How can you fix your stalled or failing business when investors are not investing in your safe note financing?
At least 90% of business startups fail within the first few years. Making it through the five-year mark is no guarantee of survival either. Even a $50B company, with decades in operation, can face failure faster than they think. So, no matter what stage you are at, it is important to know how to handle these situations. Knowing how to fix a failing business in advance can be a huge advantage too.
No matter what the reason for this challenge there are ways to tackle it, and even come out on the other side stronger. So, whether you just see storm clouds on the horizon, are stalling out, or are on the rocks already, how do you manage your way through a failing business? What are the most common risks and reasons for business failure? What are the steps you need to take?
Understand The Difference Maker
There is one overarching difference maker that will determine which direction you go in, and the ultimate outcome.
The number one thing to understand is that the dividing factor in surviving or dying here is whether you give up or not.
Despite all the odds and perceived challenges, the difference between those that survive versus those that don’t is choosing not to quit. It is often just the company and team that refuses to give up and keeps going that thrives and ends up looking like the big overnight success story.
There can be wisdom in being able to divine the difference between when you just need more grit and resolve to grind it out, and when it no longer makes sense to keep flogging the same dead horse.
If you are not sure which situation you are in, then you can give yourself a timeline and target metrics.
It’s an important time to revisit your why and commitment level.
Remember why you were so passionate about pursuing this in the first place. Get back to those roots. Find clarity. Reevaluate your commitment level. What are you willing to endure, do and sacrifice to make this a success, or not?
Get Clarity on What’s Wrong
You can’t fix it if you don’t truly understand the problems. If you feel like you’ve hit a ceiling or are failing, then be clear about why you feel that specifically, and what metrics you are basing this opinion or feeling on.
Be sure you are focusing on the data and facts too. Even the most successful entrepreneurs, athletes, artists, and others may feel they are failing miserably, when they are amazing by other people’s standards. Be objective, not emotional. Don’t let your emotions deceive you.
It may not hurt to get some feedback from others around you to get their opinion.
You may also feel you are failing just because you aren’t hitting the huge goals you expected. You may not be at the valuation you expected yet, own the brand positioning you dreamed of, be getting all the social media likes you wanted, or even be resonating with the customer base you planned. That doesn’t necessarily mean it is a failure. You may just have to make some adjustments.
What’s Not Working?
Once you are clear about what is wrong, work to understand what’s not working.
If you aren’t hitting the revenue numbers or profits you expected, what is the cause of that? Is it really your number of Facebook likes? Or is it your sales and marketing strategy, quality of content, or the process?
This can be tricky, with many misleading vanity metrics that will try to fool you and distract you. You may need expert help interpreting your data, such as a pro with domain experience.
What Is Working?
Be careful not to dismiss what is working. You need to give as much credit to this half of the equation as to what isn’t working.
What are the things that are really going right?
Don’t just assume. Find the data to back it up. This may be features customers rave about the most, the products that are turning in the most revenue or real profit, or where growth has become automatic and organic.
Even if it is just one or two things, list them out. Be sure not to scrap them in the overhaul of your business.
Create A New SWOT Analysis
The previous items will help you in updating your SWOT. Things change. You will have new insights and better clarity with more data. You should be conducting fresh market research to get a strong handle on the state of the market, competition, and outlook. Your company has probably evolved and changed since your last SWOT analysis too.
List out your top:
This is vital as you not only need to fix the reasons your business is failing right now, but to ensure you are not failing again in a month, 12 months, or three years for a lack of understanding and foresight.
Adjust Your Budget
Equipped with all this information you should be taking time to adjust your budget accordingly.
Be clear about what you can and cannot afford. Maybe some of those fluffy office perks need to go. Though you probably cannot afford to cut and pause your marketing budget. Otherwise, you are just dooming your business to a certain death. The same may apply to fundraising or even working towards a fast exit.
Slash funding from what’s not working. Just focus on your strengths, competitive advantage, and new opportunities. Set a new budget with where you will allocate funds.
Slash Business Expenses
Your budgeting exercise should identify many areas where you can and need to cut business costs. As well as where you can’t or may need to redirect funds to.
Overtime, physical office space, subscriptions, meetings, unlimited vacation time, old phone systems, inefficient systems, and similar areas can all be sources of great waste.
In some cases, acquiring other companies could solve inefficiencies, lower costs, and increase profitability and growth quickly