5 tips for avoiding small business failure with collaboration software

Sep 4, 2018

Explore GetApp’s Resource Hub. We offer original research and insights to help you whether you’re shopping for the right software tool or trying to optimize your tech stack.

Ankita SinghContent Writer

Small businesses fail for many reasons. Some of the big ones are:

  • Failure to effectively merge market and product knowledge

  • Inefficient management of existing staff and inability to hire new employees who are a good fit

  • Lack of communication and collaboration with teams on the part of leadership

  • Lack of innovation, ideation, and engagement because of communication gaps between team members

The strategic implementation of collaboration software will help small businesses manage their talent pool, encourage ideation and innovation, engage the workforce, and ideate new ways to foresee and minimize business challenges.

Without leveraging collaboration software features to combat the main causes of small business failures, you may find yourself among the 20 percent of businesses that fail within the first year. Your risk of failure increases to 30 percent in the second year and a staggering 50 percent by the fifth year.

In this article, we’ll discuss how your small business can overcome these common failures with the help of collaboration software.

Tips to avoid small business failure

    • Resource crunch in finding the right talent: Small businesses and startups are working with limited resources to invest in hiring skilled talent-in terms of both available employees and their HR budget.

    • Inability to identify useful skills in existing workforce: Startups don't necessarily have existing role descriptions in place and may be building processes as they go. This means they must rely on the abilities of a multiskilled team, often on an ad hoc basis.

    • Lack of scalable workflows: Without a vision for the future, businesses are more likely to sink than swim. The right team needs a vision and roadmap that helps them progress with the fewest stumbling blocks.

     How collaboration software can help you optimize your team: 

    • Allow remote work: Collaboration software makes it possible for team members to work remotely. Users can collaborate and communicate on the cloud using features such as task management and tracking, built-in chat, and time tracking. Small businesses and startups can hire skilled employees-regardless of their geographical location-to work remotely, saving the infrastructure costs of renting office space.

    • Scout for the right talent from within your company: You can use group chats, channels, and companywide announcement boards found in collaboration software to find the right person for ad hoc assignments. Collaboration software also gives managers better visibility of task status, so they can more equally and efficiently distribute the workload.

    • Streamline your workflows: Collaboration software allows managers to plan projects and create roadmaps for their teams, thus streamlining workflows. They can anticipate, and plan for special projects and one-off tasks. Task management and project roadmapping also help the team understand how their individual contributions work toward the overall team goal, instilling a greater sense of ownership in the organization.

    Bonus tip

    According to

    40 percent of businesses

    , employee referrals are a rich source of quality hires. The right people attract the right people to your business. If your current workforce is happy and positive about the company, they'll be advocates for getting the right talent through the door.

    2. Grow revenue: Foster team collaboration and improve product quality

     Research shows that

    17 percent of startups fail

    because of poor product quality. Some of the things that stand in the way of creating a better product are:

    • Lack of collaborative ideation and innovation: For any disruptive or innovative idea to take shape and evolve into a successful product, ideation is vital. Small businesses and startups can't always participate in collaborative ideation, as they lack the skilled workforce and technology to foster these behaviors.

    • Lack of collaborative feedback: A good product needs to go through multiple rounds of feedback and internal audits before being launched. Small businesses should focus on gathering collaborative feedback from each department to encourage constant product improvement.

     How collaboration software can help you improve product quality: 

    • Collect feedback to create accountability: Collaboration software offers built-in surveys or integrates with survey apps to help you gather feedback on product development. Other features such as file sharing, commenting, and reviewing also encourage employees to share feedback on ways to improve the end product.

    • Foster collective innovation and ideation: There is no ideation or innovation without collaboration. Collaboration software allows users to share files, comment, review, star, and chat to foster collaboration anytime, anywhere.

    Bonus tip

    When employees feel that their opinion matters in improving the product, they feel more engaged and accountable toward the success of the final product. This, in turn, helps improve the product quality.

    3. Boost communication: Make sure your team's engaged and focused on organizational goals


    70 percent of Americans

    are disengaged at work; 22 percent feel

    their leadership lacks a clear direction

    for the company. Only 15 percent say their leadership makes them enthusiastic about the future, and only 13 percent say that leadership communicates effectively with the organization.

    As a small business or startup, here are some challenges related to employee engagement that you may face:

    • Lack of connection among peers: Lack of collaborative workspaces can result in team members feeling disconnected from one another. This defeats a key organizational goal of creating a healthy team culture .

    • Lack of transparency and trust in leaders: You fail as a business if you can't convince your team to believe in your ideas and implementation processes. About 45 percent of employees feel that a lack of trust in leadership is the biggest issue impacting their work performance.

    • Absence of rewards and recognition: Employees who feel undervalued at work lose their focus, which directly impacts the company's overall revenue and profit. Sixty-six percent of employees say they would "likely leave their job if they didn't feel appreciated."

     How collaboration software can help you engage your employees: 

    • Foster internal communication between peers: Audio and video calling features, as well as chat channels in collaboration software help global and cross-departmental employees stay connected. These features also encourage workers to collaborate more often, thanks to easy reachability.

