoring, highlight a new product launch, or even provide personnel announcements. It is also much easier to track who is clicking on your ad. However, be wary because you really want to count clickthroughs rather than just clicks. You also pay for CPM (Cost per Thousand) rather than a frequency rate for a particular sized ad like you do in print advertising.Interactive ad expenditures are forecast to increase dramatically in 2010. Whether you are comfortable or not with online advertising, you will definitely need to budget some of your marketing dollars for this type of media. Social media marketing is still in the development stage. No one is really quite sure how to make money using these tools. Right now it is a good way to get prospects to follow your company and to direct them to your website.Does Online Advertising Work?Some of you may be skeptics but online advertising does work. Statistics show that 77% of Internet users employ search engines more frequently than any other online advertising media. 84% of Internet users are online four or more hours per day. 55% of Internet users are more likely to purchase online after seeing a search listing. Only 9% are more likely to purchase after seeing banner ads. But that doesn’t mean that banner advertising is dead. Instead of using a static banner, try integrating rich media such as video or gaming to the mix. For an attention-grabber, some companies get viewers to interact with their banner ads. Promoting some sort of contest or game does the trick. In fact, in-game advertising is expected to see a 9% growth in 2009 and up to 28% growth in 2010. In-game advertising is a good way to engage the visitor.Another form of online advertising is known as contextual advertising. These are graphical or text-only ads that correspond to keywords of an Internet search. They can also correspond to the content of the page on which the ad is shown. For example, if you type in a search for “flowers” you might get an advertisement for a florist’s website. A newer technique involves embedding keyword hyperlinks throughout an article, which is sponsored by an advertiser. When the user follows the links, they are sent to the sponsor’s website.There are many ways to advertise online. So, take the plunge and get started with this new and exciting media.