Are you failing in your business? No one starts a business intending to fail at it, but a business failure is indeed a reality. You started your business because you didn’t want to have a job. So, it must be agonizing when your business is failing. You’re wondering, where did you go wrong? What can you do to save it? I’ll answer your question with one piece of advice: There is no straight path to success. Read more if you want the answer to this question, “what do I do if my business is failing?”
It took Thomas Edison 1,000 attempts to invent a light bulb before he succeeded, yet he doesn’t see it as 1,000 failures, just 1,000 steps to his achievement.
Many entrepreneurs have failed in the past – I failed at 13 business ventures before I became a self-made millionaire. When we faced the possibility of failure, it’s tempting to give up. Giving up is easy, but within those days when I feel like my business is failing, is when I really test my strength and determination.
Statistics say that 30% of new businesses fail within the first two years, 50% within the first five, and nearly 70% fail in their first decade. Can you guess what is the number one reason why businesses fail?
The top reasons are cash flow problems with 82%, 42% cited an insufficient need for their product or service, followed by a lack of cash, dysfunctional or unmotivated team. Although it’s easy to blame money for the failure of a business, insufficient cash flow could be a sign that something is wrong.
Watch this video about what to do when your business is failing.
Give Your Business A Post-Mortem
Figure out where and what went wrong in your business. When my business is failing, I analyze my entire process, which means I start from the moment I invest, in the sales processes, my business strategy, and clients. You could make a list and determine the biggest contributing factors.
These are some of the most 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. You need a second person’s opinion to help you understand how and why those factors are affecting your business strategy.
With that said, to keep a healthy and neutral conversation, be balanced in your analysis. Instead of dwelling in your past failures, collect insights to avoid the same mistakes again. When you know which factor is causing your business to fail, it’s easier to decide on a solution. This means, whether to tweak or to start over.
Use The SWOT Analysis To Review Your Business
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. Which means, it evaluates a company’s competitive position through strategic planning, internal and external factors, as well as the future potential.
Here’s a breakdown of each aspect:
It describes what your organization excels at and your competitive advantages: a loyal customer base, strong balance sheet, strong brand, and unique technology.
This stops your company from performing at its optimum level. Which means, a weakness that is damaging internal factors or something that is not working well. So, look at how to make immediate changes or stop what you’re doing entirely.
Think about the opportunities from external factors that could give your company a competitive advantage. For example, having a high ticket business system. Let’s look at Walmart for instance, they use a low ticket business system and can be found all over the world, focusing on delivering the lowest price possible to their consumers.
Compared to a company like Apple which uses a high ticket business system, their branding and focus on producing innovative, top-of-the-line products have made them famous internationally.
Factors that could potentially harm your company. Common threads could be things like rising costs for materials, tight labor supply, and increasing competition. So, to ensure your SWOT analysis is successful, you could determine which area of your business is affected and quickly investigate to minimize the potential for harm.
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.
Establish SMART Objectives And Develop A Plan
Create a list of your SMART objectives. You could have better clarity and stay focused working towards achieving your objectives. 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. For example, you want to generate additional revenue of 30% by the third quarter of 2020, or if you’re a sales professional who earns a commission as an income. You could 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 determine what you’ve set for your business or yourself to be measurable? Let’s take the same example of $10,000. So, if you’re determined to make $10,000 dollars by end of the month, which means, you need to work harder or close more deals to achieve that figure.
Setting yourself a reasonable target is crucial because, as I said earlier if you want to increase 20% of your income in 30 days, the point is to challenge and motivate yourself to complete it. So, if you set an unreasonable target, it’ll cause stress and decrease your chances of achieving it. But, if it’s too low, it’ll inhibit you from pushing yourself to do more.
Set a realistic business strategy. Most successful entrepreneurs don’t become millionaires overnight. While it’s not wrong to be ambitious but remember to start off with something more realistic. Again, an increase of 20% of revenue in 30 days is a realistic goal.
