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How can you revive a failing business?

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QsId 114
Asked by Isaac Thuku
Category Personal Question
Title How can you revive a failing business?
 

What causes a business to close up shop?
What factors should I consider to ascertain that a failing business can be revived?

Tags bankruptcy, business failure, entrepreneur
Stats 1 Response(s)
 
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Answers

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Isaac Thuku

What causes a business to fail?

An ailing business may close up shop as a result of one or more of the following symptoms:
- Starting a business for the wrong reasons
- Lack of adequate funding
- Overdependence on a single client
- Shifts in the economy
- Poor management
- High employee turnover
- Pilferage or theft
- Poor health or death of the owner

What factors should I consider to ascertain that a dying business can be revived?

Talk to your customers

Customer feedback is very important and it will help you adapt you products and services to meet their needs. It will also give you a better understanding of what customers are looking for in the market so that you can either modify your existing products or develop new one to satisfy that need.

Advertise your products and services

Customers can't find and buy your products if you do not advertise. The more customers are aware that it exists; there is a higher chance they will buy it. This generates much needed revenue required to run the day-to-day operations of the business.

Talk to your employees

If you notice a trend where more and more employees are leaving your company, it is time to sit and talk to the current employees and find out what are the underlying reasons. It could poor remuneration, poor working conditions or better pay by your competitors.

Find out what would make them want to continue working in your company and effect the changes. Happy employees are more productive which will in the end turn to higher profits for your business.

Do not pay your employees more than the business can afford, it is a sure way to kill the business.

Manage cash flow

In any business operation there will be cash flowing in to the business from the sales made and cash flowing out to pay expenses needed to keep the business running. If the expenses outstrip the revenue generated then the business starts making losses. However, if the deficit is as a result of growth, you can get an affordable line of credit with a financier or your bank to cover it so that the business can keep growing.

Learn to say no

As a business owner every opportunity to make a sale is welcome. However, if you take on more orders that you adequately service it affects the quality of product as well as delivery times. If you start falling behind on your orders or run out of cash to pay suppliers you will lose customers and suppliers which can be detrimental to your business.

You have to learn when to say no to new business so that you can continue providing quality products and services to your existing clientele.

Increase prices or reduce costs

At some point in your business you may find that it is hard to deliver the same quality product to your customers at the current prices. This could be due to inflation or rising costs of production. As an entrepreneur you have to make a choice whether to increase the price or find ways to reduce your cost of production.

Increasing the price of your product could lead to loss of customers so you need to be very careful before going that direction. Alternatively, you could modify the product if there is a chance client would be willing to pay more for the new product.

It's recommended that you find ways of reducing how much you spend:
- Negotiate pricing or terms with suppliers
- Reduce non-vital expenses in your business
- Outsource services that you do not need in-house employees for
- Find innovative methods to reduce production costs

Plan, don't react

Running a business however small require a lot of planning. As an entrepreneur you have to plan where you want your business to be years to come and implement systems that will ensure that you reach those goals. Every now and then take some time to review your business plan and see how far you have gone in achieving those goals. Make necessary adjustments if you find the business is lagging behind.

Ask for help

Worst case scenario if you find that implementing these changes does not seem to improve thing in your business, do not be shy to get help. You can hire a business management consultant to consult a local business non-profit to give you an assessment and guide your business through the tough times.
2015-10-21

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