Bankruptcy is one of the worst fears that every small business owner has to deal with. The enthusiasm with which you started your business eventually sobers down, and may even disappear when you find your business crumbling. When sales are dwindling and you are deep down in debt, desperation may push you to make a few not-so-wise decisions. And then, you may be left wondering if you should fight your way back to growth or just give up and close shop.
If giving up is not an option, then there is some good news for you. Reviving your small business and propelling it back to making profits is possible. Here are some steps you should take.
Start With the Problem
Identifying the problems is the first step to finding a solution. There are several reasons that can affect the performance of your business. Competition from a well-known brand, which has a strong footing in the market, could be one of them. Or, you may not have changed or modified your business offering according to the changes in the market or your customers. Try to look at your performance objectively, and think of how the business was being run when it made profits. Make a note of all the changes that had happened after that, and list out the possible factors that could have led to your current situation.
Once you have a clear idea about the problem, planning for your business's revival becomes easier.
Refresh Your Marketing Strategy
It goes without saying that marketing is one of the most important aspects that can make or break your business. Figure out if the marketing plans you have in place are appropriate, considering the market conditions and the lifestyles and culture of the people you are catering to. If your product or service is for a niche audience, it makes sense to create a marketing campaign that focuses on them and not everybody in general.
The first step to reviving your marketing efforts is to evaluate the needs of your customers. Talk to your customers directly or through social media platforms and obtain feedback about your products. Ask them for suggestions and see how you can incorporate them in your marketing plans and improve your sales. If there has been a change in customer preferences and needs, modify your products or services to suit them. This can help you get your lost customers back.
Think of new ways to reach out to your customers. In this day of the internet, when a large proportion of the population spends time online, placing newspaper ads is not going to help. Instead, you should look at email marketing, social media marketing and other forms of online marketing, which are cheap and effective too.
Seek Help Outside Your Business
At times, when your analysis fails to give you an idea about the reasons for failure, talking to people outside the business can help. Besides asking your customers for feedback about the products and services, you should talk to your association members, accountants, marketing specialists and other experts in the industry. Doing so will help you approach your problem objectively to find better ways to increase your customer base, retain existing customers, decrease costs and improve your sales.
When sales are down and debts seem to be increasing, you should look at ways to decrease your existing costs and raise your income. To cut costs, one of the first things that business owners tend to do is cut down their team. While it may seem like the best way to reduce expenses, layoffs can actually have a negative affect on the performance of your business and restrain growth.
Before you actually consider downsizing on personnel, you should look at other areas where you can bring down the costs. Cut down the expenditure in non-productive areas and spend more where there are returns. For example, if you are spending a certain amount on making products that are not very popular among your customers, stop offering that product.
In addition to that, consider slightly increase the prices of products that your customers purchase the most. If the product is good and popular among your customers, they wouldn’t mind a small increase of few cents or even dollars. This not only brings down the expenditure on the raw materials, but also helps you improve your returns.
Altering the Business Model
Even small businesses that have been successfully operating for a long time can become bankrupt because of their outdated business models. While changing the model completely may not be an easy task, putting in the effort can actually save you from shutting down completely. Changing the business model may not necessarily mean changing the products or services that you offer. Although you may have to modify your products slightly, the major focus would be on approaching your marketing, packaging, pricing and delivery practices in a different way.