What to Do If Your Business is struggling financially - Step by Step Guide


What to Do If Your Business is struggling financially - Step by Step Guide

As a small business owner, have you ever found yourself in trouble and wondering how you are going to stay alive with all the things you are facing? If so, you are not alone. Owning a business is one of the most difficult jobs and the pressure to succeed is intense.

The Bureau of Labor Statistics reports that only 25% of small businesses will increase employment over ten years. Unfortunately, this number hasn't changed in over 20 years. If you don't want to be part of the 75% failure rate, there are key things you can do today that can increase your chances of success. First, let's get rid of the negative numbers.

You know, the anti-entrepreneurship spirit that drives small businesses all over the world - the ones that can send small businesses tumbling into the valley of death. Without a doubt, starting and running a small business can be risky and scary.

The main cause of business failure is insufficient capital. If that's not surprising enough, here are some other reasons small businesses fail:

• 79% fail because they start with too little money

• 78% fail because they do not have a well-developed business plan, including insufficient business analysis

• 77% fail because they did not estimate correctly or did not include all the necessary factors when determining the price

• 73% fail because they are too optimistic about the sales that can be made, the money needed, and what they need to do to be successful.

• 70% fail because they do not understand or accept their weakness and ask for help from others

We'll take a closer look at the reasons for this common failure in the next chapter, but it's no wonder that many small business owners tend to give up quickly instead of going through tough times. But in most cases, it's the opposite reaction that small businesses should have.

Despite these alarming numbers, there are things you can do to improve the health of your business and make a difference.


Common Causes of Failure and How to Avoid Them

What to Do If Your Business is struggling financially - Step by Step Guide

As we mentioned earlier, aside from cash flow problems which are the primary reason for small business failure, there are other factors that cause failure. Let's take a closer look at them now.

• They don't understand their market and their customers

Starting a business without proper research and identifying the desired market, the right customers and marketing habits can lead to failure.

• They don't have a well defined pricing plan

Setting prices too high or too low will affect sales. Without the right combination of marketing strategy, product quality, customer demand, product differentiation, and the right price, the business will fail.

• They do not know how to plan financial needs

If the business is new or expanding, it needs sufficient capital. However, this is not enough. Miscalculating the amount of money they will need or saving the wrong amount of money can cause the business to fail.

• They do not anticipate or react to competitive, technological or other market changes

It is dangerous to assume that what worked in the past will always work. Businesses that don't take into account changes in the market, their competition, changing technology, or the value of trying new ideas can fail.

• They think they can do everything by themselves

One of the biggest challenges for entrepreneurs is giving up control and relying on others to get the job done. When entrepreneurs give up and ask others for help, their business can fail.

• They grow fast and cannot control it

Aesop continued with his classic, The Hare and the Tortoise. Although the growth of the business is large, slow wins every time. It is hard to believe that a big business can lead to failure. Although it is tempting to go out of control, a well-controlled and continuous growth is better than an uncontrolled jump. Keep in mind the 80-20 rule: 80% of your business will come from 20% of your customers.

You may be experiencing one of these trends right now in your small business. Although it's not an easy or happy situation, there are things you can do to change things and make a positive return.


15 Things to Do to Save a Struggling Business


What to Do If Your Business is struggling financially - Step by Step Guide

1. Change your Thinking

Before you do anything else, the first thing you need to do is change your mind set. When your business is struggling, it's easy to feel hopeless and stare at the empty glass. But if you want to take it back, you have no choice but to change your mind. We know, easier said than done. 

Especially when your inner voice is sending you negative messages - "you will fail", "you don't have the courage to take this kind of risk" or "there is no point in even trying again". Unpleasant sounds must be silenced as soon as possible. Follow these steps to close the negative volume:

Realize: Realization is the first step in getting a job. When you look at how often your inner voice gets in your way throughout the day, you'd be surprised how often it rears its ugly head and stops you from doing amazing things.

Challenge it: When your inner voice tells you something negative, like "you can't do that," challenge it. Ask yourself if what you heard is true.

Silence: Once you understand and challenge your inner voice, learn to silence it. One thing you can do is make sure you have a remote control that controls your inner voice. When it rears its ugly head, press the mute button.

Strike back: Replace negative self-talk in your head with positive self-talk. Tell yourself things like "I can do it", "I can overcome this setback", or "I am growing and learning every day" and believe it.

A positive and consistent mindset will help you take more action to protect your business, improve your well-being, and boost your confidence.


2. Do a SWOT Analysis

A SWOT analysis is a series of exercises you do to identify the strengths, weaknesses, opportunities, and threats of your small business. 

This is a useful exercise that you can use to analyze your current performance, identify issues (the appropriate terms of the product, price, and work process, etc.) and find out where you can make changes. Use our free planning tool to guide you through the research and planning process from start to finish.


3. Know your Target Market and Ideal Customers

The more you know about your target market and your ideal customer, the better you will be able to understand where you should focus your efforts, the needs and pain points that your product or service can solve for customers, buying behavior your target market and create a customized plan for your business.


