How to Turn Your Failing Business Around
No one! And I don’t care how you try to spin it as something to be proud of because you tried and learned in the process. Failure just doesn’t feel good, especially if there are financial consequences for your failure, which can be painful.
The failure rate for small businesses is 80% within the first 18 months. That is an insane percentage of businesses, and far too large when a healthy economy is dependent on successful small businesses.
The common reason for small business failure is running out of cash. But this issue points to a bigger problem that is within most small businesses. The problem is that most people in business don’t even know how to operate a business.
This lack of knowledge about business operations leads people to not being able to handle the many aspects of business ownership. Just because you “own” a business doesn’t mean you actually have a business. A real business is a system of activities that support valuable products/ services, which have an active customer base.
When it comes to failing businesses, their process can be lacking within different sections of the above statement, which defined what is a real business. Failing businesses could be failing at the supporting system of activities, failing at providing valuable products/ services, failing at having an active consumer base or absolutely failing at all 3.
The breakdown in understanding of these 3 basic business functions is what leads to the vast number of small business failures.
But it doesn’t have to be this way. Yes, small business is a challenge but that doesn’t mean that challenges should lead to failure. And I will tell you why that is the case with these 3 steps that will help any struggling business avoid failure.
1. Examine the Existing Problems
Failure typically occurs because business owners do not address the issues which are plaguing their business. Instead, they ignore whatever problems are occurring, hoping that doing so will make them just go away. The unwillingness to address problems only encourages them to grow, rather than become non-existent.
A successful business relies on you being truthful about every aspect of your business. If your marketing brings in people but you don’t have a high rate of acquiring new clients, there is a breakdown in your sales. An issue like this must be analyzed because it exposes a major weakness in your business process. Businesses must know exactly how their issues effect business, why they are occurring and determine how they will be immediately addressed.
2. Implement Solutions Instead of Answers
Answers are just short-term band aids that have no major affect. Solutions are effective corrections, that provide long-term positive results. The majority of small business owners don’t know the difference between the two.
When effective solutions are implemented to correct current operational errors, a business is positioning itself to sustain longevity in the marketplace. This is where accountability becomes a major factor in a business’s ability to avoid failure, by implementing the effective actions which help your business to operate in order to attract success. Solutions mean completely eliminating bad habits that have put your business in a weak position.
3. Profits Over Revenue
There are far too many businesses that know how to bring money in but do not know how to keep even a small percentage of that money. Basic business lesson:
Revenue = total amount of money received for product and service sales
Profit = money left over after cost of doing business
You may hear of businesses that had millions of dollar in revenue but still failed. It is because their expenses were equal to or outweighed their revenue. A million dollars means nothing if it is gone as soon as it is made. A business should focus on keeping as much money as it can, so that it can be built up to rely upon during tough times. Most importantly, the more money left over after expenses, is money that can be invested back into your business.
The true reality is that some businesses will fail because they have far too many issues that make any solutions difficult to implement. But for those businesses that can be corrected and effectively turned around, I am willing to help through this blog and beyond.
Don’t idly sit by and just let your business fail and say you learned from its failing. That’s bull and you know it’s bull.
Posted on October 22, 2015, in Entrepreneurship, Small Business, Starting a Business and tagged Entrepreneurial Ambitions, how can I make my failing business successful, how to turn a struggling business around, my business is failing, why do most small businesses fail, why do small businesses fail, why is small business failure rate so high. Bookmark the permalink. 2 Comments.