According to a 2018 report published by the Small Business Administration (SBA), nearly 50% of new businesses in the US don’t live to celebrate their fifth birthday. Five years of handwork, hope, and money—and it all goes down the drain, five times out of 10! Isn’t that heartbreaking?
A startup might fail for various reasons: Market changes, unfavorable government policies, wrong choice of business, wrong location, a negative shift in consumer preference, or inadequate supply chains. However, if your business shows signs of distress, there are measures you can take to revive it before it’s too late. Here are five ways to rebuild your small business.
1. Reduce Expenses and Prioritize your Payments.
You might need to “trim the fat” to keep your business open. You can start by reducing unnecessary or discretionary expenses. Then, find other areas where you can cut costs without harming the business severely, for instance, travel costs. If you’re operating from a rental office, you can renegotiate the lease or ask the landlord to lower the rent. Laying off your employees should be your last resort. However, if your business is at its worst financial position, discuss with your employees about the reduction of compensation and working hours.
2. Don’t ignore your Creditors.
Most businesses purchase their goods on credit, besides having loans from financial institutions. However, small business owners might see debts as a sign of failure and might lack the confidence to face creditors. Let the outstanding debt not overwhelm you and cause you to avoid creditors. They might lose trust in you and auction your business assets.
Instead, face your creditors head-on and explain the situation of your business and the plans you have to clear your debt. Most suppliers and financiers are understanding and might be willing to work with your business if you show confidence that you’ll eventually pay your dues.
3. Manage your Cash Flow.
The chamber of commerce reports that 82% of business failure results from cash flow issues. Thus, without steady cash flow, your business will eventually dry up and fail. When you have a cash flow forecast, you can predict what goes out and comes into your business bank account. Use the estimates to have an insight into likely expenses and sales, so that you may know how to plan for the cash in the business bank account. You might need to automate some of the transactions, for instance, sending electronic invoices and quickly following up on clients who haven’t paid. When your business is in financial troubles, every coin collected is invaluable; you mint need a specialized well-coordinated team to ensure credit clients pay in time.
Streamline this tedious process with the help of an objectives and key results (OKR) tool. For instance, software like workboard can connect business, team, and individual goals to quantifiable outcomes, while having all team’s membership and leaders collaborate in one, organized manner. It can ensure that every coin is well spent, and in the most efficient way.
4. Focus on your Customers.
Keeping customers happy and satisfied can be all you need to turn around your business back into profitability. People expect more in today’s business world, and if you can’t meet their increasing expectations, they’ll demarket you on social media and shift to other sellers. It can severely hurt and frustrate your rebuilding efforts.
You need to set functional and strategic priorities, boost marketing efforts, offer personalized customer service, and respond to customer’s concerns on your various social media accounts.
5. Rebrand!
Rebranding might not be the first thing on your mind when your sales are plummeting. However, rebranding is necessary, particularly when you haven’t positioned your business or products properly. A rebrand that can bear fruits in the future might not be as quick and straightforward as having a new logo. You might need a total overhaul that ranges from your entire brand identity to how you have positioned it in the market. For instance, you might still maintain the same product—if it still offers excellent prospects—but change its brand name, packaging, and marketing strategies. Read widely and seek advice from established brands that had a rebrand in their success journey. You’ll learn top rebranding mistakes that others in the industry made before making their business a success story.
There isn’t a better feeling for an entrepreneur than when they’re able to turn a collapsing business around for the better. However, even if your company fails, notwithstanding all your hard work, take it as a learning experience. Many business owners failed several times before their most successful ventures. You might need to be right only once!