    • Recognize employee contribution: Badges, likes, comments, and stars in collaboration software allow you to recognize your team in the moment. For instance, to recognize someone in Asana, you can "like" a comment, task, or other action. In MangoApps, the gamification feature lets you give badges to your peers. You should also promote peer-to-peer recognition in your teams.

    • Build trust in your leadership: If your team shows resistance to following your ideas, it could stem from a lack of trust in the company. When they don't share the same vision of the future as you, they'll be unwilling to collaborate on ideas and share feedback. Share your roadmap for projects, milestones, and strategic plans using collaboration software features such as company-wide announcements, product roadmaps, and project plans.

    Bonus tip

    A lower rate of attrition (i.e., when more employees stay on in the organization instead of jumping ship) can result from better employee engagement through rewards and recognition.

    4. Devise a feasible business model: Share your vision with the team

     According to one study, 17 percent of startups and small businesses

    fail because they lack a functional business model

    . Small businesses and startups may lack business modeling and strategy skills in the beginning, but they must work to overcome that deficit early on in order to create a clear and strong

    business model

    to avoid being surpassed by the competition.

    A good business plan means knowing your projected timeline and offerings, thoroughly analyzing the target audience, and having a steady cash flow.

     How collaboration software can help you create a model for success: 

    • Focus on skill development and peer learning: Build collaborative relationships with partners and other experts to co-create innovative and functional business models. Collaboration software facilitates teaming up with external sources as easily as it does for internal team members. You need additional user licenses only for the new stakeholders.

    • Keep your team informed: Use collaboration tools to update your team about the projects, timelines, milestones, and business value proposition. Host town halls and group meetings through collaboration software to ensure that remote workers are also up to speed on projects.

    Bonus tip

    Doing a

    SWOT analysis

    (strength, weakneses, opportunity, and threat analysis) for your businesses can help you gain a competitive advantage, understand the opportunity cost, and improve product quality as well.

    5. Don't ignore customers: Understand their problems to better market your product

     About 14 percent of startups and small businesses

    fail due to poor marketing

    , another 14 percent due to ignoring customers, while 19 percent were out-competed, showing a lack of understanding of the market.Another study found that most

    small businesses focus on increasing revenue

    (72 percent), but also see great value in establishing new customer relationships (60 percent) as well as marketing and advertising (46 percent).

    If you're looking to succeed, you need to keep your customers at the heart of everything you do. Here are some challenges you may encounter:

    • Failure to identify customer pain points: If you're not solving your customers' problems, your business model will fail. You won't be able to grow your customer base or increase your revenue. On top of difficulty in finding new customers, your competitors will likely outperform you.

    • Poor marketing plans: Small businesses and startups often ignore the benefits of marketing campaigns. A great product will be inconsequential if it's not reaching the customers and they're not buying it. Small businesses need to create marketing plans that set realistic budgets, projections of target audience reach, and sales conversion ratios.

     How collaboration software can help you reach your customers: 

    • Listen to your customers: Collaboration tools allow centralizing and archiving data in the form of accessible files and documents. Use social listening apps and share the insights you gain with your team so that they can also learn from it.

    • Develop a customer-focused business approach: Channel your company's endeavors to focus on the customer. Collaboration between customer-facing departments, such as sales and customer service, with the marketing and product teams to develop an integrated business strategy can be fundamental to your success.

    Bonus tip

    A strong market positioning and customer value proposition will result in new customer acquisition and retention.

    Steps to help you choose the right collaboration solution


    Here are some things to consider before you purchase:


    • Understand your budget: Analyze your budget and see how much of it can be diverted toward purchasing new technology. Plan for the next couple of years so that you anticipate increases in user numbers (i.e., licenses), frequent upgrades, and integrations with other software. Also, talk to various vendors about their pricing plans to understand what they offer upfront and what could cost you extra in the future. Check out software pricing on GetApp to see which solutions fit your budget.

    • Understand your business needs: While a software suite is more than enough to address the challenges discussed here, you should consider implementing a few specific functionalities (such as chat and audio/video calling to improve communication among teams) for your more immediate needs. Ensure that the functionality is able to scale up with the integrations you add over the years.

    • Understand the hidden costs and opt-out options: Before purchasing a solution, ensure that there aren't any hidden costs of installation or scaling up. Ask the vendor about opt-out options, in case you wish to cancel your subscription before the contract ends. Also, look out for contract costs or any other agreement costs that are hidden in the fine print.

    Read on to discover:

    • Slack vs. Google Hangouts for Business Collaboration

    • Seeking a Google Hangouts Replacement? Compare Small Business Collaboration Apps

    • Box vs Dropbox for Small Businesses: How Do They Compare?

    • Finding the Best File Sharing Software: A Handy Checklist

    • Should Your Small Business Upgrade to G Suite?

    • Cost Optimization Guide: Understanding Collaboration Software Pricing

    About the author

    Ankita Singh

    Content Writer
    Hey there, I’m Ankita Singh. I’m a Content Writer at GetApp. I bring you insights about customer experience, CRM, and project management. I’ve studied English Literature at the University of Delhi, India. Home base: Faridabad, India. (1-2) things about me: I enjoy traveling and socializing. The [1-2] tech trend[s]/innovation[s] I think you should keep an eye on: Watch out for all contactless technologies!
    Visit author's page