The cyclical nature of business suggests that at some point, your business is going to go through a down phase—a recession and oppression that is either due to owner mismanagement or the overall economy. Many know the statistics of business failure, what is less known is the statistics of business survival.
Saving a dying business that has gone through a major downturn is one of those things legends are made of. Here are three tips to do it:
1. Recognize Your Business is in Trouble
One of the biggest mistakes with small business owners is not fully recognizing their own business cycles. Small business owners tend to think with their hearts instead of with their pocket books when it comes to managing difficult times. Thinking that you can ride out the storm will leave you bankrupt and closing your doors.
If you have not and do not understand your own business cycle, start tracking and researching it. What months are traditionally high income months and which are low income months? What items/services do you sell the most of and to whom? Do you only serve clients in a particular industry or area? How diversified is your clientele?
These are questions that you need to answer in order to determine the state of your business. When your largest client is affected by the economy, so are you. If you do not know what is affecting them, you will not know what is affecting you. If you start to notice that the months that should be producing high income are not producing what you expected, you know that there may be a problem. Do not wait until the bottom falls out to assess the state of your business and how well you are doing.
2. Adjust and Shift
As a small business owner, you should be able to adjust and shift your business as necessary. Many small business owners have difficulty making necessary changes because they do not know where to start. The first inclination may be to cut expenses, but perhaps the issue is how the money is being spent and not how much money is being spent.
If you are seeing a drop in income, shifting emphasis on certain aspects of your business may be important. While increasing the marketing budget may be necessary, perhaps what you need is an increase in technology to create systems that ultimately result in higher profits.
You may have to retrain yourself and employees to the new economy and way of doing things. You may even have to hire advisors. Loss in income makes small business owners want to store money, when what is really needed is to spend. Thoughtful investment into processes that will make your business better should be the number one priority.
If you have been working in a certain industry for a long period of time, this may be difficult. However, if your chosen industry is going down as a whole, a new market is required. Begin making efforts to shift your target market to attract new clients.
3. Protect Yourself First
I see many small business owners who risk everything to save their businesses. They deplete their savings accounts, borrow from friends and family, and get a second mortgage on a house. In the attempt to save their business, they put their families at risk.
While I truly understand the need to save your baby (your dream), it’s not worth making your family homeless. I’ve seen too many business owners lose everything (I do mean everything) trying to save a business. It is just not worth it.
It doesn’t make you a failure if your business cannot survive its current form. You can always rebuild and rebrand. Sometimes, you just have to cut your losses and start over. That is okay. Many successful business owners have done the same. I had a client who had to shut his doors and eventually started a new business that was more profitable than the first. Create a line for yourself that you are not willing to cross no matter the state your business is in.
If your business is struggling, you can make the changes necessary to save it. In order to do so, you must be willing to open yourself up to new opportunities and seek help from others to guide you through the process.