The life stories of the world’s wealthiest self-made businesspersons can be deeply inspiring for anyone that’s been wondering whether to take the big plunge into entrepreneurship. But while the stories’ endings are uplifting, the journey to the pinnacle of business success is often one fraught with numerous failures.
In fact, one of the common traits of successful individuals is the failure to give up even in the face of seemingly insurmountable odds. If you already run a business, it’s important to brace for the difficult times and know what to do when your company appears to be teetering on the verge of collapse.
Here are a couple of tips that can help you get your business moving in the right direction once again.
Isolate the Problem(s)
You cannot really solve a problem if you do not know what it is in the first place. Your path to recovery begins with a thorough, realistic and candid assessment of the state of the business.
Could it be poor sales? Are the margins too thin? Do you find it difficult to retain past customers? Is the business profitable on paper but struggling with cash flow? Are you unable to attract the right kind of employees? Understanding exactly what is going wrong with the company will be key in identifying the appropriate solution.
If you are running into cash flow problems, it’s probably time to have a conversation with your lenders. Lenders are relevant in two ways. First, they can extend credit to your business that allows you to stay ahead of your expenses long enough for you to recover into a positive cash flow position.
Second, they can amend payment terms on your outstanding debt to make it easier for you to service the loan. Credit is often maligned as dangerous for small enterprises. But if you master the art of how to build business credit and leverage the debt to your advantage, it can be the thing that ensures your company’s survival.
Reevaluate Your Strategy
Many businesses fail because they are built on the wrong strategy. Perhaps it’s time to take a step back and evaluate whether your current strategy is right, relevant and realistic. Do not hang onto a strategy that prevents you from making changes that recognize changing market realities.
Some failed businesses made the mistake of equating their brand with a specific product or target market. One of the best examples is Kodak. A company that one’s dominated the photography equipment market, it was eventually pushed into obsolescence because it did not quickly recognize and respond to changing market dynamics.
Reassess Your Team
It’s often said that employees are a business’ biggest asset. That may no longer be true for many enterprises today that view their data as their single most valuable possession. Even in that case, employees come a close second. If your employees’ skills, mindset and attitude are not correctly aligned to your business goals, you are doomed to failure from the get go.
However, before you start to lay off anybody, evaluate their abilities and have a conversation with each one of them. Sometimes, an employee has the right attitude but perhaps lacks a skill that can be obtained via a brief training course sponsored by the company. Eventually though you may have to make some hard decisions before some workers bring your company down with them.
Before a business completely collapses, there are multiple warning signs that alert you of the looming disaster. If you act quickly enough, you can save the enterprise and get it back to sustainable profitability.