No one starts a business intending to lose it. But unfortunately, a business failure is the 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 unsuccessful businesses before he became a self-made millionaire. He always reminds his students and clients that struggle is the best sign of growth and the only way to master your own destiny.
Statistics show that 30% of new businesses shut down within the first two years, 50% within the first five, and nearly 70% in their first decade. But can you guess what is the number one reason why businesses do not succeed? Well, it turns out that 82% of reasons for issues have to do with cash flow.
Now, it’s easy to blame the lack of money for lack of success. 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 problems and turn things around, check out this video and then read on.
1. Find The Root Cause
What is the root problem with your business? Take time to properly assess your business. What might be the reason behind the difficulties you’re facing? There are some common reasons why businesses do not succeed, 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?
As the saying goes, two brains are better than one. You may have a crucial blind spot so include any partners or employees in the post-mortem. Another person’s perspective will help you understand the bigger picture better.
Try to be balanced as much as possible. Instead of dwelling in your past mistakes, collect insights. What are some lessons learned that you can take away from this experience?
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 a thorough analysis of the following four segments of your business:
What does your organization excel at and have competitive advantages in? Perhaps you have a loyal customer base. Or a strong balance sheet. Maybe your strength is in your brand or your 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.
2. Analyze Your Profits And Losses To Create A New Budget
Do you know what your profit and loss statement looks like? Are you aware of the revenues as well as costs and expenses incurred at different stages of your business? If you aren’t fully familiar with your profit and loss statements, this is a good time to take a close look and analyze them. Do you see any opportunities for improvements?
Some of the important things to look at are sales, sources of income, seasonality, net income, cost of production. Observe everything and analyze it thoroughly. Is there a place where you can cut your costs? Is there a product that you spend a lot on but sell little?
If you don’t know where to start, you can also look at the financial statements of public companies. Do their profit and loss statements look different? How? Why? Is there something you can do better?
Forbes identifies bad accounting and poorly priced products to be some of the most common reasons why businesses lose money. Do you know where you lose the most? After you identify problem points, implement changes to create a new budget. Focus on cutting expenses and increasing profits in your budget.
Your budget is essentially a roadmap for your company. A budget should include your revenues, costs, and most importantly, your profits, so you can figure out whether you have any money left over for improvements.
If your goal is to save your business, the budget is a good place to start looking for clues. What direction do you want to go in? What do you need to do to get there?
3. Prioritize Your Payables
If your profits and losses statement shows that you have high costs, you might have to set your priorities right. What are your most important payables? Can you clearly define what you must pay first?
For example, if you don’t pay your employees, they will likely leave you. If they sense you thinking “my business is failing,” they might lose motivation, too. This will disrupt your business and make it impossible for you to keep operating. Paying employees is typically a top priority. In case you need to make staffing cuts, consider them carefully as well.
Besides thinking about your staffing costs, you might want to set paying priorities. Do you know what bills you have to pay first? What are the items that might result in high penalties? Usually paying your taxes is the priority. Consider all your loans and such as well and decide what needs to be addressed first. Leave payments that are not late and that you can cover for last.
4. Prioritize Your Customers
Now, what’s going on with your customers? As you navigate your way out of a tricky spot for your business, you might be tempted not to prioritize your customers. This, however, might cause more problems. Without staying in touch with your customers, you won’t be able to make sales.
Loyal customers could be the success stories of your business. Customer experience is incredibly valuable. Can you involve your customers in your business strategy? Perhaps they can help you develop a new product or be involved in your marketing campaigns? Creating a system to get customer feedback is essential.
These data could be the key to your success. Perhaps they have fresh ideas and a new perspective? Or maybe they’re pointing out issues you might need to resolve to make more money?
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.
Perhaps you can use this difficult time to connect with your customers 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.
5. Invest In Your Team And Never Say “My Business is Failing”
Is your team happy and motivated? Have checked in to see how they’re coping with stress and if they have ideas for improvements? Your team plays the most important role in your business performance. If your business is struggling, it might be a sign that you must invest in your team.
Your team will perform best if they feel invested in your success. Develop a good team and you will build a successful business. For example, Adobe provides its employees with challenging projects, then follows up with all the support they need to meet them. Consequently, they routinely deliver fantastic products to the market.
When employees feel invested in a business, they also become its best salespeople. Gallup in “State of American Workplace” reports that employees who are engaged are more likely to improve customer service and can result in a 20 percent increase in sales.
6. Focus On Producing Sales
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.
No business succeeds 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.
But before thinking about sales, ask yourself – what’s my mindset like? Am I the problem? Dan Lok is the best salesperson for all his businesses. Being a good salesperson for your business sets your mindset right and keeps you on the path of success. If one of his businesses is struggling, Dan always looks at what he can fix in himself first.
The next thing to do to increase revenue is to figure out what drives sales. How can you increase sales overall? Maybe you need to go back to your old customers? Or expand into a new market?
A good place to start might be 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?
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.
7. If You Think “My Business is Failing” – Invest In An Advisor Or A Mentor
There are other reasons to consider taking courses. If you’re in a situation where your business is struggling, 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. 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 and with fewer resources.
When Dan Lok’s business was sinking, 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. What are your own strengths and weaknesses? What are the strengths and weaknesses of your competitors? Learn from them and their business models.
8. Go Back To The Drawing Board
Now that you covered all the most important steps of analysis, can you tell what the root of the problem is? If you know what costs to cut, for example, you now know what decisions to make. No matter how tough they are, these are the decisions that will ultimately save your business.
If your business needs more cash flowing in, your immediate goal should revolve around marketing and bringing in sales as quickly as possible. This might mean investing in your marketing team to bring in more revenue. Redesign your business to drive energy where needed.
Facing business failure is a hard hit for the ego in some people. It’s hard to accept that something you built with pride might ultimately collapse. But if you overcome your ego and take a moment to think, you might just see a better way forward.
This is why you should always go to the drawing board instead of throwing the towel in. If you cannot figure it out alone, hire an expert or special analyst to help you. Reach out to people who faced similar difficulties and consult them about what to do.
The bottom line is: Don’t give up.
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 struggling 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.