Success and failure are part and parcel of any activity, be it sports or business. Have you felt like closing down the doors of your business for good? Well, you are not alone, as many entrepreneurs undergo the same situation daily. Just having an entrepreneurial spirit doesn’t guarantee a business leader immediate success. And even if the person faces headwinds running the business, he/she should think about course correction options, rather than giving up completely.
We have factors like insufficient cash flow, lack of a well-developed business plan, failure to gauge product demand and determine their prices, getting overly optimistic about parameters like achievable sales and money required and the inability to identify the weak operational points, contributing to a business’ struggle or the worst case, demise.
And it’s not like businesses are immune to struggles. Many successful and established businesses of the 21st century have gone through periods where their sales have hit rock bottom and debt levels have gone high, almost inviting bankruptcy in the process. However, they have managed to perform the course corrections and come back in a rocking manner.
Why Do Businesses Face Headwinds?
An entrepreneur should think of the tough times as the “growing pains” he/she experienced as a child.
“You didn’t reach the height you’re at now without experiencing some pains in your joints as your body transformed from a toddler to a young boy or girl. The same logic or growing pains can apply to starting a new business. Take for example never having enough time or constantly putting out fires—you can probably relate to those pains, “Noted educational and business content writer Besma Bihnam commented.
These growing pains can be solved. If struggles start to take over the business, or business owner, they could lead to failure. All the business owners need to do is take a step back, look at the overall state of their business and identify the root cause of the problem.
Apart from the cash flow problems, some headwinds also stem from the fact that entrepreneurs sometimes fail to understand their market and customers. Starting a business without thoroughly researching and identifying the target market, ideal customer, customer buying habits and a clearly defined pricing strategy can lead to failure.
Assuming what worked in the past will always work is dangerous. Businesses that don’t factor in market changes, their competition, changing technology, or the value of experimenting with new ideas are likely to fail. Also, one of the biggest challenges for entrepreneurs is to let go of control and rely on others to finish the job. Yes, businesses, irrespective of their size, need decentralisation of roles and responsibilities to perform like a well-oiled machine, but having way too many hands-off approaches doesn’t help the business leader’s cause either.
While business growth is great, slow and steady wins every time. It’s hard to believe that too much business can lead to failure. While it’s tempting to go for it all, steady, predictable growth that’s properly managed is healthier than uncontrolled jumps and spurts in volume. Keep in mind the 80:20 rule: 80% of your business will come from 20% of your clients.
Successful small businesses have four common characteristics that we recommend all small business owners adopt. They can know their market better and make sure there is a demand for their product/service before they develop it. They can enter the market with a distinction that sets them apart from their competition. Most importantly, stay strong and don’t give up. If required, rely on a mentor while starting out your venture and throughout changing business climates.
How To Revive A Struggling Business?
Innovate
“Markets, people, and technology all change. What’s relevant or trendy today isn’t guaranteed to stay the same. Your business, too, should change in order to adapt to the ever-changing world. Choosing to focus on today’s marketplace without anticipating the future is what made known companies such as Eastman Kodak, Motorola, Sony, and Yahoo lose their edge. Experts call it the strategic trap,” says Robyn Howard, a video enthusiast and content manager over at VideoRemix.io.
There is a psychological trap, where business leaders focus exclusively on what made the business successful and fail to adapt to new changes. Also, not investing in the equipment/other systems that run their company is another way many businesses end up losing on new and relevant investments.
“Put simply, if a business doesn’t innovate or resists innovation, the chance of failure becomes high. At one point, all the companies on the list dominated the market in their respective fields; the great lesson any small business owner can learn here is to never make the same mistakes they made,” Howard stated.
Adapt to new changes, innovate your products and services, and also, rather than trying to deal with everything on your own, listen to your friends, family, employees, and business partners. Invite them to share any ideas that could help revive a failing small business.
Perform A SWOT analysis
A SWOT analysis is a strategic exercise a business owner needs to go through to identify his/her venture’s strengths, weaknesses, opportunities, and threats. It’s a helpful exercise the person can use to analyse your current performance, identify things that are going wrong (problem with product-market fit, pricing, operational processes, etc.), and discover areas where the business leader can make improvements.
The business leader should also know his/her target market and ideal clientele. Performing the task will help the person to understand where he/she should focus the efforts, the market needs and pain points the company’s product/service can solve for clients, apart from targeting clients’ buying behaviour, and develop a strategy that’s the right fit for the business.
Set SMART Objectives And Create A Plan
Make a list of your (addressing business leaders) SMART objectives for your business. This will give you clarity and make it easier for you to stay focused and work towards achieving them.
“SMART stands for: Specific: Clear enough to fully understand. Measurable: Can determine when it’s complete. Achievable: Can be accomplished. Relevant: Is connected to your overall game plan. Time-bound: Has a deadline with specific dates,” stated Bihnam.
Next, create a plan that will put your SMART objectives into action. As you create a plan, think about the steps you’ll need to take, how long it will take, and who will help you.
Put A Solid Financial Roadmap
To keep the business open, cut discretionary or unnecessary expenses. Look at areas where you can cut costs like travel expenses/reduce your utility usage to lower your monthly bills. If you are renting office space, talk to your landlord to see if they will be willing to reduce rent/renegotiate your lease. The last place you will want to cut costs is people. If you find yourself in a tough spot, try reducing employee hours and compensation before laying them off.
“Create a cash flow forecast so you have insight into what’s coming in and what’s going out. Use the forecast to project likely sales and expenses, so you know how much money you’re likely to have in your bank account. You’ll also want to manage your cash flow more efficiently by sending invoices out on time and following up with customers who haven’t paid. You can streamline this tedious process with a payment and invoicing tool like Keap payments to save you time and help you get paid faster,” Bihnam said.
“If you’re like most small business owners, you probably have debt to pay. Many business owners see debt as a sign of failure, but in reality, small businesses who have debt have higher credit scores. Try not to feel too overwhelmed by outstanding debt or avoid creditors. That only makes matters worse. Instead, talk to your creditors and explain your situation and your plans to pay your debt. Most creditors understand and willing to work with you if they’re confident you’ll eventually pay what you owe,” she commented.
Put A Client First Attitude In Place
“Keeping clients satisfied and happy has never been more important than it is today. We live in a world where people demand more, and if business owners don’t meet increasing expectations, people will voice their opinions on social media and go elsewhere. It’s a hard fact, but that comes with running a business nowadays. Tools like Keap make it possible for small businesses to deliver personalised service and create happy clients,” Bihnam remarked.
Aggressive marketing is the best option to gather new customers/clients. Did your previous marketing strategy deliver good results? If not, then it needs to be refreshed.
Small business expert Melinda Emerson lists these essentials of a good marketing plan: market research, target market, positioning, competitive analysis, market strategy, budget, and metrics.
“Each one of these items matters in turning around a failing company, but I think knowing your target audience is one of the biggest factors. Try to understand them by obtaining all the essential information you can about them. You can speak to them directly through email or social platforms, and request them to share feedback on your services or products, plus any other suggestions they may have. Also, try creative and productive ways such as personalised video marketing to convert them,” Binham noted.