5 Things to Do When Your Business Is in Trouble
“I told myself I wouldn’t cry” said the lady on the other end of the phone as I asked her about her business. Patiently I waited for her to dry her eyes and compose herself. She went on to tell me how the summer had been tough, sales were slower than usual, and now months later, she was struggling to catch up. She had vendors calling her because she was late in payments, she had lost some staff, and she was trying to keep stock on the shelves. She was worried because her business was in a downward spiral. She didn’t know if she could turn it around and she was reaching out to me for help. She was at the end of her rope and the tears were flowing.
It takes guts to reach out and ask for help. More often than not, business owners cannot bring themselves to make a phone call, to find someone who can give them some advice on their business, or share their struggles in a way that leaves them open to suggestions. I can tell you from experience that when our businesses are failing, we feel a sense of shame.
Quite a few years ago, I had a start-up company in which I had sold shares. Not only was my money and time on the line, but the investors’ money as well. I worked hard to build the business, but like many entrepreneurs, I was trying to do too much. Faced with business challenges, I had spread myself too thin and was stressed out and run down. I didn’t think I had anyone to share the anxiety of my challenges with on more than just a superficial level. I kept my worries and shame inside. It almost wrecked me. When eventually I sold the business in order to pay my investors back, I collapsed exhausted on the couch for 2 weeks. I was one of the lucky ones.
Businesses can fail for a number of reasons, but the primary reasons are: a poor business model which fails to give value to the customers; lack of profitability which can be directly related to high expenses or low margins; low sales as a result of poor marketing; dysfunctional leadership which results in the inability of the team to sustain focus; inadequate cash reserves to see us through growth spurts and slow times. Businesses can struggle when we suddenly have more competition, increase our overhead, or hit a speed bump in the economy. The reasons are varied but the result is the same. Not enough cash to adequately fund the business and a stressed leadership team.
So what do we do if our business is failing?
1. Get a Bird’s Eye View – So often we get caught in the weeds of the business that we don’t take the time to stop and see what is really going on. Taking an afternoon or a whole day to examine the root causes of our problem can give greater clarity on the challenges we are facing and some of the possible solutions.
2. Understand your Financials - many business owners are looking at the bank account as a gauge of how their business is doing, but in reality, they need to understand their financial reports. Knowing what the numbers mean and how to make a difference to the numbers are two different things but are crucial for small business owners. You might know what your margin is but having the understanding about what you can do to improve your margin is a totally different consideration. Understanding if your margins and expenses are in line with others in your industry can enable you to make some small changes that can result in big differences to the bottom line.
3. Know Your Customers - Understanding who your customers are and what is valuable to them is crucial in revitalizing failing businesses. If we are clear on how we can add value to our customers and how we can retain their patronage, we then have the ability to adjust our methods to encourage them to participate in more frequent business transactions with us.
4. Effective Marketing - Marketing is changing and many businesses are repeating strategies that worked for them in the past. The key to effective marketing is being able to capture the attention of your ideal clients, giving them a reason to believe in you and calling them to action. Having the right medium is also key to your marketing. If we understand the behavior of our ideal customers, we will be able to reach them successfully. This can drive our sales and put money into our bank accounts.
5. Ask for Help – Reaching out for business advice when we are in trouble can be hard on the ego but if we do it soon enough, it can be so much easier on our bank account. All that is involved in closing a business is costly, stressful, and depressing. If we turn our business around but still want out, we can save face and money. Getting the right guidance from a business coach or other professional can not only save money but also reduce your stress levels.
You might be discouraged or even feel like crying when you reflect on your business and its difficulties. However, if you can take the time to change your approach and reach out for help, not only will you be more likely to succeed, but you will minimize your stress levels. As a wise woman once told me, your pain today will be your strength tomorrow. Don’t give up!
Dave Fuller, MBA is a Professional Small Business Strategist and Award-Winning Business Coach who is the author of the book Profit Yourself Healthy. Need to reach out today? Email Dave @ pivotleader.com