What is one thing to do if your business is failing?
From determining underlying causes to cutting costs and spending smarter, here are 13 answers to the question, “What is one thing to do if your business is failing?”
- Determine the Underlying Causes
- Do Not Be Scared to Cut Losses
- Reevaluate Your Business Plan
- Never Outsource Responsibility for Failure
- Find An Investor
- Cut Costs and Spend Smarter
- Ways to Manage Business Failure
- Focus On Employees and Customers
- Evaluate Your Outreach
- Keep Your Eyes On the Ball
- Have Cash On Hand
- Invest Efforts into PR
- Ask for Help
Determine the Underlying Causes
If a business is failing, one thing that can be done is to conduct a thorough analysis to determine the underlying causes of the failure. This can involve looking at factors such as market conditions, competition, and the performance of the business itself. Based on this analysis, it may be possible to identify specific actions that can be taken to address the issues and improve the performance of the business. For example, this could include things like adjusting the product or service offering, changing the pricing strategy, or improving operations and processes. In some cases, it may also be necessary to consider more drastic measures, such as restructuring the business or seeking outside help.
Do Not Be Scared to Cut Losses
It is important to remember that not all business ventures are successful. Every business owner must know when to cut his/her losses. Cutting unnecessary costs and finding ways to reduce expenses are some of the initial measures a business can take. Focus on profit over revenue. Always be nimble and ready to adapt to changes. If you have done everything in your power and the business is not earning, be ready to close shop and find a more sustainable venture. Resilience is one of the keys to success.
Reevaluate Your Business Plan
One thing to do if your business is failing is to reevaluate your business plan and strategies to identify areas of improvement. Consider areas such as pricing, marketing, sales, customer service, and product/service offering. You may also want to look into getting outside help, such as a business consultant or mentor. Finally, consider cutting costs and adjusting your budget to reduce expenses.
Never Outsource Responsibility for Failure
When a brand fails, many entrepreneurs make the lethal mistake of pointing fingers at external culprits for the failures in the company. “Oh, it is the customer, it is the market,” they say. This way, they keep misdiagnosing the ailment since they look for pathogens outside instead of those killing the company inside. No, never outsource blame for the mishap. The market or customer is rarely wrong; it is mostly your approach to the market that is flawed. Accepting responsibility for failure and admitting you are wrong is the quickest way to discern where concrete improvements can be made. This is way more effective than folding your arms and illusively waiting for customers (or the market) to become radically better. Conduct a comprehensive review of your systems for the cracks in the operational architecture. What could be done better all the way from management to the customer-facing employees?
Find An Investor
Our company was started out of a garage in 2012 and was 100% owned by its founder. He sold a portion of the company to another company, one large enough to have a presence on the New York Stock Exchange. That sale closed in 2018. Two years later, the founder repurchased that portion and resumed 100% ownership. Our ecommerce business took off after we got that flow of money. We bootstrapped first and became more financially solvent because of an outside investor. Once we gained traction and saw that we could operate independently, we regained full control. It’s a move that a lot of young companies try and it has worked for them time and again.
Cut Costs and Spend Smarter
Cash flow is the lifeblood of any business, and if you’re struggling, your finances are likely mismanaged. Look at what you’re spending and where you could save money—if it’s possible. Reduce your inventory levels, look for cheaper suppliers, and consider whether you need to increase prices or adjust your product line. You can also do away with some services or products that are giving you more trouble than they’re worth and focus on what truly works.
Neil Platt, Director, Emerald Home Improvements
Ways to Manage Business Failure
One thing a struggling business can do is reach out to employees and let them know what is happening. Certain things may need to remain confidential, but letting employees in on key information will ensure no other issues arise. It will also show them that the business has its best interests in mind. If the business is failing because of employee attrition, for instance, staff surveys may be a good route to take (if this is within budget). This can weigh employee sentiment and help management gain control of any existing internal issues. If the issue lies with customer attrition, consumer-centric surveys can also be run.
Focus On Employees and Customers
If your business is failing, focus on two things: employees and customers. Sometimes the first instinct is to reduce costs by laying off employees, but this is just the beginning of a downward spiral. After all, how can you proceed without your team? In addition, failing to cater to your customers in favor of something that you want to push, is also a mistake. When your business isn’t doing well, remember to cater to the two things that actually matter: your customers and your team. And remember, even the greatest companies in history have hit hard times.
Evaluate Your Outreach
Are you reaching as many people as you’re hoping to with your outreach efforts? No business thrives without customers, so if you find yourself struggling, it may mean that you aren’t finding your way to your target audience as well as you should be. While improving outreach isn’t always a magic balm to instantly boost sales, making sure that your marketing is properly on target can mean creating more opportunities for your business to grow that it would otherwise be missing. While strong marketing isn’t ever free and is rarely cheap, it can be absolutely pivotal to the success of your business. Even if your business is falling on hard times, always consider and evaluate your outreach efforts and commit to improving them where you can. Every potential customer who can’t see your business is an opportunity you can’t afford to miss.
Keep Your Eyes On the Ball
Distraction, in my experience, is the root cause of business failure. The distraction could be internal and under your control as the business owner, or it could be external and pulling you away from the day-to-day operations of your company. Whatever the reason, your company is failing because you have taken your eyes off the ball. In this case, the ball is the business fundamentals—sales, revenue, and expenses—which must be managed and given adequate attention. Focus on your numbers if you suspect your business is failing or has the potential to fail. Money coming in, money going out. Understand where your money and time are going. There are usually aspects of the business that you are failing to do, such as sales, because you do not want to do them. It is time to tackle the difficult tasks and postpone the simple ones. You have got to eat your own dog food. Whatever you sell as a business, you have got to embrace it and do it yourself before you expect others to do it.
Have Cash On Hand
Turn your focus to cash flow. One of the top reasons businesses fail is due to a lack of cash flow. If you’re currently failing, it’s not too late to turn things around. Create a forecast, so you can start predicting both sales and expenses. This will allow you to know how much money you’ll need to have on hand at all times. It’s also smart to send invoices on time and have a system in place to follow up with anyone who’s delinquent. With a few tweaks, you can help your business succeed.
Invest Efforts into PR
In the words of Bill Gates, “If I were down to my last marketing dollar, I’d spend it on PR.” This is the most underused of all marketing mediums yet it has the biggest and longest-lasting ROI. The best PR or content pieces are when you make your customer the hero; they get the spotlight, but you are really the star of the show. Another is How-To or Tips pieces that help solve someone’s pain points or give them something positive, such as weight loss, anti-aging, or beautifying their home. Pitch your news release or feature piece to your local media outlets, as well as any and all online publications where the topic is appropriate. PR is a credibility hack and can also help boost your website’s SEO and rankings organically. Third-party publication of your content portrays your firm as an authority and trusted resource. PR can help incite people to action and generate interest, which, if you know how to close a sale, generates revenue. The goal is to thrive, not just merely survive a lean time.
Ask for Help
It’s awkward to approach someone and say, “My business is failing, can you give me some advice?” Yet it’s precisely that level of vulnerability that might save your company. I had to do this in 2013, and after listening to me talk about all the challenges I faced, a fellow entrepreneur told me I should turn my stories into articles and pitch them to business magazines. I did, and was offered a column with a major global publication. That led to hundreds of articles in more than two dozen outlets, a TEDx talk, a book deal, and an invitation to hang out with Richard Branson for a week on his island. It also saved my business and generated $10M in revenue. All because I was willing to ask for help.
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