No one starts a business intending to fail at it. Unfortunately, business failure is a reality for many. The hardest part is facing this reality and admitting to yourself – my business is failing.
But failure is more common than we think. It took Thomas Edison 1,000 attempts to invent the light bulb before he succeeded. He never saw it as 1,000 failures, he perceived it as 1,000 steps closer to his achievement.
Dan Lok himself had 13 failed businesses before he became a self-made millionaire. He always reminds his students and clients that failure is the best sign of growth and the only way to master your own destiny.
Statistics show that 30% of new businesses fail within the first two years, 50% within the first five, and nearly 70% fail in their first decade. But can you guess what is the number one reason why businesses fail? Well, it turns out that 82% of reasons for failure have to do with cash flow.
Now, it’s easy to blame money for the failure of a business. But insufficient cash flow could be a sign that something else is wrong. So if you want to know what to do to identify the cause of your failure and turn things around, read on.
Watch this video about what to do when your business is failing:
Give Your Business A Post-Mortem
So as we mentioned earlier, facing the truth has to be the first step. Look at your business with fresh eyes and with distance. Take on the position of objectivity. Ask yourself – what went wrong in your business?
When Dan Lok’s businesses were failing, he always took the time to analyze the entire process. This helped him understand how to see the big picture, and it is what makes him successful today.
So take time to properly assess your business. Think about what might be the reason behind the difficulties you’re facing. There are some common reasons why businesses fail, so ask yourself these questions:
- What did you ultimately achieve?
- When you first started, what did you want to accomplish?
- Were you out of touch with your clients?
- Are you in a niche marketplace?
- Was your product or service unique?
- How did you communicate your value proposition?
- Are your expenses higher than sales?
- Did you have a pricing issue?
- Does your product or service add value to the marketplace?
You may have a crucial blind spot that led to a business failure so include any partners or employees in the post-mortem. As the saying goes, two brains are better than one. Another person’s perspective will help you understand the bigger picture better.
With that said, to keep a healthy and neutral conversation and analysis, try to be balanced as much as possible. Instead of dwelling in your past failures, collect insights. Take the lessons learned and leave all else behind.
When you know what factor of your business is causing the failure, it will be easier to find and decide on a solution. Whether you tweak your business or end up starting all over again – knowing where you failed is key.
Use The SWOT Analysis To Review Your Business
To think through the pitfalls on your business path, you can use SWOT analysis. SWOT analysis is a framework used to develop strategic planning. It’s a technique for assessing your performance, competition, risk, and potential of your business.
It allows you to evaluate your company’s competitive position through strategic planning, internal and external factors, as well as the future potential. You do this through a thorough analysis of the following four segments of your business:
Look at what your organization excels at and your competitive advantages, Perhaps you have a loyal customer base? Or a strong balance sheet? Maybe your strength is in your brand and unique technology. Whatever your strengths are, list them all and analyze each of them. How can you develop more in that direction?
What stops your company from performing at its optimum level? Weakness is usually something that is not working well, and it is usually internal. Identify all your weak spots and list them. Then, think of the immediate changes you can implement to strengthen those areas or stop what you’re doing entirely.
What are some external factors that could give your company a competitive advantage? For example, would having a high ticket business system help your business?
Walmart, for instance, uses a low ticket business system and can be found all over the world. They focus on delivering the lowest price possible to their consumers. On the other hand, Apple uses a high ticket business system and focuses on producing innovative, top-of-the-line products.
Are you implementing the strategy that makes sense for you or do you need to make adjustments?
Are there any factors that could potentially harm your company? Common threads could be things like rising costs for materials, tight labor supply, and increasing competition. This can help you spot your weaknesses too and minimize harm to your business.
A SWOT analysis is a helpful exercise to analyze your current performance, price, business strategy, and operational processes. On top of that, you could discover areas where you can make improvements. Essentially, SWOT acts as a roadmap to your success. It is best if your whole team does this exercise together because different teammates see what you as a business owner might not be aware of.
Establish SMART Objectives And Develop A Plan
After you analyze your business, look closely at the areas that need changes and improvements. Create a list of your SMART objectives. They allow for better clarity and focus while you’re working towards achieving your goals.
If you learn how to apply SMART objectives effectively with your business strategy, you’ll realize that they are much more efficient than the conventional objectives.
And here’s what SMART stands for:
Be specific with your goals and what you want to achieve. Perhaps you want to generate additional revenue of 30% by the last quarter of 2020. Or perhaps you want to be specific with how much you want to make by the end of the month. For example, you can say, “I’m going to make $10,000 dollars of commission by the end of this month.”
Can you measure your objectives? Is there a way for you to tell exactly how much progress you’re making? If you want to be making $10,000 a month, then you need to know how much work you need to put in to reach that goal. You have to set a measurable goal (such as the amount of money you want to make) and measure progress (e.g. how much you work and how much you make each month) and adjust as you go.
Setting yourself a reasonable target is crucial. If you want to increase 20% of your income in 30 days, the point is to challenge and motivate yourself to complete it. But if you set an unreasonable target, it’ll cause stress and decrease your chances of achieving it. Striking the balance is the key.
Most successful entrepreneurs don’t become millionaires overnight. While it’s not wrong to be ambitious, remember to start off with something more realistic.
Deadlines may not be your favorite thing, but it’s an important factor in a successful business. A good business strategy must include a reasonable deadline.
