Looking at a slowly decreasing profit line can be a soul destroying practice for business owners. It’s easy to become disheartened immediately and give up. A failing business is a difficult thing to deal with. Not least because you’ve poured your heart and soul into getting it off the ground. The truth is that most businesses do fail, and that can be hard to accept. When that line starts dipping there are three things you can do.
One, you can learn from the mistakes and evolve the company into something else. Two, you can give up and liquidate the company. Three, you can turn this dip into nothing more than a small dent. You can make quick changes and turn that profit line upside down. That’s what we’re going to help you with today. All businesses have peaks and troughs. You simply have to look at this like a small trough. The peak is just around the corner if you make the right moves.
The first step is realising and accepting that something is wrong. Don’t ignore the profit sheets or the analytics. If there is a dip, it means that something isn’t working. It needs to be addressed immediately. The longer you hold off or pretend everything is fine, the worse you’ll suffer. And, the harder it will be to turn around. Accept it immediately and start making a plan. We know it can be hard to admit that something is failing. Remember, this isn’t game over, this is a learning experience and you move on. Mark Zuckerberg (Facebook founder) famously said, “If you aren’t breaking things, you aren’t moving fast enough”. Break things and move forward.
It is really important not to panic. Trust us, we know how patronising that can sound. But, it’s really important to look at the bigger picture. A dip in profits doesn’t mean the end. It just means a small problem needs to be overcome. Panic and desperation leads us into the wrong decisions. We may make quick judgements like selling off the company or quitting entirely. Learn to stay calm and keep a clear head. That is what will help you take stock of the situation and deal with it effectively.
Before you make any rash decisions, you need to assess what is causing the problem. If the profits are down, it means there is a problem with sales. That could mean a problem in marketing or the product itself. If your web traffic is plummeting, it could be your online marketing is failing or your SEO is outdated. When things start going downhill, there is always a very specific reason. Take the time to look through every aspect of your business. Target the exact areas that are failing. It will be those things that are causing the bigger problems. Once you understand the problem, you will feel much better about moving forward. If you need to, hire a consultant. Sometimes all it takes is a fresh pair of eyes on your accounts and business workings. They could spot the problem immediately and help you move on.
Now that you know where the problem is, it’s time to plug the holes in the ship. If money is pouring out like water, you need to stem the flow. You need to make immediate cuts and reduce your outgoings. It will immediately give you some breathing room and extend the life of your business. You need to buy yourself time to turn things around. You can start by selling unnecessary assets. Look at Plant Insurance at AutoTrader for better insurance deals. Do this across the board with insurance, energy bills and other outgoings. Let your employees work remotely for a while and save money on office overheads. You’ll know the best cost cutting activities for your business. This should buy you some collateral to help turn the business around.
Once you’ve highlighted the problem and bought yourself some time, you need to make changes. Work with the analysis you made earlier. Assess the areas that were failing and figure out how to fix them. If your online stats were down, construct a better online marketing plan. Change your social media strategy and rework your SEO goals. Something as simple as a new web design could work wonders. If the problem is the product itself, change it. Don’t be afraid to adapt. Talk to your users and customers and find out what they really want.
Finally, don’t be afraid of putting up the prices. A failing business is often suffocated by low profit margins. By increasing your prices just a little, you’ll increase margins and free up some breathing space. Don’t try to be the lowest priced product on the market, try to be the best. Customers will pay for it, if you offer a good product.
If none of this is working, it’s time for a radical approach. One option here is to look to another company for a partnership. Find a business that succeeds in the areas that you struggle. Plan a pitch that shows how your skills can complement theirs. Bringing two businesses together can expand your reach and reignite your bank balance. Don’t go it alone and don’t be scared to ask for help. There is always something that you can offer others in return.
Hopefully if you’ve followed this advice, you won’t have to use this final suggestion. However, if you’ve tried everything and nothing is working, you may need to plan an exit strategy. Begin to look for potential buyers or look at closing. You will probably make a loss if the accounts are down. However, it may be worth it in order to pay off debts and move forward. Remember, don’t see this as a failure. It is simply a learning step. Don’t be discouraged, start thinking about the next thing.
All big startups have stumbling blocks. But, many have reignited a failing company. All the best CEOs have struggled through difficult times. It is a test of strength and resolve. If your profits start to dip, it is not the end of the world. Stay calm, look for the problem and figure out how to turn it around. Don’t be afraid of asking for help either. You’ll soon be back in command with rising profits.
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