How to Save Your Business From Doom
With 70 to 80 percent of businesses failing within the first 10 years, entrepreneurs know that starting a company isn’t easy. They also know that finding success takes more than a can-do attitude and some run-of-the-mill innovation. Success means knowing when it’s time to cut your losses and move on – be it a new venture or a pivot of your current business strategy.
As hard as it is to let go of a business made of your blood, sweat and tears, it can be the best decision in the long run. I’ve seen an entrepreneur hang on far too long, taking a profitable business to nearly seven figures in debt. Don’t let this be you.
Before you company gets to that point, pay attention to these signs and make a change before it's too late.
1. Your market disappeared.
Before the 2008 housing crisis, my brother and I worked for a land development-engineering firm. Management didn’t take precautions to prepare for the upcoming shift; as a result, the office lost 85 percent of its employees over the next two year, including my brother and me.
To combat this, you have to adapt. A talented entrepreneur told me that the minute you release your new product, it’s old. Baking this mentality into your core values will ensure that you’re continually pushing for innovation and wowing your customers.
2. No one understands your product or service.
Prior to finding entrepreneurial success, my brother and I pursued a charitable venture called Painting with a Purpose. It doubled as a sweepstakes program that sold digital copies of paintings created by children with special needs. Confused? So were our customers. Trying to create an entirely new industry and product simultaneously nearly killed us.
You don’t have to reinvent the wheel to be innovative. Often, selling a really good wheel is more than enough. Before giving up, consider how your product or service could be modified. One small tweak may be all you need to break it wide open.
3. You and your team have lost the drive.
Many entrepreneurs thrive on the challenging risk of starting something new. After the fast-paced growth period is over and the business model begins to work, don’t let monotony blow out your entrepreneurial flame. Your passion needs to stay constant to persevere after the honeymoon is over. Constantly find new things about your business to fall in love with and share these with your team to keep the spark alive. Outsource the tasks that no one is in love with.
4. You’ve got a bad apple.
I once worked for a company that appointed a new manager with no prior management experience. In less than three years’ time, he crushed morale, decimated employee retention and dropped our sales numbers by nearly 85 percent.
The next time you underestimate a bad apple’s impact, picture post-Godzilla Tokyo to see where your business could be heading. Getting rid of these people is not only great for your business but also your team’s morale.
That said, I’m not saying that every bad apple should be fired. Simple repurposing will sometimes get the job done. My former manager won his position because of his expertise in sales. Sending him back to sales could have saved our company and made better use of his knowledge.
5. You’re not making money.
Dried up cash flow can crush dreams faster than the panel on Shark Tank. While it may seem unimaginable to give up on the business you’ve invested so much time and capital in, you have to know when to cut your losses.
Before closing shop, identify the problem and determine whether it’s controllable. If it isn’t controllable, do a thorough review of why the business failed. If it is controllable, develop a plan of action. If your business still can’t be saved, determine exactly where you went wrong. Remember that lesson.