Published By Faith Stewart at September 26, 2018
Are you afraid your business is failing? Businesses fail every day. No one wants to think theirs might be next. Everyone wants to beat the odds, but the sad truth remains. What truth you ask?
Well, according to the Bureau of Labor Statistics, 20% of new business fail in the first year. That’s not too bad you say? You’re right, it’s not. However, 30% fail in the 2nd year.
You may think you are home free if you make it to year 5. But 50% of small businesses fail in the 5th year. However, if you make it to 10 years, you are back down to 30%.
So the news is depressing, but it isn’t the end of the story. Many businesses fail only for their owners to rise from the ashes even stronger. You learn from your mistakes, and applying what you learn to your next business can only help you.
What do you do if your business is failing? If you are already taking on water, how do you reverse the damage? Sometimes you can’t. Still, we have some tried and true tips for keeping the boat afloat, and a few hacks to try for plugging the leaks if you have already taken a hit.
If the Titanic had changed course only a tiny bit and just a smidge sooner, we might not even know the name today. It wouldn’t be famous at all, maybe. We’ll never know because, well, you know the rest of that story.
How can you keep the same from happening to your business? Predict the icebergs and plan for getting around them.
Prepare for this by getting your business credit in order on the front end. Establish and build business credit so you can access cash needs to bridge the gaps before they show up.
Gaps happen for a ton of reasons. Sometimes they are temporary timing issues, and sometimes you are leaking cash faster than a balloon with a hole in it leaks air.
And if your business credit is strong, you can access credit cards or a business line of credit to help you shore up the leak while you look for a permanent fix.
Without a solid business credit foundation, you will have a hard time finding the cash you need to fill the shortage, even short-term. Without cash, you simply cannot stay afloat.
You have to start slow. If you jump in the deep end before you are ready, you’ll sink for sure. Take things one step at a time and research everything before you take the leap. Want to expand? Make sure you can handle any financing needed. Want to open a new location?
Be certain the demand is there to support it.
Trying to grow too much too fast is a sure plan for disaster.
You had to write a business plan to obtain a business loan to get started. Even if you were solely founded on the backs of investors, they surely wanted to see a plan. It should already be there, in writing. Use it!
Work the plan you started with, tweaking as needed. It was good enough to get you started, and with minor adjustments for growth, it should be good enough to keep you going.
Working without a plan is like setting sail without lifeboats. You have nothing to refer to when you need guidance for making decisions.
While branching out is a great thing in many cases, you can diversify too much. For example, if your specialty is donuts, and you want to add other breakfast items to the mix, that may be a great idea.
However, if you are a donut shop and you decided to sell hair bows and tap shoes also, you may run into problems.
Find what you are good at and stick to it. Before you make any decisions on diversifying product lines, do the necessary research to determine whether or not that is the best plan of action. It may sound great, but will it be profitable?
If you have great employees, treat them right. Offer benefits, time off, fair payment, and appreciation as much as is in your power. Showing appreciation for a job well done is crucial to keeping good employees, and keeping good employees is vital to the success of a business.
Maybe it’s too late for prevention. Maybe you have already hit the iceberg and you need to make repairs before you sink. How do you know? What does it look like when the water is rising?
There are many warning signs, but these seem to be the most common.
While these aren’t always bad signs, they usually are. It might not be too late though. Let’s look at each one and see if we can fix the leak long enough to find a more permanent solution.
If you have that business credit foundation we mentioned before, you can buy yourself some time here. Figure out a way to pay now, or ask creditors for more time. Then set to work figuring out the problem. Is it a timing issue?
So look at getting a credit card or line of credit to fill that hole.
Are your customers not paying? See the next point. Or are sales simply lagging? Find a way to increase sales! Have a sale, increase marketing efforts, and work on the quality of your product or service.
First, sell those old invoices. Invoice factoring is a great way to get some cash fast. And if this is why you are short, here is a temporary fix. So get those accounts off the books and the cash in the bank.
Then, reconsider your credit strategy. Do you need to incentivize early payment? And does there need to be a stricter vetting process for who you will extend credit to?
What’s up? Did you order too much? Maybe you need to have a sale to get some of it out of there. Is there too much diversity in your inventory? Go back to your first love, your original product, and off load the rest at a deep discount if you need to.
This one is hard to fix on the back end. They aren’t happy, and trying to make them happy after the fact is almost impossible. If you have good workers, show them you appreciate them. They have plenty of options when it comes to places to work.
Give raises where possible and warranted. Offer as much flexibility in schedule as you can. And most of all, just show appreciation. Courtesy goes a long way. So maybe it’s not too late.
Word of mouth is a powerful thing. If you have no reviews and no recommendations, that is a bad sign. Try offering a drawing for a free or discounted product each week to those who leave a review.
They can send you a link to the review, you read it, and they get entered in the drawing.
Create social media chatter in a similar way. Because incentives to like, share, or retweet sometimes take off like wildfire.
Also, an even better bet is to hire a someone who specializes in this type of publicity.
The fact is, once a ship is sinking, it is sometimes too far gone to save it. If you see the warning signs early enough and take big enough action, you may be able to make it to shore. So this is similar to scooping out water from a small leak with a large bucket.
However, if you have a gaping hole and try to get the water out with a Styrofoam cup, you aren’t going to make it. Sometimes, if a business is failing, these fixes just won’t be enough.
Keep your eyes open. At the first sign of a leak, spring into action. Follow these tips, do your own research, and start working to save your ship. As captain, it is yours to save. You can enlist others if you need to, though. Also, consultants and specialists may be able to help.
The most important thing is to not just watch it sink. You may still become a statistic, but you don’t have to go down without a fight. Prepare for inevitable leaks and act when they come. Because at least one will pop up. This is key to staying afloat.
No one starts a business planning to fail. But if you do end up in the water, be sure you don’t go down with the ship. You want to make it to shore yourself so that you can live to build another ship should this one not make it.
Remember those mistakes you made, learn your lessons well. And sail a new ship on another day. This one will only be stronger for what you have already been through. Learn more here and get started toward succeeding with business credit.