Help My Failing Business!
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Q: My business is on the brink of failure, and I don't know what to do about it. Any suggestions?
A: Most successful entrepreneurs will tell you that they have had one or more businesses fail before their current one succeeded. However, it can still be a very disheartening ordeal to go through when your business is not living up to your expectations. There are a number of turnaround consultants whose job it is to help keep your business afloat, but they typically charge large fees and require payment upfront. Here are some simple ways to begin looking at your business in a new light.
First of all, remove yourself from the equation, and look at your business objectively, as a case study. The joy of creating and growing a business is unlike any other. When your business is doing well, the feeling is exhilarating. On the other hand, if your business is failing, the feeling can be devastating. You feel like a failure yourself. This is not healthy for you or conducive to improving your business. Therefore, you must view your business as an independent entity, where its health is dependent on inputs and outputs.
Once you have removed yourself from the equation, take a look inside the business. You cannot save a sinking ship without pinpointing exactly where the hole is. Therefore, you must do the same with your failing business. Key areas to look at are the demand for your product or service, your marketing and sales efforts, and your cash flows. At the root of your business is the demand for your product or service. Just because you think there may be a need for your product or service, the general public may not feel the same. This can be a very humbling experience, but you must remember that the law of supply and demand is still the root of economics. If people do not want to buy your product or service, then you may just have to abandon ship and move on.
However, if there is statistical evidence that there is a market demand for your product or service, then you have to look at your marketing and sales efforts. Are people even aware of what you offer? Develop a marketing plan for your business, and stick to it. While word-of-mouth can prove invaluable, you must always maintain a marketing budget to keep a presence in the market. Some people make their marketing budget a percentage of revenue. Others choose a more subjective way to allocate funds. Either way, be sure that you are constantly creating awareness about the products and services you offer either locally, regionally or nationally, depending on your industry.
Also, if you haven't already, try to become affiliated with groups or organizations in your industry. Networking can provide valuable support in down times and expand the sphere of influence for your business. If you do not have a sufficient sales team, then consider finding people to work on commission. This way, you only have to pay them when orders come in.
If cash flows are bringing your business down, analyze every source of income and expenditure that your business generates on a monthly basis. Decide which expenditures are truly unnecessary. It's time to work with a bare-bones budget. Next, determine which bills have to be paid promptly and which bills can be delayed. You should have a sense of which vendors are more lenient and which are less forgiving. If not, call them individually and explain your circumstances. If they value your business, most of them will work out some sort of payment schedule with you.
Finally, look at your accounts receivable and determine which parties owe you money. It's a common accounting fact that the older an outstanding receivable is, the less likely it is you will receive payment. In the end, your oldest accounts will be written off. So call each and every party that owes you money, beginning with the most recent receivables.
Remember, a variety of things can bring a business down. It's not necessarily your fault. If you do have to jump ship and close your doors, don't take it personally. The entrepreneurial spirit is unyielding, and no ordeal is a failure if you learn from it.
Brian O'Rourke is the CEO and publisher of EnTrends, an online publication devoted to exploring how entrepreneurs work and live.