When your brand runs into seemingly irreversible difficulties, it can be extremely stressful. How can entrepreneurs salvage their business if they encounter an unexpected loss or a breakdown?
Getting hit and learning lessons through a crisis situation is a part of every entrepreneurial journey. The UK witnesses hundreds of startups being born each year but few conquer the challenges faced. The sad reality is 90% of startups end up failing and only 4% of businesses survive past their tenth birthday.
But not all hope is lost just yet – after working with hundreds of businesses on the cliff’s edge and in various forms of insolvency, I’ve discovered many ways you can help a business rise from the ashes, no matter how dire its circumstances.
If you feel like your company is at risk of being yet another statistic, follow these tips to help you get back to business.
Find the source of the problem
Before taking any action, it’s important to identify the reason why your business is failing. Take your time to understand any internal politics that may be causing issues. Ask your employees for feedback – their on-the-ground insight can often be immensely helpful. It’s also important to be honest with yourself and determine what you may be doing wrong. Unfortunately, businesses typically fail because of poor leadership. As disconcerting as it is to admit this, it’s an important first step on the road to turning your business around.
Take care of your team
When times are tough for a company, employees feel the pressure too. Concerns over job security can be destabilising so it’s important you, as their leader, make sure they feel taken care of. Aim to be as transparent as possible, hear everyone’s concerns and reassure them that you will do everything you can to try to keep the business moving forward. Cultivate a company culture which, in the face of difficulties, keeps employees motivated to share your vision and come out the other side.
To keep your management team on board, try to find incentives that will ensure they remain invested in the success of the company. If there is a pivotal employee you can’t afford to lose, consider giving them a profit share or equity in the company. For instance, if you give them 10% of a new deal they personally bring in and they win an extra £50,000 worth of business, that’s still £45,000 extra you didn’t have before.
Revisit your goals
Once you’ve identified the sources for your company’s struggles, be sure to make a plan of action before you start cutting costs left and right. Be realistic about where you are at right now and where you can feasibly see yourself going.
While there’s no one-size-fits-all approach, common short-term goals include reducing overhead costs and restructuring teams. Medium-term goals should be focused on growth: increasing sales and generating profits. Long-term goals vary: they could be rising to become a leader in your field or perhaps acquiring another business. Once your goals are in place, create a strategic plan to achieve them.
Downsize where possible
The uncomfortable reality of a struggling business is that often some employees will need to made redundant. Before rushing into it, conduct a thorough staff audit so that you can understand everyone’s roles and look for low-profiting parts of your company which you can afford to reduce. Avoid the temptation to ruthlessly cutting staff to minimise costs in the short-term – you will need these people to achieve your medium and long-term goals.
In addition to staff cuts, look for any other costs that can be reduced or eliminated. Encourage your team to be more efficient. From cutting down on paper usage, downsizing your office space to getting rid of company cars, controlling every little expenditure can make the difference when coming out the other side.
Be open to change
If you want to get your business to bounce back, it’s important to put your ego aside and acknowledge that some things need to evolve. Delegate tasks where you can and determine where your time is best utilised.
Sometimes even after all these changes, you may still need external help because you can’t always resuscitate your company on your own. And, getting expert help can be immensely helpful. For example, you could bring on a consultant for fresh perspective and expert advice. Sometimes a different point of view is all you need to change your company’s direction and get your business rolling again. Don’t be afraid to chat to competitors to see if there is scope to merge your business. Think pound signs not percentages.
As much as we would like our problems to disappear overnight, things take time to improve. A struggling business is no different. The road to turning a business around is a marathon, not a sprint. Our turnaround businesses usually break even at best in year one. If you follow these tips, you’ll start seeing noticeable changes and increase your chances of helping your business rise from the ashes.