Failure was not what you expected when you went into business for yourself. You knew it would be hard work, but you never thought you’d find yourself searching online for “how to save a failing small business” or “how to save a business from going under”. But here you are.
First of all, don’t panic. Just because your business is struggling doesn’t necessarily mean it’s the end. Second, it’s important to realize you are not alone. Succeeding in business is tough. And there are many challenges you may not have predicted, even if you did the most diligent small business risk assessment.
4 Challenges Your Business May Face
As a struggling business owner, some of the challenges you may now be facing include things like:
1. Time management
A new business is a big investment in terms of money, but it’s also perhaps an even bigger investment in terms of your time. You may find that you are wearing too many hats, trying to keep every aspect of your business under control. There’s just not enough time in the day to get it all done.
It depends what your line of work is, but your own health can have a huge impact on your business. For example, if you’re a one-man show in your carpentry business, what happens if you get a nasty bout of the flu? Similarly, if you’re a yoga instructor and you injure your back, what happens to business while you lay in bed recovering? Staying in good health as a freelancer or small business owner is critical to your success, and a challenge that’s not always easy to anticipate.
3. Money management
This challenge has many different faces. At the beginning, you may have issues in terms of income. Instead of making money, it’s possible you’ve found yourself streaming your savings into your business. In this case you’re not only not making money, you’re bleeding money in an effort to prevent your company from going out of business. On the flip side, once your business is making money, there are a lot of financial details to handle. You need to manage inventory and pay your vendors, issue salaries, cover taxes, and generally manage cash flow. Since this can get complicated, it’s actually recommended you hire a professional like a bookkeeper or accountant, to prevent money management from becoming a reason you’re going out of business.
4. Client dependence
While client dependence won’t likely happen in running a restaurant or daycare business, plenty of other professionals know exactly what this is. True, it’s tempting to lean heavily on one consistent client who pays well and regularly. However, if that person leaves, your business is in big trouble, and the gap they leave in their wake may be hard to fill.
Common Reasons Small Businesses Fail
The above challenges are just some of the reasons a small business may fail. There are other factors at play as well, to consider when seeking ways to save a failing small business.
For example, you may have done excellent research when you started out, but the business climate, or customer demands have changed. If you’re a Zumba teacher today, think of all those step teachers who had to retrain to keep up with the times.
Then there are unforeseen factors like the weather. If you’re in the gardening business and face a few cold, rainy summers, you could see your business suffer as a result.
Another scenario that could have you Googling how to save a dying business is when a serious competitor comes into town. You might have started out as the first beauty salon in your neck of the woods, but what happens when a discount chain opens up nearby?
Sometimes, the reasons can be even more mundane than that. Like if you neglected to get general liability insurance and your business was sued. A big payout can be the end of any business, even one that was on a successful track.
Is it Possible to Notice Negative Trends Early Enough?
Like many things in life, recovery is aided by early discovery. So when wondering how to save a failing small business the first step is early detection. If you have a clear business plan, with your milestones spelled out, this can be an excellent resource for spotting signs of a struggle early on. While it may not be a guarantee, it can certainly help you get your “cure” underway.
What Are the Signs that Your Business Is Going Under?
There are a number of signs a company is going under. If you notice any one of them, you should already be paying attention, and thinking of a fix.
- Few customers
- Low sales
- High employee turnover
- Cash flow problems – For example you’re not able to pay your suppliers or employees on time.
- You’re not doing what you set out to do – If you meant to work as a tutor in a learning space and find yourself hosting bingo nights instead just to pay the bills, you may well have a problem here.
- You’re always putting out fires – Mishaps will occur. But if you find yourself running around like a chicken without your head all day, every day, there’s something bigger going on.
- You feel stressed, all the time – Running your own business certainly has its stresses. However, if you feel unhappy, distracted, or similar symptoms on a regular basis, it’s a good sign it’s time to investigate how to save a failing business.
What to Do When Your Business Is Failing
While your business insurance can’t fix a failing business, there are things you can do to try. So how to save a failing small business you ask?
Like we mentioned earlier, always keep a finger on the pulse. That means checking against pre-established parameters and goals, so you always know how your business is actually doing. Since you’re heavily invested in your business – on both a personal and financial level – it’s also a good idea to get an outside opinion. Having a good relationship with key employees can be particularly helpful here. If they feel safe telling you about issues that may affect your business, you have yourself a great source of information. And if you trust them, take what they say seriously. This is especially true for those employees in critical positions in which they really see what’s going on.
You may also may need to reevaluate your cash flow. While it’s not recommended you cut corners (customers will notice) you can cut down on non-essentials that they won’t feel. Another thing to consider is your marketing. If you haven’t been reaching customers successfully, you may want to investigate why, and reposition your business accordingly.
Final Advice on How to Save a Failing Small Business
Bottom line, while it’s not easy to save a failing business, it can be done. Don’t lose sight of your passion and drive. Instead, lean on them in tough times and try to keep a positive frame of mind. You built this business in the first place. And now, with the same dedication, skill, devotion, and grit, it’s time to set it right.