Facing failure and overcoming it is just another part of any business. So, if you feel like your small business is about to go under, you’re not alone. More importantly, you can do something about it. Launching a small business is risky. But leading that business to success and keeping it there is even more challenging. There will be pitfalls along the way, and it’s vital to remain positive and flexible. It’s likely that with just a few readjustments, you’ll get back on track. Of course, embracing change and the willingness to look at problem areas are essential to the effort — and so is knowing how to fix a failing business. That’s what this article’s about. There are different approaches you can take to turn your small business around. Some of them work much better when combined. So, take a look at the following 10 ways to save a failing business and try to implement as many of them as possible.
Reassess Things with a SWOT Analysis
This is sound advice, no matter what stage or condition your business is in. A SWOT analysis will help you get a better sense of your business. It’s basically a review of your business’s Strengths, Weaknesses, Opportunities, and Threats. While a SWOT analysis is typically used to design a business strategy, it’s perhaps more helpful when it comes to a failing business. When your small business is in crisis mode, it’s crucial to prioritize the right things. By analyzing your business in terms of SWOT, you’ll get a clear image of what actions and strategies you should follow first.
When doing a SWOT analysis, make sure to have a few other people present — no one person can see the whole image clearly. That goes double for you as the business owner. Even if your business has a couple of employees, try to use their insights. Also, try to be as honest with yourself as possible. Stare any weaknesses your business has in the face has and acknowledge them. Without that, you won’t find a way to overcome the problem.
Manage your Cash Flow
This may sound more than a little intimidating, but it’s not something you can’t handle. Cash flow is simply about how much money “flows into” your business and how much “flows out.” That means your cash flow is how much your business rakes in and how much it spends during a fixed period. Now, if you receive more cash than you spend, you have a positive cash flow. Getting a positive cash flow and maintaining it is part of running any successful small business. A negative cash flow will complicate things — you may be unable to pay your employees on time or even pay the rent on your office space.
Some businesses will face a negative cash flow even when technically profiting. It may sound odd, but there is a reason it’s called cash flow. So, even if you’ve converted many customers and issued a bunch of invoices, you actually have zero incoming cash flow until they pay those invoices. So, your incoming cash is just that, cash — meaning liquid assets and money in the bank.
This delay is at the root of many cash flow problems. You’re always paying your expenses with cash, but it’s standard to invoice and wait, maybe because you offer a trial period or another incentive. One way to wrestle free is to reformulate your budget to ensure your business has enough reserves to survive the interval. After going through the product and sales cycles a few times, you will have managed to turn your profits into positive cash flow. This will free your budget once again.
Revisit your Target Market
You’ve probably researched your target market when you were launching your business. However, your ideal buyers won’t necessarily stand still as time goes by. Markets shift, trends change, and you need to be informed. When you’re trying to save a small business, revisiting the target market is essential. You can start by doing some research or rewriting your buyer personas. That will ground you in here and now.
Adjust your budget
Designing budgets is not exactly a walk in the park, not even an infernal park with confusing numbers for trees. That aside, you probably have some budget plan already, and that’s what you’ll need to revise and adjust now. Most small business advice on this goes something like: “cut costs, reduce the budget.” Of course, that’s not always wrong, but neither is it always right. Instead of considering cuts, you should start thinking about budget adjustments. Sure, there will be an overall decrease in your budget at this point, whatever you do; but that doesn’t have to be all there is to it.
Once you’ve done your SWOT analysis, you will know which areas need more work. Is it more efficient to turn your strength into new opportunities? Or use current opportunities to counter your weaknesses? When you can answer this type of question correctly and honestly, you’ll know where to reassign part of your budget. There is also the cash flow delay problem that I mentioned above. If your small business is making a profit but doesn’t have a good cash flow, you should consider putting some of your budget toward ensuring survival until things balance out.
Handle the Creditors
Now, this is the part where many small business owners struggle. Being in debt is not the best thing that can happen, and the pressure of dealing with creditors is enough to make people want to hide and ignore everything. That’s only natural — nobody likes the headache of handling creditors on top of everything else. However, hiding is not an option if you want to turn things around for your business. Instead, try talking to your creditors to explain the situation. Be honest and upfront, and be the first to reach out if you think you won’t make the payment. When your creditors know you’re going strong and just need some help getting your business on its feet, they’ll be more likely to help than to cut you off. So, whether you’re dealing with a bank or other businesses providing a product flow, keeping communication channels open is the only way to save a failing business. In the end, creditors want their money back, and they will help you if they think they stand a better chance of getting it once you’re doing well.
Remember the Customers
It’s easy to overlook the basics when dealing with crises. When saving a failing business, many people forget that the primary revenue source for any company is its customers. According to data, keeping current customers happy and coming back is even more important than attracting new ones. This makes even more sense when you’re trying to make a turnaround and don’t have the time and budget for marketing. So, to ensure your revenue stream doesn’t dry up (and maybe even increase it), you’ll need to optimize your relationship with the customers. You need to know when to touch base with each of them and fix their problems. True, investing in a Customer Relationship Management (CRM) system may sound unreasonable when your business is facing failure. However, an affordable yet feature-rich CRM like RunSensible can quickly solve things. It’s ready to go right out of the box and it’s cloud-based, so it doesn’t consume precious time to be implemented.
Prioritize your Time
You won’t have much free time between handling creditors, revising strategy, and running the actual business. That means you have to make the time you need to spend on more urgent parts of your business. In normal conditions, you can devote more time to something crucial and keep at it until you have a solution. Dealing with failing businesses, however, things are different. Here, you don’t have the luxury to follow problems through. You’ll have to juggle a lot of tasks and problems competing for your time and attention. So, try to prioritize and categorize your time. Managing your schedule is indispensable to pulling your business from the brink.
Keep a Positive Attitude
I know that keeping your spirits up isn’t the most obvious thing while the company you’ve built faces failure. But it’s essential to keep a positive and can-do attitude. When you realize there is a chance things could go under, self-defeating negativity is almost natural. If you let it, this negativity, this desire to just give up and walk away, will overwhelm you. Give up and you’ll lose any chance you may have had at your own Amazon story.
But as long you keep up the fight, everything’s not lost. That’s why it’s important to remind yourself of all the challenges you’ve faced so far. Being an entrepreneur is tough and you’re tough enough to handle any problems coming your way. There is no reason this time should be any different.
Rethink your Brand
Rethinking your brand may be as simple as changing your logo and website design to changing your company’s name or even a complete makeover of its identity. Reinventing your business can be the change in direction it needs to get back up. There are more than a few examples of small, mostly local, businesses that went from near-bankruptcy to success to growth by embracing the online revolution. That’s just one of the ways to reinvent your business. Some companies have done better when they went the opposite way, focusing on the local scale. Try to find what works and change your brand to fit that.
Consider Scaling Down
I’ve placed this dead last because it should be your last resort. I’m talking about layoffs. Cutting employees off is not really a good solution, and it may leave some long-standing marks on morale. But if you feel like the choice comes down to firing some employees and going out of business, then it’s only logical that you do it. Of course, even then you want to choose the employees you want to lay off very carefully. You need to keep the people most important to your business. Also, try to do the entire cutback in one go — firing people gradually makes things feel like a survival reality show, and it’s anything but pleasant.