Keeping Afloat: A Survival Guide for Struggling Businesses
One of the clients I work for is currently on “auto-pilot” mode in which they are making just enough to pay employees and turn a small profit but in no way are they making major moves in the industry.
This moment of stagnation is utterly frustrating for the owners but doubly so for the employees because the responsibilities and challenges are no longer being presented. It’s great to have some kind of stability in your payroll but when it’s merely keeping the business afloat … it gets old, fast.
Generally, the owner will do two things:
· Start cutting costs, or
· Burn through budgets on wild experiments
I’d say the majority go for the first because it’s conservative. They want to stretch the business as far as they can versus going supernova in one last push. It’s morbid, but that’s business and having been around it enough, it’s now commonplace to see.
What would I do if I had the one-off chance to turn around a business I saw falling from grace?
It’s actually quite simple. The suggestions would be this…
· Logistics – Business owners love going for free shipping. It’s simply something they feel they need to do because it’s so common in every industry. However, cut away the short-term gains and you begin to see the long-term losses. The best approach is to go for multiple warehouse locations once the funds provide for it. Logistics from the manufacturing and warehouses should be further cut by researching how to factor freight bills, which keep your fleet on track even if there are small slip-ups (which will happen) in highway transport.
· Analytics – This is where the majority of your growth will come from, especially if you’re the type of business that has been neglecting the trends. Data doesn’t lie. When you see that a product is earning a majority profit for your business, yet it’s still on a single page and lacks promotion, you know you need to get things going. Look at the analytics and find what’s working for your business. Put it front and center. Run advertisements and marketing campaigns; these may not reach everyone in your audience but it’ll reach the ones that are creating the majority of profits and that’s what you need right now in this time of floating.
· Regress – If you’re a company then you’re stuck having to move forward, but most of you are small business owners so you don’t have a board and shareholders to answer to … so why are you acting like you do? Scale back when it’s appropriate. Don’t be afraid to cut products that are underperforming even though “you like them” – same with employees you know aren’t carrying weight but you feel obligated to because “they’re good people.” You have to think about the viability of the business but also the core members. Sometimes this means taking things back to the basics to create a twinge of nostalgia with the customers – and to remind them why they approached you the first time (and why they stuck around).
If I were talking with any business owner who needs help turning their business around, I would mention these main points.
· How are you saving on logistics?
· Do you know what’s making you money?
· Are you expanding too quickly?
It sounds rather simple, but these are items that owners have become blind to because of early success. They feel they know it all and refuse to change the formula despite new technologies, better deals, and sweeping competition coming to the table.
It’s unfortunate to see a business fail because these major demands cannot be met – especially since they are so easily obtainable – but I guess that’s the nature of the game. If the owner is too thick to take action on such simple things, perhaps they deserve the dust. Allow an up-and-comer to take the role and show them how it’s done. But… that’s just my opinion… and I’m just passing along my thoughts and experience with businesses that fail.