Every business faces natural ups and downs, but there are times when the challenges feel completely insurmountable. Hard work and dedication aren’t always enough to bring in revenue or customers. If you find yourself struggling, you need to target the specific problem and strategize accordingly to fix a failing business.
How do you fix a failing business? We polled industry experts for their advice. Here are some major issues they identified:
- Not earning enough to cover business expenses or turn a substantial profit
- High employee turnover and frequent disputes
- Low customer satisfaction
- Not enough internet traffic (specific to online businesses)
- Lack of knowledge or connection to market
- Poor financial discipline, or spending too much
- Product price is either too low or too high
- Ineffective marketing and a lack of brand cohesion
- Struggling to meet payment deadlines
These same experts also provided potential turnaround strategies.
Tips for getting started – look for help
Karriem Kanston, The Encourager, Kanston Development: “The first thing a business should do if they are failing is to get a good team of advisors around them. This could be their accountant, lawyer, banker, business consultant, or trusted advisors. They should lay out the data and information they need in order to make good decisions about their situation.”
Baron Christopher Hanson, owner of RedBaron USA and Baron Christopher Creative, agrees on the recruiting of trusted advisors as a first step: “The first strategy is to step back and be willing to have your entire business model, leadership style, HR policies and fiscal reality accessed and challenged. Ideally, this would be by a roundtable consisting of your accountant, a business consultant, and your lawyer. The hardest part will be accepting the fact that ‘your baby is getting ugly.’ Regardless of the type of trouble your business is facing, you will need expert help to first peel away any layers of ego or vanity or attitude so that you can begin accepting the full roster of fiscal, operational, and human resource truths that may be causing your business to fail.”
After you’ve consulted with the experts
Nishank Khanna, Chief Financial Officer, Clarify Capital: “Use your competitors as a resource. If a competitor is outperforming you, look to see what they’re doing differently. Incorporate what they’re doing right into your existing strategies. Start with the financial blueprint. Look for any numbers that seem off and work from there.”
Andrea Franco, Intuitive Business Mentor & CEO, andreafrancoxo.com: “Fixing a failing business requires taking radical responsibility for the role you are playing in your business. When you find yourself stuck at a level that you want to move past, it’s best to ask for help and stop wasting time and energy. The money you invest will be well worth it when you hire a good business mentor that brings in a higher ROI and more aligned strategies to get you out of the negative spiral.”
Tips for managing financials:
- Hanson: Don’t borrow any extra funds; revise your “menu of offerings” to make it more profitable.
- Kanston: Review your cash flow closely – on a weekly basis, if necessary – to predict and prepare for gaps in revenue.
- Franco: Before making a business investment, think about the long-term impact and value it may (or may not) bring.
- Ameé Quiriconi, Owner, Activity Girl: Make sure you understand all the costs of running a business, from overhead expenses to the cost of sales.
- Chris Abrams, Founder, Abrams Insurance Solutions: Speak with a financial advisor.
When is the right time to give up on a business, and when should you keep trying?
Hanson: “Giving up on any business is a difficult financial decision. In general, either closing down or staying the course is a matter of fiscal survival –– or ruin. Only if new or contractual sales and profits are immediately around the corner should any failing business continue. The first step is to sit down with your accountant, lawyer and a business consultant and to completely access and potentially revise your business model ASAP.”
Chris Erhardt, CEO and Co-Founder, Tunedly: “Building and growing a business is hard. It will feel like it’s failing several times along the way. I’ve experienced it with my own company and keep experiencing it with the companies I’m consulting over and over again. I think the biggest indicator to give up is if you can’t figure out product-market fit within a reasonable timeframe. You certainly should not give up if you think you have a good product, but the sea gets a little rough due to internal or external circumstances. Power through it – it usually is just temporary.”
Quiriconi: “It is important to dismiss the idea that you gave up. That is a phrase that can trap you into an unwinnable situation. It is important to think like a businesswoman and reframe that whole concept to I am cutting this off so that I can live to come back another day. Yes, it’s hard to apply strategic thinking when you are feeling emotionally connected to your company and if you have employees, to them as well. But if the financial risk to you personally is so great that you won’t be able to recover in a year or two, you have to let it go.”
Jen Herrmann, Business, Marketing & Digital Strategist, The Marketing Greenhouse: “When you’ve exhausted all options to succeed with a business, we believe you can give it one year before turning it into a ‘side hustle’ and restarting.”
Ruth King, Profitability Master, ruthkinghvac.com: “The only time I give up is if the market vanishes. Fix the problems and survive.”
Franco: “The right time to give up on a business is when you know that this is something that doesn’t align with you anymore. The passion is gone, and you are being called to something new. The wrong time to give up a business is when you are in scarcity, fear or you are going through an up-level. Running a business has its challenges, and ups and downs, but you learn and grow, and can always try again. The wrong time to give up on a business is when you are just getting started.”