If your business is in dire straits, take hard steps to turn things around, but think positive. These short-term remedies might lead to long-term, sustainable solutions.
According to the Bureau of Labor Statistics, around half of all startups fail within five years.
That’s a depressing statistic, but one has to wonder how many business owners prematurely threw in the towel. Apple, after all, operated at a loss and teetered on the brink of bankruptcy for years.
If you’re not ready to give up, taking these eight tough actions might just save your business.
Confront your problems.
Are your products top quality? Do you provide stellar service? Is your brand relevant to the consumers you’re trying to attract? Have you invested enough in marketing? Maybe you haven’t implemented the technology to make transactions fast and convenient. Maybe you’re charging too little or paying employees too much.
If you can’t pinpoint the problem, it would be well worth the money to bring in a consultant. Your ship can’t stay afloat if you don’t know where the leak is.
Listen to your customers.
Customer feedback, whether good or bad, is your best friend. Are you intentionally inviting it?
If you operate in a brick-and-mortar setting, reach out to longtime customers and departing customers alike. Ask them to be brutally honest. Has your brand disappointed lately? Are there products they need that you’re not providing? Are improvements to your physical space in order?
If you own an e-commerce store, add a survey to your website. Regularly comb social media for remarks and reviews about your brand.
Promptly resolve issues, and use negative feedback to improve.
Listen to your employees.
Along the same lines, this is no time to avoid or tune out your employees. They probably have valuable insights, and your decisions about the business will impact them.
Launch a discussion to make sure that everybody’s on the same page. Encourage everyone to speak freely. Production difficulties, lack of teamwork, or poor communication could be at the root of the downslide.
Is your management style a problem? Do employees feel valued?
If your workers don’t feel safe being honest with you, your leadership skills could use some brushing up.
Reduce expenses.
You might have more to work with than you think. Here are some ideas:
- Monitor your budget and cash flow weekly, or even daily, for tighter control.
- Renegotiate your lease, or ask your landlord for a temporary reduction in rent.
- Downsize to a smaller space, or operate from a shared workspace.
- Make sure you’re not over insured.
- Consolidate bank and credit card accounts to reduce maintenance fees.
- Go paperless.
- Get rid of the landline.
- Buy refurbished technology.
- Buy government surplus computers, furniture, office equipment, vehicles and other goods.
- Barter for goods and services. For instance, if you own a restaurant, work out trades with whoever prints your menus.
You may be tempted to start laying off employees, but don’t be too hasty. You’ll need them when things turn around. Consider reducing employees’ hours or asking loyal workers if they’re willing to take a temporary pay cut.
Put your assets to work for you.
Tangible assets like buildings, vehicles and equipment provide a much-needed lifeline. Look into leveraging yours to keep your head above water.
Leasing out machinery or space in your building might generate enough income to keep you going. You might also sell the building to someone who’s willing to rent a space to you.
Do you even need a building? From Seattle to New York City, business owners are questioning the necessity of real estate. More and more businesses, even giant tech companies like Facebook and Twitter, are closing up shop and sending everybody home to work.
Of course, business liquidation is a reasonable, streamlined option for getting the most out of your assets.
Reach out to creditors.
One of the worst things panicky business owners do is dodge their creditors.
Banks and credit card companies are far more likely to work with you if you contact them at the first sign of trouble. Mind you, that’s not when your loan payment is six weeks overdue.
Be proactive. Call when a payment is in danger of being late. Explain that you’re in trouble, and propose a plan to repay. You might be able to renegotiate terms, negotiate to settle a debt or defer a payment.
Find additional funding.
Just a little more cash might get you over the rough patch and on the path to profitability. In business, it never hurts to ask. If you’re turned down for a bank loan, look for a partner, angel investor or venture capitalist. Be persistent.
Airbnb’s co-founders — two roommates who started leasing out an air mattress in their San Francisco apartment to make rent — had a devil of a time getting funding.Eight of 15 angel investors turned them down, and seven didn’t even bother to respond to them. They didn’t give up, though, and they eventually got the attention of a venture capitalist. Frederick Smith spent FedEx’s last $5,000 on blackjack in Las Vegas. He raked in $27,000 and saved the company.
That strategy is highly inadvisable, but you have to admire Smith’s tenacity.
There are also grants available through federal, state, county and community developmental programs. The U.S. Small Business Administration is also a good resource. Scams abound, so make sure you’re applying with legitimate entities.
Rebrand and start over.
Finally, it may be time to go back to the drawing board. If your business model is sound, evaluate your product line. Find out why well-reviewed products aren’t flying off the shelves. It could be that marketing efforts aren’t reaching your target audience or that the branding is all wrong.
Consider promoting your values to attract like-minded consumers. Starbucks’ humanitarian efforts and CVS Pharmacy’s discontinuation of tobacco products, for example, have been extremely popular with consumers.
Other companies that have found new life after rebranding include Old Spice, UPS and Pabst Blue Ribbon.
If your business is in dire straits, take hard steps to turn things around, but think positive. These short-term remedies might lead to long-term, sustainable solutions.
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