Dan Lok’s coaching business went from zero to $1,000,000 a month in less than 8 months. So if you have a good team and a brilliant business strategy, you’re most likely to see success.
Stay In Touch With Your Clients and Customers
While you’re working on analyzing your business to find solutions, do not forget your clients and customers. Without staying in touch, your business will not be able to survive.
Loyal customers could be the success stories of your business. Customer experience is incredibly valuable. Involve your customers in your business strategy, new product development, and marketing campaigns. Absorb their feedback, embrace it, and make them feel important.
While you’re looking for solutions for your business, you could create a system to collect customer and client feedback. These data could be the key to your success. They might provide fresh ideas and a new perspective.
In the 1990s, toymaker Lego lost money when it faced competition from video games and other challenges. The company restructured its supply chain, made changes to its sourcing, manufacturing, and distribution, and even got its largest Lego Group customers to participate in product development. By 2013, Lego was the world’s most profitable toymaker.
You can also use your struggle to connect with the customers and clients more. Find ways to communicate with them and share what you’re doing to find solutions and improve. This will strengthen their trust in you and your work.
Keep your sales and marketing strategy in mind at all times, and you will never have to say my business is failing again.
Focus On Cutting Expenses
Now, we all know that a business truly dies if it runs out of cash. While you’re figuring out your next move, think about how you can increase cash flow. Cut down on unnecessary expenses to increase stability.
Cutting expenses is not the same as being cheap. So we wouldn’t recommend lowering your employee salaries or making cheaper quality products.
For example, Delta Air Lines filed for bankruptcy. Then, they renegotiated union contracts and increased its fleet with used planes. They saved money and got back into the business. Now, you may not need to take such drastic measures, but the concept is the same.
Look at every line item in your business ledger and see what you can cut out. Office parties at the local restaurant? Subscriptions you never use? Luxury items and memberships that only feed your ego but not your business?
Think if there is anything you can sell to put cash in the bank. To avoid the my business is failing trap, decide what you need to keep, such as money for payroll and overhead.
Here are some other ways you can cut expenses:
- Evaluate your contracts. In a soft market, you might be able to negotiate to lower existing contracts like rent.
- Re-evaluate employee responsibilities and effectiveness. Encourage time management and freelance when effective.
- Leverage social media advertising by engaging fans organically instead of with paid advertising.
- Review your insurance coverage instead of letting it automatically renew.
Focus On Producing Sales For Your Business
No business succeeds or fails overnight. Focus on getting to the core of the problem and then on generating revenue and producing sales. No company ever goes out of business because of too much revenue.
Maybe you’re more of a people person, so you focus on managing people instead of selling. The truth is, you have to be the number one salesperson for your business.
Dan Lok is the best sales advocate for all his businesses. If one of the businesses is struggling, he always looks at his core problems and what he can fix in himself first. Being a good salesperson for your business sets your mindset right and keeps you on the path of success.
To do this well and increase revenue, you need to figure out what drives sales. Think about how you can increase sales all the time. Maybe you need to go back to your old customers.
Think about your sales approach. Can you sell your existing customers more things? Do you have a product line? Where can you get new customers without doubling your marketing ad spend? Do an analysis and then make a plan to increase revenue through sales.
If you need help with improving your sales skills, consider signing up for a course. Dan Lok believes that focusing on sales is the key to success in any business, which is why he created the High Ticket Closer® Certification Program.
This program is designed for salespeople and entrepreneurs who are ready to take their business to the next level.
Focus On Learning
There are other reasons to consider taking courses. If you’re in a situation where your business is failing, it means that you don’t have enough knowledge.The books you don’t read don’t help you. - Dan Lok Click To Tweet
Self-made millionaires Mark Cuban and Dan Gilbert read between one and three hours daily. Billionaire investor David Rubenstein reads six books a week. They don’t read because they are rich. But spending time on your own education makes you rich.
Now, besides reading, how much time are you investing in learning? Are you taking courses? Going to workshops? How many new people you met lately and how did you expand your mind?More information and more knowledge mean more choices. - Dan Lok Click To Tweet
If you invest in learning, you will create more solutions to solve the problem that’s in front of you.
When you have more knowledge, you’ll have not just one but maybe five or ten ways to solve the problem. You might even be able to solve it faster. You can solve it with fewer resources and with ease.
When Dan Lok’s business was failing, he invested in a business mentor, someone who has been in a similar situation. The truth is – this kind of mentor can give you the best advice. They already know what it takes to succeed.
Study what other successful entrepreneurs are doing. Be aware of the best practices. Know your own strengths and weaknesses, and know the strengths and weaknesses of your competitors. Learn from them and their business models.
Never Say “My Business Is Failing” Again
Failure can be daunting at first, but if you know your strengths and weaknesses, it doesn’t have to be the end of the world. Saving it is possible, with effort and the decision to accept to move forward. Learn to adapt and keep working towards your dreams.
As a mentor, sales professional, and entrepreneur, Dan Lok helped thousands of people from all over the world. Most of them approach Dan with the “my business is failing” problem statement.
This is why Dan created a special masterclass in which he shares 3 proven strategies to save a failing business. These are the same strategies he used on his own businesses as well as with his clients. They are also the strategies he teaches to his top closers.
If you’re ready to take back control and be the entrepreneur that you know you can be, then consider signing up for Dan’s free 4-day training here.