According to a recent survey, about 95 percent of all startups and small businesses fail within the first five years. Reasons behind this are numerous. You can fail to meet the requirements of your clients and therefore earn a negative reputation, falsely advertise and get stuck in an expensive lawsuit or simply devise a bad business plan. These are just the tip of the iceberg. Other reasons are the lack of adequate leadership, poor management and lack of capital. Be as it may, even if your business starts showing one or several of these symptoms, there might still be a cure to your problem. With this in mind, here are three steps that can perhaps save a business on a decline.
1. Focus on Regular Customers
A lot of startups focus on increasing their traffic and dedicate all their marketing-appointed resources to gaining new customers. Even though this may sound great, it might be for the better if you were to focus on making your current customers return for more. First of all, this takes a lot less effort, seeing how a person that has bought something from you once already has a 27 percent chance of eventually returning. A person who has shopped from you twice raises this chance to about 45 percent, while someone who has bought from you three times has 54 percent chance of returning for a fourth purchase. Be as it may, this results in about 8 percent of your customers making about 40 percent of all your profit.
2. Get a Capital Injection
Seeing how the lack of funds tends to be a persistent problem, you might want to look for a way to get a capital injection your business so desperately needs. If you have a property you aren’t using, you might want to consider selling it. Same goes for your vehicle or any other valuable you own. Sure, this might not be the most popular of choices, but if your business hits off, you might simply buy them again later on. To make the long story short, it all comes down to how much you believe in your own vision.
Other things you could do is go to a credit union and apply for a loan, get a personal loan from a friend or a family member and even think about selling some equity in your company. Out of the three, the last one is by far the least popular, seeing how it might have devastating effects in the future. Keep in mind that just because someone has the same interest with you doesn’t make them an ideal partner. For this, you need someone who shares your vision, as well, which sadly isn’t something that is easy to find.
3. Downscale a Bit
Another thing you could potentially do is try taking one step backward. You see, the most common reason for early financial problems is the cost of your operational expenses, luckily, there are more than few ways in which you could downscale them. For instance, you could move into a smaller office, sell some equipment and lay some people off. Sure, all of these steps are unpleasant (and therefore unpopular) but may be vital for the survival of your company.
Luckily, all of them have some, bit less effective, half-way alternatives. You could move into a smaller office and have these extra people work from home. As for the extra gear, instead of selling it and then being forced to purchase it again on a later date, you could just find an adequate place to store it at. All you need to do is google: “Self storage near me”, and find what you are looking for.
Finally, even though all of the three above-listed steps may help, they don’t necessarily have to. One of the hardest jobs of a business owner is recognizing when their business is past the point of no-return. Once this happens it might be for the best to simply pull the plug. Here it might be for the best to simply declare bankruptcy and start all over again. There is no shame in this and even some of the greatest names in the history of business, like Henry Ford and Walt Disney, have faced this at one point in their life. Furthermore, some bankruptcy options such as Chapter 11 bankruptcy can give you one last chance to salvage your business from the clutches of failure. As you can see, there is always something you can do.