If your business is failing, it’s time to take control and turn the ship around.
These guidelines will provide any small business owner with a blueprint for revival, whether you sell garden tools or bespoke consultancy services.
It doesn’t matter how dire the situation may seem right now. If you take action, your business can still succeed.
Find out exactly why you are failing
Before you can start to address systemic problems within your business, you need to assess the roots of your decline. This isn’t always obvious, and there can be plenty of reasons for revenues to plunge.
For example, new companies might have entered your market, eating into your profits.
Your own service level could have declined, sending customers fleeing. Internal procedures inside your organization may be inefficient, and your managers may have lost control, sending costs spiraling.
In some cases, demand may just have evaporated. Products are always becoming outdated, and companies need to move with the times.
Think about what is ailing your business. Is it a systemic problem concerning the structure and practices of those within your company, or is it due to external factors that are difficult to control?
It might help to carry out some market research to get a better idea of where things are going wrong. Canvas your customers to find out any problems they have with your products, and look at your competitors to ascertain why they are succeeding when you are not.
Usually, business failure is due to a mixture of both external and internal factors, and there are some remedies that apply in almost all cases.
Trim your costs to a minimum
One short-term solution to declining profits is to launch a thorough cost-cutting campaign. Almost every business generates waste at some stage in its operations, and there are many different approaches you can take.
For example, you can often save money on the infrastructure that underpins your company.
You may be able to implement more efficient lighting systems, use Skype Business to make long distance phone calls, or install free conferencing software to interface with clients and employees remotely.
Another target is the incidental costs that all businesses accrue.
These include expenses like corporate parties, team-building exercises, hospitality, and expense accounts. You might not want to do away with these expenses completely, but almost all of them can be cut back in some way.
There are also systemic cost-cutting strategies that deal with the structure of your business. Are all of your employees in roles that utilize their skills and time efficiently? If any staff members spend portions of their time idle, it’s a good idea to restructure their roles.
In some cases, bringing in external contractors can also deliver lower costs than permanent staff.
Payroll is another cost that can be reduced. It might be a last resort, but don’t be afraid to match wages to market rates if you have been overpaying. If your business is in crisis, you can’t afford the generous remuneration packages that you’d like to offer. Until the business is thriving, austerity is essential.
Secure finance to fund your operations
If you want to turn around your business, cutting costs won’t be enough. You also need a positive plan of investment that will spark greater productivity and increased sales.
This makes it important to source financial support. When your business is failing, there is little point in worrying about taking on debt, particularly if you need the money to remedy the situation.
Your production, sales, marketing, HR, and administrative staff all need the resources to do their jobs, and if it’s not coming from regular cash flow, a loan will be essential.
Small business loans are a lower-risk option, but these can be difficult to obtain and subject to long delays. On the upside, you will probably be able to benefit from your lender’s financial advisors, and the interest rate should be manageable.
However, if you need money fast, there are other options.
Peer-to-peer lending is an increasingly popular alternative to conventional banks, as loan requests can be processed in a matter of days.
The cost of credit can be high, but this isn’t always the case, and it’s worth shopping around to find a competitive P2P lender.
You might also consider selling any assets that have the potential to raise cash quickly. You could sell inventory in an eBay flash sale or cut back on office furniture. There may also be scope to mortgage your premises if you are in a position to do so.
Ensure your business is focused on its core purpose
When you’ve found a way to raise money and you’ve cut costs to the bone, it’s time to start revolutionizing your business.
It’s important to think about the bigger issues surrounding the business. Do you have a clear picture of what the business does, and what its primary goal should be? Failing businesses tend to suffer from fuzzy goals and poor branding. You need to be clear about what you do and who you are.
Come up with a brand identity that can be communicated to all staff and key clients. Extend this identity across your marketing channels and reinforce your central message to all staff on a regular basis.
Now, focus on specific problems such as waste, employee productivity, sales, marketing spend or energy costs. Identify each problem and come up with a solution.
The solutions could be anything from “attract 10,000 followers on Instagram” to “reduce failed shipments to 2 percent.” For each of these solutions, come up with a short strategy about how you intend to deal with them.
At this stage, you’ve come up with a plan that can then function as the roadmap to a revitalized business.
Look to the future
If you slim down your business to a lean, money-making machine, there’s one last piece of the business rejuvenation puzzle: the future.
The aim of the recovery process is to turn business on its deathbed into a forward-looking, cutting-edge organization that leads its sector and embraces change so that it never has to go through the revitalization process ever again.
The key part of planning for the future is knowing and growing your market.
Find out who your core customers are and start trying to multiply your audience. Leverage social media, email marketing, pay-per-click advertising, local marketing, and your own e-commerce site. Do whatever it takes to attract business from your competitors, and supply them with what they want.
If you can identify your problems, slim down your business, secure funding, and create a sense of corporate purpose, you can start to turn any company around.
The result will be an efficient company with growing revenues and a loyal customer base — a far cry from the wreck that you started with.
The 5 Step Plan to Turn Around a Failing Business
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