It can be a hard truth to accept that some businesses struggle on a daily basis. The obstacles are stacked high against new ventures. Some don’t have the finance; others don’t have the staff.
One of the most exciting things about people who start a small business is that they tend to have the entrepreneurial spirit to revive even the most struggling business.
Should you always save a struggling business? No. Sometimes you must know when to cut your losses.
But, if you have a business that isn’t going as well as you hoped, and you are looking for some short-term and long-term saves, let’s get started.
It is 4.30 am, you haven’t slept in three days, and all you can think about is the mountain of work, the pile of invoices, and the negative balance in your bank.
At this very moment is where you will decide that you need to a) throw the pile in the bin, close the business, and make arrangements to pay everything.
b) drink a coffee, sort through the pile, start penning emails to each creditor you owe, making a neat chart for when you can manage to submit all of the work.
Both of these are reasonable responses to something that can be very stressful. It is a learning moment for you, though. You now learn if you have the motivation to raise the business back up.
What was your failure?
It is time to look at what you have done or not done up until this point. What was the turning point between floating along and doing well and struggling?
Cash flow is usually one of the most significant issues for a small business, and usually, bad planning compounds that further.
If you failed to plan, one of the first things you need to do is work out how you could’ve planned better. Do you need to consider going to classes to help with planning?
Go further with this; what was the area of planning that went badly? Time management? Money management?
If you know that you can get the work done for the client and you aren’t too far into the red, then it can be a good idea to consider a short-term finance option. Use a bridging loan calculator to help you work out what you need and what you will need to commit to following it.
Re-do the audience
Did you have the perfect product, but you didn’t make enough sales for some reason? Then one of two things went wrong – you didn’t have the right audience or were pitching the wrong product.
Going back to the drawing board and creating a new profile for your audience is a must, not a maybe. It might feel like you are going over old ground, but the old ground didn’t give you the results you needed.
It’s time to try something different.
Get all of your metrics together, and build a more in-depth buyer persona than ever before. Where do they live? Where do they work? What do they watch in their free time? How did they enter your website, and what made them leave?
Don’t use your old template if it didn’t bring you sales – build a new one; it is worth the time.
If you were spending more than you were making – hoping to make it all back through sales, then you just ended up with a lot of costs. The lesson you can learn here is that money management is essential, and you will need to look at where you have been spending and what on.
Most likely, you have a lot of cash that needs to be paid back; making those arrangements might feel humiliating. But prioritizing who you pay and how much you pay will help get everything in order.
You should also look at expenses that have stacked up like travel, stationery, and any rental agreements that you have.
Many small businesses make the unfortunate mistake of spending a lot upfront and committing to costs that aren’t sustainable in order to appear professional to the outside world.
If you have employees, this can often be a complicated process since, most likely; you will need to let them go or reduce their hours.
One of the worst things you can do is hide from your creditors. You may damage all future potential you had with them if you do. Small businesses often have cash flow issues; about 82% of small business closures happen due to mismanaged finances.
Try to take a step back and realize that not all debt is bad; often, a small business with some debt can have a higher credit score. What is important is that you take steps to discuss what is going on, your plan of action, and how they will be repaid. Most creditors will be understanding and willing to help you resolve your issues and prepare a friendly repayment plan.
Refresh the cash flow
Most of the time, a business plan will contain a cash flow for the first five years of the company. They are typically optimistic. Now, however, you have insight into the actual running costs and the income too.
Refresh your old cash flow with the true figures that you now have access to. You will be able to more confidently make projections for your expenses, sales, and general running costs.
Just remember that if you do take a bridging loan, you add the repayments into the cash flow, as well as the initial amount that you will be receiving.
Become more organized
Poor organization when it comes to business can be the reason things don’t go according to plan. If you haven’t been on time with sending invoices or chasing unpaid invoices, this can be a huge issue.
Or perhaps much of your valuable time is being spent on smaller tasks that didn’t require that dedication. Anything that is repetitive should be handed out to an outside source, or software should be sourced to automate the process.
Free up as much time in your weekly workflow as possible so that you can do the great work that brings in the paying clients.
Your clients are the reason you are running the business in the first place. Look over your past performances, and can you say that you always have focused on your clients getting the best from you?
It is also possible that your business expanded quickly, and you found yourself with more clients than you could handle efficiently, which means that some of them did not get the service or product that they were expecting.
Speak to your clients and discuss with them anything that may have impacted your performance with them.
Going over all of the initial foundations of your business will enable you to highly opportunities and modify your processes to plug any threats and issues.
Setting SMART goals is going to be the final step to enable your business to move forward with a renewed sense of self, better organization, and everything under control.
Each goal that you set should have some smaller corresponding steps that will allow you to track your progress and measure the success of each one too.
If you decide that it is time to close the doors on this specific business, remember to take everything you have learned and apply it to a new venture. Are you already considering your next steps? Unique Tips For Starting A Business – Mom and More.