When a small business starts to fail, things can be terrifying. If you’re not prepared and don’t know what to do, it can quickly become an even scarier situation. But there are ways to survive hardships and get your business back on track. Here are four things to do to help get your business back on track when things begin to go downhill.
1. Don’t Panic
While failure can be frightening, don’t panic. There are stages of failure as a new business, so chances are you won’t have to close doors right away. First, take deep breaths, and don’t make any reckless decisions. It’s easy to get caught up in the moment, but you have time to figure out what’s going on before making any long-term changes that could negatively affect your business.
Don’t worry about the future of your business, because there are more important things on your mind right now: the present. You need to take care of yourself and ensure everything is OK before working toward the future, especially if you’re trying to get things back on track.
2. Manage Cash
There is no way to avoid money being a problem for every business owner. Bills will continue to need payment, even if you are approaching hardship as a business owner. If the bank calls and asks for a loan or investment payment, you have to pay them back, or your business faces more risk for failure.
Here are some things you can do.
- Use your cash flow to pay bills and avoid debt.
- Find new sources of revenue to help boost your business.
- Create a new budget to help you manage your cash better.
- Make sure you have enough cash to pay taxes, your employees, suppliers, and to pay any other debts that are due every month such as rent or mortgage payments.
- Consider leasing equipment instead of buying it, if possible.
- Increase cash flow by offering discounts, sales, and other promotions to bring in extra cash and reduce inventory.
- Offering a discount on social media is fine, but only if there’s some value proposition for people who use it, such as free shipping.
3. Cut Costs
You are in business to make money, so when business is starting to go downhill, it’s important to cut costs where you can. In this section, we’ll look at ways to reduce costs in your business without compromising quality or service.
One way to cut costs is to reduce your inventory. If you don’t need a supply of items on hand, then it’s not necessary to buy them. You’ll save money on purchasing and storage costs if you only keep the number of products that you sell in stock at any given time. If things are really bad, reduce inventory to a bare minimum, since it costs money to store items. The easiest way to do this is to focus on creating and selling products that don’t require inventory, such as services or digital products.
Another way to cut costs is to lower your cost of production. Look for ways to cut production costs by choosing less expensive materials that still provide the same quality as more expensive options.
You may also want to cut marketing costs if your budget is tight. It’s possible to cut costs by focusing on the most effective forms of advertising, such as print and online media. You can also try to attract new customers by offering them discounts on their first purchase or promoting a sale on a specific product line.
4. Pivot the business
In the business world, a pivot is a strategic change in direction. It can be as simple as changing your marketing strategy or as drastic as moving your business online or to a more beneficial area. Whatever the case, pivoting is an important part of business when things aren’t going well.
Here are some examples of how you can pivot your business.
- Focus on a new market segment.
- Create a new product or service offering.
- Change location.
- Change your target audience.
- Move to selling online services and products only.
- Figure out what competitors are doing.
When your business is failing, it can feel like an endless spiral you can’t escape. But, by implementing some of these strategies and by evaluating your situation, you can turn things around in no time. It is important not to panic and to not make rash decisions when faced with challenging situations. Instead, take your time and think through all of your options before making any big changes.