Running a business is hard work, especially if it is a new venture in the formative years of its life. There are a lot of challenges that can beset a business, and overcoming them can be too much for many fledgling organizations. In fact, starting a business is so much hard work that almost 20% of new businesses fold within their first year. Plus, if they do manage to survive that, a similar percentage doesn’t last into their third. There are multiple reasons why this happens: it can be because of a lack of an active customer base, it can be because profits don’t exceed overheads, or it can be because of changes in the economy.
No one enjoys seeing a daring company collapse and close. So, to help new businesses stay afloat and give them the best chance of long-term success, here are some of the most vital tips for saving a failing business.
Common Reasons Businesses Fail
Knowing about the common reasons businesses fail can help prompt new business owners to take extra care to avoid these common pitfalls. A lot of the time, having prior knowledge and experience can be enough to mitigate these risks.
One of the main reasons businesses fail is because they embark on the journey with too little money starting out. This means that a lot of businesses spend big with money they perhaps don’t even have, to be able to get all the equipment they need and to fund their initial costs. One of the best ways to combat this risk is to budget comprehensively and research everything that’s required to make sure you have a clear picture of how much things will cost and how much you’ll need to get off the ground.
Another reason businesses don’t succeed is because business owners lack a robust business plan. It’s important to take the time to create one and to fully understand the industry you’re starting out in. A good business plan can serve as a guide and help you grow effectively through staying focused.
A further reason is that a lot of businesses are selling goods that aren’t competitively priced, meaning that customers are being drawn elsewhere. It’s vital that businesses work out a suitable price, one that matches what the competition has to offer, and provide a service that turns a profit at these prices.
Finally, another big factor that causes businesses to shutter is that many owners fail to recognize their weaknesses and thus don’t make the required alterations and improvements to attract customers. Criticism is the best way to find out what’s not working and should always be acted upon as it can help make things better. Failing to seek help from others can be the downfall for many businesses in the long run.
Now that you know the common reasons why businesses fail in their first two years, here’s a closer look at some of the tips and techniques business owners can mobilize to change the trajectory of their company and revive it.
Don’t Give Up
This first tip might seem corny, but it’s a vital one. Many business owners decide to pack it in because things started to get tough. That’s a big shame. So, to help give your business a fighting chance, it’s important to stay motivated and never lose faith. Owning a business was never going to be easy in the first few stages of its life, so business owners have to roll with the punches and persevere.
If things seem too hard to manage and are overwhelming, it can be difficult to know what to do to rectify things. The best piece of advice is to take a step back and evaluate the business to try and figure out the cause of the challenge and then work hard to rectify it.
Changing your mindset and becoming more optimistic and passionate can be the missing ingredient to save your business. Of course, when things are failing, hopelessness can easily set in. But to shift it try these steps to shut out that negative interior voice.
1. Acknowledge it
Acknowledging negativity is the first step into dispelling it. Try to pay attention to how often these destructive thoughts pop into your head, and measure how much they affect your ability to work and push forward. Acknowledging how these feelings can affect your work will make you more motivated to get rid of them.
2. Challenge it
When your inner voice is screaming that you can’t do something and that you should give up, challenge it. Challenge that thought process and ask yourself ‘why’? You might find that you don’t have a good answer, which suggests that the negativity you’re hearing isn’t true.
3. Fight Back
The next step for challenging negativity is to actively fight back and try to replace the negative internal dialogue with positive thoughts. Just telling yourself that you can do this and that you can overcome these business challenges will put you in a much better frame of mind to tackle the issues and make the appropriate adjustments to save your business.
Perform a SWOT Analysis
A SWOT analysis is a strategic exercise used to identify the core components of your business and is a useful tool to help you evaluate your current performance and identify problem areas and things that can be improved on.
SWOT analysis starts by looking at the strengths of your business, the things that it’s doing well and those you want to continue doing. This could range from good customer service, to having a good price point, to even the visuals of your brand. Literally, everything that you like and everything that’s working effectively can be brought up here.
As well as strengths, it’s also important to work out your weaknesses. Things that are going badly and stuff that brings down the overall quality of your business or brand. Being aware of your weaknesses is the first step to eradicating them, so it’s important not to skip this step. In the same vein, you also want to figure out the threats that your business faces. These can include competitors in the same domain, financial issues, and everything else in between that could force you to close.
The final thing a SWOT analysis includes is working out the opportunities that are available to you. This includes researching your competitors and figuring out what they’re not doing that your business can implement to give you an edge.
Conducting a SWOT analysis can give you all the vital information needed to make vital changes to your business, such as adopting Operations Management Theory. Visit this website to find out more about Operations Management Theory.
Set SMART Goals and Make a Plan
SMART objectives enable you to create clear and easily measurable targets that can be assessed at anytime to see how you’re doing, as well as keep you focused on working to a concrete end goal. This is a great way to keep your business organized and is a good way of constructing a plan. SMART goals have certain criteria to be considered as such, and they are:
- Make your goals are specific and focused so that they’re easy to understand.
- Make them measurable and not abstract so that its easy to see when they’ve been completed.
- Make it achievable so that it’s actually something that you can realistically obtain.
- Make sure it’s relevant and is beneficial to your overall game plan.
- Ensure that it’s time-bound, meaning that there is a deadline to hit these objectives.
A good way to help stabilize a struggling business is to try and cut as many expenses as possible so that you can boost profitability. It can be hard knowing what to cut and what to keep, but the first thing is to stop spending on any unnecessary items and expenses. If it doesn’t help you produce or isn’t needed to keep the business open, get rid of it. Furthermore, try and be smart with your energy consumption and put measures in place to reduce it.
Installing a timer to make sure things are off when they’re not in use, and using energy-saving components like super-efficient lightbulbs can be a great idea. The last thing you want to cut is staff, as it’s these people that are vital in keeping you operational. If you’re really in a pinch, try to reduce hours and compensation before making your staff redundant as the last resort.
Use Your Time Effectively
In business, time is money, so to help improve your struggling business, you need to make good use of your time as well as your that of your employees. Organization is key, so it’s vital to keep a schedule and to have a plan.
It’s also a good idea to stop wasting time on repetitive tasks, as these keep you from doing the more important stuff. There are lots of reasonably priced software and services that can perform these repetitive tasks on your behalf, such as budgeting software that can sort out for finances in a flash and HR software that can manage rotas and shift patterns so that you can move your focus to more important matters.