Deadlines may not be favorable to you, but it’s an important factor if you want to have a successful business. A good business strategy must include a reasonable deadline. My 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 Customers
Without staying in touch with your customers, companies simply won’t be able to survive. Loyal customers could be the success stories of your business. Customer experience is incredibly valuable. Investors often won’t invest in customer experience without proof. So, involve your customers in your business strategy, new product development, and marketing campaigns. Absorb their feedback, embrace it and make them feel important.
Forbes has compiled 50 statistics proving the value of customer experience for your business. Here are some statistics I find interesting:
- Companies with a customer experience mindset drive revenue 4-8% higher than the rest of their industries.
- 84% of companies that work to improve their customer experience report an increase in their revenue.
- 73% of companies with above-average customer experience perform better financially than their competitors.
- 96% of customers say customer service is important in their choice of loyalty to a brand.
- 83% of companies that believe it’s important to make customers happy also experience growing revenue.
- Customer-centric companies are 60% more profitable than companies that don’t focus on customers.
- Loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company.
- American consumers will pay 17% more to purchase from a company with a reputation for great service.
As you can see positive statistics from consumers, it’s important to stay in touch with your customers to gain inputs. You could create a system to collect feedback, these data could be proof to your next success. But if you neglect to create a good customer experience, your business will fail. You have to understand what they need, and what they want in order to grow.
So, what can you do to avoid your business from failing?
Focus On Cutting Expenses
Cutting expenses is not the same as being cheap. So I wouldn’t recommend lowering your employee salaries or make cheaper quality products.
If my business is failing, I would squeeze out every dime of profit that I can because I need cash. A business only goes out of business if it runs out of cash. (tweet)
Automaker General Motors filed for bankruptcy and laid off tens of thousands of workers in the late 2000s. It survived near disaster when it got a federal government bailout plan and trimmed and killed off its struggling car brands divisions like Saturn and Pontiac.
The amazing turnaround saves 1.2 million jobs. Similarly, Delta Air Lines filed for bankruptcy, then 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 of expenses in your business ledger and see what you can cut out. Office parties at the local restaurant for example. See if there is anything you can sell to put cash in the bank, such as unused office furniture that secondhand stores will buy. 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 your rent.
- Re-evaluate employee responsibilities. Are they effectively doing their jobs? Encourage time management and freelance where that is effective.
- Leverage social media advertising by engaging fans organically instead of with paid advertising.
- Review your insurance coverage instead of letting it automatically renew.
Cutting expenses, especially those recurring expenses or monthly charges, is your first step to saving your failing business. If you have expenses that don’t bring you more money, cut them. Then, take a closer look at your sales record.
Managing Your Cash Flow Efficiently
As you know the number one reasons are cash flow problems, 82% of small businesses fail because of cash flow issues. So, to no surprise that without consistent cash flow, businesses will eventually end up failing. If you have this in mind, my business is failing. Create a cash flow forecast so you have insights into what’s coming in and out.
With your forecast, you could project your sales and expenses, so you’re always at the top with how much money you have in your bank account. If my business is failing, I would want to manage my cash flow more efficiently. For example, I would send out invoices on time and following up with customers who haven’t paid.
Remember, this is only a forecast, but if my business is failing, this is what I would do to get insights into my financial future. Your business could also fail if you lack a contingency plan. This means you may not have reserved money in the event of a financial crisis. Sometimes you start a business to only make money, but you don’t have the skill to manage money, on top of many other things. Such as taxes, expenses, and any other financial issues.
So, how to avoid financial mismanagement? You could use professional business accounting software to keep records of all financial transactions. This includes, expenditures and revenues received. Having a professional business accounting software is valuable to keep information that you need to run a business.
But if my business is failing and I’m lack of skills in financial management, I would learn and pick up courses to revive my business or hire a professional accountant to help manage my financial affairs.
