Failures happen all the time in business. Maybe you poured a lot of time and money into creating a new product that nobody responded well to. Or, you might have run out of cash right before it was time to pay your bills.
Setbacks don’t always mean it’s time to close shop or file for small business bankruptcy. Instead, a business failure can provide a valuable opportunity to learn from your mistakes and bounce back better than ever.
As an entrepreneur for over 30 years, I have faced my fair share of setbacks. In fact, one of my startups was up against stagnating sales, and it only got worse during the Great Recession. After months of losing money, I realized it was “do or die” time. Thankfully, we were able to get my startup back on track after making some serious changes.
If you are facing a business failure, one of the most important things I can tell you is to not lose hope. Here are eight steps for turning around a small business failure.
1. Wake up!
Recognizing that your business is failing in some way is not always easy. You might be numb to what’s happening, even if the signs are staring you in the face. Before you wake up, you may even continue doling out huge sums of cash for different expenses, but this will only dig you further and further into the hole.
Don’t become numb to failures and accept them as the way things are, or you could be on the road to losing your business. Waking up is the first step to turning around a small business failure. You need to accept what’s happening so you can make pivotal changes in your company.
2. Assess the situation
Once you realize there’s something wrong with the way your business is operating, you need to get in there and figure out what the problem is. Just because you might not know how to fix something doesn’t mean you won’t know what’s wrong.
For example, you may have a negative profit margin, or your sales may be dropping. Whatever the problem is, assess the situation calmly. You don’t need to know how to fix it right away. Do your research and take notes.
When my startup hit a bump in the road, I took notes of everything I saw and heard in the business. I listened to my salespeople’s conversations with customers, and I listened to what managers were doing. My employees weren’t the happiest that I was always there, but it helped me to assess what was wrong with my startup’s operations.
3. Kill inefficiencies
Once you know what the setback in your business is, you can come up with a plan of action to turn it around. For me, assessing the situation led me to find that there were a lot of processes that slowed down business operations.
As a small business owner, you may not have hundreds of employees working for you, and your employees probably have a mix of responsibilities, and wasting time is not an option. So when employees devote too much time to menial tasks that can be automated, your business will slow down.
One way you can kill inefficiencies is with the help of software. For example, accounting and payroll software can free up your time so you can focus on your business, instead of managing your books and running payroll by hand.
4. Expect the unexpected
Setbacks are bound to happen when you run a business. It’s all part of the … fun? Well, it’s all part of the joy of being an entrepreneur, at least. Expecting the unexpected applies to both before you have any setbacks and when you experience one. Set aside money in case of emergencies, and if you are up against a small business failure, prepare yourself for worse.
When my startup was struggling, the recession hit it like a freight train. I should have planned for the worst to happen, but I didn’t, and I was caught off guard. You can’t control the economy, seasons, or your customers’ buying patterns. What you can do is plan for worst-case scenarios.
5. Get rid of excess spending
Many businesses have extra expenses that don’t directly turn into profits. Or, maybe you’re offering too many products or services that just aren’t selling. Cut everything to the bone to get rid of unnecessary expenses and to simplify processes. Get rid of your least popular offerings.
You can also shop around for new vendors to see if they can give you better prices, or buy wholesale, which allows you to buy products in bulk at reduced prices.
6. Don’t quit
When you’re up against a big setback and feel like your business is on the brink of completely failing, remember the business can always bounce back. Don’t lose hope and develop a defeated attitude, or your business could continue spiraling. And make sure your employees don’t lose hope—negative attitudes could turn customers away. To stay strong, think of any obstacles you may have overcome.
7. Be easy for customers to find
After some time has passed, you’ll want to focus on growing your business instead of keeping it afloat. One way to grow is by getting more customers to buy from you. To attract new customers, you need to make your business easy to find, offer competitive prices, and improve the customer buying experience.
And you don’t need to spend a lot of money to advertise your offerings. There are many low-cost marketing strategies available, such as taking advantage of social media, posting new content on your business blog, and using email marketing.
8. Listen to your employees
Don’t forget your employees are amazing business assets. They can offer innovative ideas and new strategies to set your business up for the future. Employees can tell you what customers really need and want, and when you show you value their opinions, it will encourage them to stay motivated and be engaged with your business.
SOURCE: ALL BUSINESS