Coping with a struggling business
If your business is struggling, you may be overwhelmed and considering giving up. The income ideas panel of experts suggest that there are strategies to help revive your dream or pivot in a new direction that takes on lessons learned.
Systems, people or cash…these are the key areas of consideration that the business experts suggest that you look for.
According to Yanique Grant, CEO of Professional Training and Occupational Services Ltd (PTOS): “A review of the business and what worked well when things were good is always a great place to start. Look at your sales and marketing initiatives when business was good. How were you retaining and servicing your existing customers? How were you attracting new customers? Was your product adding value at a time when it was needed most? Have the market needs changed since then? If they have, what have you done to adapt and adjust your own product offerings? Look at your team – did you have key team players who are no longer there? Have you been working with your team to ensure they are fully equipped with product knowledge?”
UWI researcher Dr Carolyn Hayle adds, “Remember, your business plan is a living, breathing document which you should consult every month or so. Having consulted the plan, let us look at your sales. They themselves tell a story. Those of you who did business courses will remember the Boston Consulting Group matrix (BCG) where they show you how to analyse sales. From your sales numbers you will know whether your product is a cow (brings in the cash) and will be moving to a star. If it is a star, then you need to invest in it. However, the problem you have put forward indicates that maybe this company’s product(s) are either question marks or dogs. If they are question marks, you need to revamp the product, and this calls for new strategies. A simple example of this is a product that is relaunched in a market with a tag line “New” or “New and improved”. If the product is a dog, it is time to get rid of it. You need an exit strategy.”
Dino Hinds, director of MicroFinancing Solutions, continues the discussion and suggests, “The first thing that you would need to do is to identify the reason(s) for your falling sales. There could be several factors, and we can categorise these as either micro or macro. Micro factors are those which are specific to your company. Is it that your customer service has fallen off, has the quality of your product gone down, or have your competitors been taking market share from you? Some of the macro factors could be seasonal demand, or the overall economy might not be doing well, so demand overall has fallen. Only after identifying the problem can you look to fix it.”
Grant notes that the analysis shouldn’t exclude the human side of the equation. “If a once successful business is struggling, it’s almost always a people-related issue. Not financing, not capital: employees, management or the owners! Somewhere along the way something broke, and now there is a disconnect between the owner’s concept and what people did with that concept. The problem may be entitlement, complacency, laziness, or ego. Eventually, between the reality of the marketplace and the company’s ability to act within that reality, something fractured until it was too late. Always start with people, because it’s always about people. As the business owner, you should always be reviewing what works well and what does not. Auditing best practices and making sure they are aligned with your goals, and of course, ensuring that your clients are satisfied and will return again.”
Now that you have done the analysis, do you continue to put money in the business? The expert opinion? Maybe. Hinds says, “I am not sure I agree with the concept of trying to seek capital when things are tight. As a business person you should have a clear blueprint of how you are going to go about growing your business, including capitalising future growth. If you wait until things are tight to seek capital, then your leverage would have been severely diminished and you’ll probably end up paying a higher cost on loan or giving up more than you want to if you are taking on partners.”
Business Rocket Coach, Kerrie Ann Richards, believes that business owners should look within for the answers to dealing with a struggling business. “What is the source of the struggle? Is it that you are exhausted, or is it that your systems are not working in favour of business growth? Is the structure of the business heavily dependent on you? Are there ways to automate processes to free up time to make those sales calls? Or is it that you hate making those sales calls, but you are the only one who can do them?”
Richards says for all those questions there are short-term and medium-term solutions.
Short-term cash flow issues:
• How many clients have money outstanding for you? Are you willing to forgo a percentage in order to collect?
• Can you bundle items or services to increase average purchase value? Or do you need to have seasonal offers to entice people?
• Have you kept client information in a Customer Relationship Management System? Or do you have a database of any kind to be able to reach out to clients who have not ordered in a while?
Long-term preventive measures:
• Ensure that you are doing a quarterly trend analysis so that you can project customer behaviour and sales
• Automate as many processes as possible. Look at all areas of business and work through where automations can help you to do basic things like:
⁃ Send quarterly emails to clients with updates
⁃ Auto responders on social media to keep your response rates high
⁃ Use scheduling software to manage customer bookings and reminders
According to Grant, “As a struggling business, one of your most important metrics should be customer service.” She lists some simple reasons why you should pay keen attention to this:
1.Customer retention is far less expensive than customer acquisition – on average it costs approximately five times more to attract a new customer to your business than it costs to retain an existing customer.
2.Existing customers are more likely to buy from you than new customers – the probability of selling to a new customer hovers in the range of 5-20 per cent, whereas selling to an existing customer resides in the range of 60-70 per cent.
3.Excellent customer service improves public persona and strengthens your brand – the reputation and strength of your brand is highly dependent on a high level of customer service.
4.Word-of-mouth advertising is the best kind of advertising that money can’t buy –you absolutely cannot buy word-of-mouth advertising – the kind that can have a monumental effect on a business. It’s priceless. People are considerably more likely to listen to the advice of a friend than they are to heed the guidance from some online review or advertisement.
5.Great customer service opens doors for new partnerships and other opportunities – treating your customers like gold is infectious. It opens the doors for new partnerships, especially when other businesses see just how well you take care of your existing customers. It says a lot about a company and what sthey value when they care deeply about their customers. It’s something that you rarely find in business these days, but it most certainly paves the way for powerful partnerships, collaborations and other opportunities.