In this immensely competitive world, a struggling business is likely to fail sooner rather than later. Your strong entrepreneurial spirit is compelling enough to start a business, but not enough to keep it afloat for long until you start making a profit.
Businesses fail for many reasons. 80% of small and new businesses fail because they don’t start with the right amount of capital. 76% fail because their business model is ineffective. 75% fail because they don’t price their services effectively. 72% fail because they don’t have proper research of their target market. 69% of them fail because they do not review and evaluate their performance and do not recognize their shortcomings. More than 60% of companies are also struggling due to an economy in crisis.
These numbers are scary, but don’t worry! Now that we’ve got those scary numbers out of the way, we’re going to walk you through a few steps to help you get your struggling business back on track and turn things around for the better.
Through this article, you can find ways to take control of the situation and make the most of it.
don’t give up
It’s no wonder that many small businesses give up easily and close up shop too quickly, rather than take it for granted. ‘Growing Pains’ is a mandatory phase at the start of any business.
You plant a seed and water it every day, but it won’t be until days before you see a seedling come out. It will take longer until it becomes a massive tree laden with fruit. The same goes for start-ups. Sometimes you won’t see benefits for a long time, but you have to persist.
In many cases, however, the exact opposite must be done.
Sometimes it’s the quality of the soil or the amount of sunlight that seems to be the problem. If you don’t see any way to save your business, it’s better to let it go and start over. The faster you act, the better your prospects for success.
Acknowledge the problem
Try to understand what it is about the company that doesn’t seem to be working. Is it an internal problem like overspending or mismanagement/top management? These problems can be solved by careful monitoring of expenses or a change of personnel, respectively.
Perhaps it is an external issue, such as the inability to compete with established companies or large corporations. Big corporations always quote better prices to consumers that a smaller company simply won’t be able to match. In a case like this, always remember that smaller companies can offer better customer service and work to make customer service a priority.
In the event that the root cause appears to be a decline in business, reassessing your sales team and reevaluating your approach to advertising and marketing can be an effective method of growth.
A struggling company needs to trim its finances by cutting spending and ending unnecessary expenses. The operating budget should be thoroughly reviewed to develop immediate strategies to reduce costs.
You can try to reduce expenses by implementing “work from home” jobs for certain functions that do not require being present on site. Energy-saving electrical equipment significantly reduces the electricity bill and will also help reduce costs. Eliminate unnecessary roles if they exist, for example customer service roles can easily be outsourced from other countries at a lower cost. However, letting go of the workforce should be saved for a last ditch effort.
Apply for a business loan
In case your business does not make enough profit, but your business model seems efficient and sustainable, you can apply for a business loan. The loan can be used for various strategies to help increase your profits.
Use the loan for branding, marketing, social media outreach, as well as discounts or other promotional offers. You can also use the loan to hire more staff if needed, and even move to a new market better suited to your product.
Consult the experts
Last but not least, don’t be afraid to seek a second opinion. Take advice from nonprofit organizations like the US Small Business Administration and the Service Corps of Retired Executives (SCORE) for your struggling business. These organizations were created to provide assistance to entrepreneurs and provide a comprehensive assessment of your business at little or no cost.