It's hard to start a business, and even harder to admit when your business is struggling. The admission is only the first step to determining what's right for your struggling business. Do you fight onward and find out how to improve your struggling business? Or is it that your business will only continue to struggle, draining your energy and your wallet? There's no way to address this directly without looking at all the specifics of your business and industry.
In today's article we'll talk about some of the questions you should ask yourself to help figure out what's right for your struggling business.
Are You Struggling?
Admitting there's a problem is the first step, but that doesn't mean you've taken that step yet. You need to consider whether your business is actually holding its own. Here are some signs that your business is actually struggling:
- Cash flow is sporadic
- Employee turnover is high
- Making payroll is difficult
- Paying accounts is difficult
- Negative customer reviews are piling up
Ask the Hard Questions
If those sound like they apply to your business, then it's time to ask more probing questions. These are some of the questions that will help you see your business for what it is:
- Your Market Proposition
- What is your value proposition?
- Are you providing a needed service/product to fix a problem in the market place?
- What are you doing to set yourself apart from competition?
- When people come in to your store or you pitch to a potential customer do they buy? Why or why not?
- What markets are you in?
- Have you researched global markets where there might be a better fit?
- Do you know the key metrics for your business?
- What's your gross profit margin?
- What does it take to break even?
- Do you understand the financial cycles of your business?
- What products/services have the highest gross margin? The lowest?
- How are your accounts payable terms affecting cash flow?
- If your business is your only source of income, do you know how much you need to make to live?
- Do you have the right people on your team?
- Are there people on your team being underutilized or people who don't offer positive results to your bottom line?
- Are you spending time and money in the right areas?
- Do you need upgrades (capital, equipment, etc.) to improve how you produce your products or services?
- Are you in the right space and location?
- Do you need a full office or another type of facility? If you're not utilizing this kind of building, why not, and what will it take to put you there?
- Do you have a marketing plan? If yes, what’s working and not working?
- Do you know what metrics define the success or failure of a marketing campaign?
- Do you have a marketing budget?
- What are your distribution channels? Are they working?
- How much time are you spending on marketing and business development?
Analyze Your Answers
Not every problem can be fixed, and even some problems that can be fixed may not do much to help your business. Determining what's right for your business isn't easy, especially when it's time to decide whether or not you should cut your losses.
For instance, if your product or service isn't supported by the market, you can't make any money. If you're making enough to comfortably break even, or if you're seeing signs of growth, that's one thing, but if your business is slowly losing money (or worse, steadily losing money) then even if your value proposition is ahead of its time, your business can't function. It may be possible to pivot your product or service, but that will require a certain minimum amount of market support.
Financials, marketing, and operations problems may be things you can fix if you consider restructuring or other new or innovative approaches to problem solving. One of the possible first steps to improve your struggling business is cutting back expenses or other costs, however, sometimes spending more and investing into your business is the path to improvement. Investing will only work if you have the right market support, the right margins, the right path to customers, and the right team, i.e., an advisory team that includes your accountant and bookkeeper, lawyer, mentors, and PCC SBDC advisor. Find solid and dependable advice to follow, avoid passing fads that don't offer you true substance while latching on to meaningful strategies, and consider investing in yourself as a business owner through networking and continued learning.
No matter your situation, it's important to remember that you don't have to do it alone. If you're looking for a way to improve yourself and your business, consider some of the courses at the PCC Small Business Development Center. Our Advanced Small Business Management program offers 10 sessions on critical topics, as well as access to resources (including those for market research), peer networking, confidential one-on-one advising, and access to more than 25 veteran business advisors.