Richard Dickinson, Business Coach at Ology Coaching provides some helpful hints on how businesses can survive potential setbacks.
Ups and downs are always a part of being in business but occasionally the downs can reach the point where they seriously threaten the survival of your business.
There are many factors that can be responsible for this. For example, competition may have increased, interest rates may have increased, fashion may have changed, a key employee may have left, a major cost may have increased markedly, the economy may have slowed etc. So, what to do..?
1st– Identify the problem
Do an honest and critical appraisal of your business weaknesses and write them down. Remember that, ultimately, you are responsible for your business. Turning a business around may mean that you yourself have to do things differently. Not all business setbacks are caused by external factors and that weakness within the business can be just as debilitating. For instance, failure to monitor the crucial numbers within a business, or even worse, failing to record those numbers can mean that problems may not be identified until too late, e.g. overheads may have become unacceptably high or receivables collection is getting dangerously slow.
Once the weaknesses have been found draw up a plan to fix them. If this feels a bit overwhelming or you feel you don’t how to do it, get help. Spending a thousand or so now is preferable to losing everything later.
2nd– Start fixing
Don’t wait. Having identified where the problems are, start fixing them now. Eliminate anything that doesn’t contribute to the bottom line. This can be hard to do, but keep in mind that everything will be cut if the business fails. Make the hard decisions that will either generate cash or retain it. If your business handles inventory to sell that which is obsolete or excessive and see if your suppliers will give extended credit terms. And when you sell, accept only cash or payment in less than thirty days. Monitor your receivables regularly, and do not hesitate to use a collection agency if necessary.
Re-assess staffing levels and training. Could your customers be adequately serviced by fewer, better-trained staff? Re-assess your market. Does your customer still want what you are selling, at the price you are asking and in the volume you need to remain viable? Re-assess your marketing. Are you reaching the right customer using the most effective methods for today? Re-assess your systems and procedures. Is your business running as smoothly and efficiently as it could be?
A key element in turning any business around is to meet with your accountant, banker, advisor/coach, suppliers etc and especially anyone, apart from yourself, who has a financial interest in the business. If you are open about your situation and have a plan to turn things around they should be willing to provide help and advice on dealing with your business problems.
Finally, re-assess your goals and vision. Is what you are doing now really what you want to be doing and be brutally honest with yourself? More than one business has failed simply because the owner really wanted to be doing something else. Remember, if it all seems too much to handle, and it can get help. Some help now is far cheaper than losing everything in the future.
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