Running your own business is not easy. In fact, it can be rather challenging, especially when you’re in the beginning stages. But the challenges can continue for a number of years before you’re truly comfortable. And at any given time you can fail. No matter how well you think you’re doing, no matter how wide and deep your profit pool runs, a bad decision or taking too big a risk can knock you. Sometimes that knock can be difficult to recover from and fixing what’s broken can take time, energy and a ton of money.
A failing business is not simply one that no longer operates smoothly or is no longer making sufficient profits. The problems don’t stop there. But rather, the real issues arise when you (as the business owner) realise that you’re not able to pay your suppliers, vendors, rent and so on. When you can’t pay out the money you owe, you’re in deep waters. It’s time to make a real commitment to fixing what’s broken or at the very least, making good on your debts and contracts. This can be difficult. For instance, you cannot under deliver to the clients who’ve paid for your services upfront because your business is sinking. If you do, you could find yourself facing some serious accusations and possible legal action if you don’t return their monies to them. You could be liable for penalties depending on your contract or retainer stipulations or even the Service Level Agreement. Of course, all of these factors differ depending on your company policy and what you’ve promised.
Unpacking the reasons for, and ways in which a business is likely to fail is something you should consider doing right at the start of your new venture. However, there are general mistakes that young business owners and entrepreneurs make often without realising they’re placing their company in jeopardy.
Here’s what might have happened if you find yourself trying to save a sinking ship.
Your marketing strategy is wrong or non-existent
Not everyone knows how to put together an excellent marketing strategy. After all, that’s why there are people out there who have studied marketing and who earn pretty good money putting together strategies for companies. But this is not something that business owners simply know. In fact, most business owners go so far as traditional advertising but by not embracing strong marketing techniques, they’re missing out on targeting the right audience at the right time with the right product. The marketplace (in all different sectors) is a fiercely competitive playground. If you don’t have a strong marketing strategy you will inevitably fail, maybe not right away but soon. To prevent this from happening, you as the business owner or entrepreneur should invest in gaining some practical knowledge by signing up for marketing courses. And the emphasis is on the plural here because you need to consider the various avenues that marketing activities travel. A basic marketing course will develop your understanding of segmenting target markets and performing a competitor analysis. Whereas a digital marketing course will offer you key insights into the digital realms of remarketing and paid media campaigns. And then of course, there’s social media marketing which honestly is one of the most powerful ways to make sure your company is known by the masses.
You can’t handle the growth you’re trying to attain
You want it all and you want it now. But do you have the correct measures in place to actually manage this type of growth and success? You see, when your business suddenly scales and you have a lot of customers demanding your products and services, you have to be ready to deliver. Having the ability to deliver on your customers’ expectations is crucial to your business remaining a success. Many companies fall apart when their marketing efforts pay off. So you have to have a backup plan. If you are asking the masses to sit up and pay attention to your online sale then best you upgrade your servers, hire some call centre people and have enough space in which to house them. If you don’t do this, you’ll end up missing the boat and under delivering entirely. This means that all your marketing that’s finally put the spotlight on you is about to show you up as a dismal failure rather than an incredible success.
Your pricing structure is out of whack
Realistically, if you are running a business that is high functioning and you’re delivering to your clients’ expectations but each month you continue to run at a loss, there are two things to consider. Firstly, you are going to run out of funds to cover you and you’ll end up being unable to afford your overheads. Secondly, something is wrong with your pricing. You need to reassess your pricing structure. The best way to ascertain how to manipulate your prices is to consider what your direct competition is charging, and also the stalwarts in your game (although they’re likely to be expensive based on their reputation of quality), and then look at where you sit. You can begin raising your prices on certain services and products and, if possible, with only a few new clients. By observing their reaction to the pricing structure you’ll be able to tell if you can push up prices even more or whether you’ve gone too far already. Don’t introduce an entirely new pricing structure overnight, you want to handle this carefully but you must handle it.
Don’t beat yourself up about landing in hot water with your new business. To be honest, it happens to the best of us. But you do need to have some plans and skills in place to fix it if and when necessary. Don’t worry about trying to save a sinking ship, rather use the working parts to put together something even better and make sure you have the knowledge to do so.