As you may have guessed, the way in which one turns around a failing small business varies based on a number of factors – the type of business, its size, its specific issues, and so forth.
In fact, it’s very common for turnaround specialists to turn around dozens of businesses in their career and never come across two that require the same exact turnaround strategy or execution.
That being said, on the surface, turning around any failing small business can be reduced to a few overarching key guidelines that any struggling business needs in order to turn things around and become profitable again.
Analyze the Numbers…and Then Analyze Them Again
A business’s financial statements will tell a story about the business and give you a lot of information that you’ll then use to develop a turnaround strategy. Evidently, the key here is being able to understand them.
Why are financial statements so important? Well, you’ve heard it before – numbers don’t lie.
If the business isn’t your own, you might think that relying on the business owners’ answers to your questions is sufficient, but oftentimes, the business owners’ narrow sight is exactly what’s contributed to the business’s desperate state.
Taking the time to analyze a business’s financial statements cannot be overstated. Do it, and you’ll be monumentally closer to turning around a failing small business.
Focus on Quality and Market Need
More often than not, quality and/or market need contribute to a business’s demise.
At some point along the journey, the business may have either begun sacrificing product or service quality to save money or decided to start offering additional, yet mismatched, products or services in an effort to increase revenue and grow.
In critical times like these, turning around a failing small business means tightening up quality standards and focusing on the products or services that made the company successful in the first place.
If there isn’t a relatively substantial market need for a particular product or service, get rid of it.
Trimming the Fat is Easier Than You Think
It goes without saying that in order to turn around a failing small business, one must eliminate any and all unnecessary expenses.
This is where most business owners have difficulty determining what qualifies as an unnecessary expense. To make it easy, get rid of any and all expenses except for those that:
- Directly drive revenue
- Maintain high product or service quality
- Support your employees (although you may need to let go of a few)
- Are absolutely necessary for your business to remain in operation
Otherwise, cut them out. It’s time to get lean.
Don’t Make Matters Worse
The significance of each and every customer becomes incrementally greater the more a business struggles. Without them, turning around a failing small business is nearly impossible.
A failing business has probably lost quite a few customers in recent months or years. However, don’t make matters worse.
Do everything in your power to keep the remaining customers from jumping ship.
Above All Else, Be Objective
Without a clear and unbiased mind, one will almost never be able to turn around a failing small business.
If it’s your own business that’s struggling, this is much easier said than done. In these times, your emotions are higher than ever, and it’s extremely difficult to look at your own business objectively and make the painful decisions that are usually required to save your business from closure or bankruptcy.
That’s why most businesses bring in a turnaround consultant or specialist to help turn around their failing small business.
For performance-based business consulting, contact The Business Turnaround Group.