How often do you hear this – over half of new businesses will fail in their first year. That’s a scary statistic. However, it isn’t entirely true.
The recent numbers from the Bureau of Labor Statistics (BLS) show that in the first two years of operation, 20 percent of businesses will close. That number increases as the years go on, but it does show that you have a fighting chance.
Every business will go through some rough periods. Unfortunately, some companies can survive those difficult times while others end up closing their doors for good.
Is your company during those difficult moments and wondering how you’ll move forward? CBS-CBS.com has a few tips to help you revive your struggling business.
Take a Step Back to Identify the Issue
Before you can begin moving forward, you need to identify the problem. If you try to revamp your entire company without first determining where the issue truly lies, you could end up in the same position relatively quickly.
Look at when you were the most profitable compared to right now. What has changed since then? It could be the market is changing, and your company hasn’t, your management style shifted, or maybe it’s the economy, and your customers can’t afford to spend right now. Once you have that reason, then you can develop a plan.
Revamp Your Marketing Plan
When’s the last time you’ve taken a look at your marketing plan and seen those analytics behind it? Sometimes, all you need to do is freshen up your marketing strategy to engage with your current clients and reach new ones.
Adjust Your Business Model
Adjusting your business model can bring business back to life. However, it isn’t an easy task. As the world changes year after year, your business must adapt to these changes. If you’re still doing the same thing you did for the last few years and noticed a decline, it could be time to adjust your business model to keep up with modern times.
Boost Internal Moral
What happens behind the scenes of business eventually spews out into the public. That means, if your company culture is negative, your customers will soon pick up on that.
The consumer often wants to support companies that provide a happy, healthy, and encouraging work environment. If your team struggles to work together or simply don’t want to come to work, a morale boost could be what your struggling business needs to thrive once again.
Make Cuts
In some circumstances, cutting costs can help a business get back to thriving. Maybe you were once spending extra dollars on luxuries to make life a bit easier for you as the owner. If those additional costs are coming at the expense of your success, it’s time to make some cuts.
In other circumstances, though, making cuts is only a band-aid solution and not addressing the root issue. However, making cuts could give you the time to determine the actual problem that needs fixing.
Failure to control costs is one of the primary reasons a business fails. If you are aiming to have a 10 percent profit, that means you have to run your business so that your expenses equal 90 percent of every dollar you take in. You need to create what is called a managerial accounting system that pays yourself first. You are entitled to the salary of what it would reasonably cost to run the company if you were hiring someone to run it for you as well as your predetermined profitability. Together, your salary, plus your planned profit becomes the Total Ownership Return. By paying yourself first rather than getting paid what is left over after all the expenses are paid, it will create the internal management discipline to make the necessary decisions to cut costs so that your business can pay your what you deserve while becoming a profitable business for the long-term.
The tips above could help you get your business back to where it used to be and even more profitable than before.