Focus On Producing Sales For Your Business
No business succeeds or fails overnight. If it is failing, it’s because you’re failing as a leader or CEO. Where are you focusing your time? Inventing the product instead of working on what you can sell? Perfecting your service? Doing a long of unnecessary things instead of getting to the core of the problem?
In the 1990s, toy maker 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 toy maker.
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. In your company, you need to be the number one sales advocate. In my company, no one can sell better than me. So if my business is failing, I would focus on my core problem.
For Apple, no one can sell Apple products better than Steve Jobs. Whether he’s doing a sales presentation or announcement, even marketing, he’s closing deals. You need to figure out what drives the sales.
How is money being made in your business? You need to know the process in an out.
You constantly need to be thinking about how you can sell more. Maybe you need to go back to your old customers. 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.
Focus On Learning
If you’re in this situation, it just means that you don’t have enough knowledge. The books you don’t read don’t help you.
Just look at some highly successful role models. 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. Rather, 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? More information and more knowledge mean more choices. More solutions to solve the problem that’s in front of you that you don’t know how to solve.
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.
If my business is failing, I would invest in a business mentor, someone who has been in a similar situation and can give you solid advice. Study what other successful entrepreneurs are doing. Be aware of the best practices.
As the CEO of your company, you have to be honest with yourself. When cutting expenses, decide if something is or isn’t producing any revenue. Ask yourself if you dislike sales. Decide if you think of yourself as being in the business of marketing and selling your products and services. You must be very good at selling.
Know your own strengths and weaknesses and know the strengths and weaknesses of your competitors. Once you’ve assessed your situation and come up with a strategic plan, you can beat your competitors. You can out-earn them.
How Do I Save It If My Business Is Failing?
Failure can be daunting at first, but if you know your strengths and weakness, 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 I said in the beginning, I failed in 13 business ventures. So when my business is failing, I read plenty of books to increase my knowledge and search for a mentor to help me. You could to the same by drawing from their pool of knowledge and personal experiences to help your business grow.
On top of that, grow your business by having a dedicated team that commits themselves to its success. That’s how I built my empire. As a mentor, sales professional, and entrepreneur, I’ve mentored thousands of people from all over the world. From millennials to business owners and they all have one thing in common, which is to be a successful entrepreneur.
They come to me saying, Dan, my business is failing, what do I do? and because of that, I create a special masterclass for you to discover my secrets to success. With my high ticket closer masterclass, you’ll discover the 3 proven strategies that could save your business.
What Will You discover On This Masterclass?
First of all, this masterclass is free but it requires your time and effort to rebuild your business. Entrepreneurs need encouragement and guidance when faced with problems. You need the assurance from a mentor that has been in a similar situation to share their successful business strategy.
By now, you would probably be preparing your cash flow forecast or look at every line of expenses in your business ledger. Let me share with you what you’ll discover on this masterclass to help you reach your goal quicker. You’ll discover 3 secrets, on this masterclass:
- The real reason why most people fail with eCommerce, amazon, drop-shipping, coaching, consulting, social media agencies, and more.
- The little-known 3-step wealth triangle formula that will make your bank teller wonder what you do for a living
- What they don’t teach you in any MBA program, that almost every elite entrepreneur does (whether they know it or not)
Want To Save Your Failing Business?
Running a business is no easy task, as you know, there are so many things to be taken into consideration to avoid your business from failing. If anyone tells you otherwise, they’re lying.
As I said in the beginning, 30% of new businesses fail within the first two years and with the world that’s constantly evolving, you need to learn to gain more knowledge. Not because you need to save your business, but also to grow your business so that you could reach your goals quicker.With perseverance, determination, and a positive mindset reigns supreme. Click To Tweet
It can be challenging to save a failing business. I wish I knew these secrets and strategies when my business is failing back then, but now I’m going to share these proven strategies to help you save yours. So, if you want to save your failing business, sign up for my 4-day training here.