4. Set SMART Goals and Create a Plan

Make a list of your SMART goals for your business. This will give you clarity and allow you to focus and work in front of them more easily.

SMART stands for:

Specific: Clear enough to understand

Measurable: Can be decided later

Achievable: Can be obtained

Relevant: Connected to your overall game plan

Limited time: Has a deadline

Next, create a plan that will put your SMART goals into action. When creating a plan, think about the process you want to do, how long it will take, and who will help you.


5. Reduce Costs and Deliver What You Pay for First

To keep your business open, you may need to "trim the fat" or cut costs. Start by cutting back on unnecessary or unnecessary expenses. Next, look at areas where you can cut costs, such as travel expenses or reducing your usage to lower your monthly payments. 

If you are renting office space, talk to the landlord to see if they would be willing to lower the rent or renegotiate your lease. The last place you want to cut costs is people. If you find yourself in a difficult situation, try to reduce the hours and wages of employees before releasing them.


6. Manage Your Finances

As you know from the statistics we mentioned at the beginning of this guide, 82% of small businesses fail due to financial problems. It is probably not surprising that without a continuous financial system, businesses eventually dry up and eventually fail.

Create a cash flow forecast to get an overview of what's coming in and what's going out. Use the forecast to create a sales and spending plan, so you know how much money you can have in your bank account. You'll also want to manage your cash flow better by sending invoices on time and tracking non-paying customers. You can streamline this tedious process by using payment and billing tools like Keep Payments to save you time and help you pay faster.


7. Talk to Creditors, Don't Ignore Them

If you're like most business owners, you probably have debts to pay. Many consumers see debt as a sign of failure, but in reality, small businesses with debt have high credit scores. Try not to get too emotional because of outstanding debts or avoid people who owe you money. It makes things worse.

Instead, talk to your creditors and explain your situation and your plan to pay your debts. Most lenders are understanding and willing to work with you if they are confident that you will eventually pay what you owe.


8. Organize your Business

Oftentimes, meetings are neglected by business owners. Lack of organization not only leads to expected losses such as wasted time and money, it affects your business reputation in a negative way, adds a lot of stress to your life, and makes the harder it is to work properly. 

Taking the time to organize your business will not only help you save time in the long run, it will also help you breathe easier, reduce your stress, and free up time spent on planning so you can get more work done.


9. Stop Wasting Time on Repetitive Tasks

Small business owners have a lot on their plate, no doubt. There is a lot of repetitive work that goes into running a small business. Time-consuming tasks are useful when done manually. When repetitive tasks are automated, it saves money and frees up time to work on growing the business.


10. Always Focus on your Customers

Keeping customers satisfied and happy has never been more important than it is today. We live in a world where people want more, and if consumers don't meet the rising expectations, people will express their opinions on social media and go elsewhere. It's a harsh reality, but it comes with doing business these days. Tools like Keep allow small businesses to provide personalized service and create happy customers.


11. Don't Panic

It's normal to feel overwhelmed when your business is struggling, but try to stay calm and focus on finding a solution. The fear of failure can set in, if you let it. Trust your instincts. There needs to be a positive change, and it will be impossible to find out what it is if your mind is filled with wrong thoughts and feelings about your situation. Believe in yourself, and you can change things.


12. Step back and Figure Out Where Things are going Wrong

What are your initial goals for the business and how do you plan to achieve them?

What obstacles did you encounter and get motivated? Sit down and review your professional and personal goals. Get clear on what you want, find out where you are now, and come up with a new plan for moving forward. Re-frame your long-term goal setting into short, achievable goals that will get you where you want to be. Remember to keep your dreams and goals in mind when making business decisions to keep going.


13. Review your Expenses and See Where you can Cut Costs without Sacrificing Quality or Service

Even if your business is in financial trouble, you can still save it. Managing business expenses is critical to success. When was the last time you looked at where the company's money was going? If you don't use an accounting system to track your expenses, look at your bank statements and review any expenses over the past few months. You may find that you are still paying for subscriptions or services that you no longer use.

Look at what you are paying and ask yourself these questions: Do you need this office space?

Are you paying too much for administrative work that you can hire part-time or outsource?

Can you negotiate new contracts with suppliers at lower prices?

Are you paying for software licenses you don't use?

Play and find out these money leaks so that you can prepare a fix for your financial survival.


14. Reach out to Your Network of Contacts for Help and Advice

You are not alone. Many other entrepreneurs will be happy to share their own experiences and offer suggestions. If you don't have a network, find one. There are many ways to connect with like-minded business owners. Join a local networking group, find an online group in your niche, and find a small business development agency or similar agency near you for one-on-one support. If you can, find a mentor who will guide you through the trenches and reach your dreams.


15 Lastly, Don't Give Up!

Most businesses struggle at some point, but with persistence and smart planning, you can get things back on track.

Read: 26 Businesses You Can Start With N1000 In Nigeria

Final Word

You are responsible for your success. If you don't like the way you're going, you have the option to change it.

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