Having to nurture a failing small business isn’t any entrepreneur’s dream. But sometimes, it happens. It happened to one of my startups during the Great Recession. And although trying to get my business to bounce back wasn’t the highlight of my 30 years as an entrepreneur, it taught me a lot of valuable lessons.
A failing small business doesn’t mean your run is over. What it does mean is you have to put the pedal to the metal to save your company. If I had floated along without instituting any changes, my business might have continued failing.
Nobody wants to talk about a failing small business. But I’m here to tell you that business failure is a reality. However, you can bounce back and use what you learn from it to grow your small business.
Here are five lessons I learned from my failing small business.
1. Accept Advice From The Right People
From the time you decide to start a business, seeking guidance is a must. Although forging your own path is essential, you should ask questions so you aren’t charging ahead blindly. This is true whether your business is just an idea, running successfully, or failing.
I’ve learned that there are a number of people you can turn to. Accountants, lawyers, and seasoned business owners should be at the top of your list when it comes to seeking advice.
Accountants can help you interpret your business’s financial state. Lawyers can help you choose the business structure that will best help you succeed. And other small business owners have been in your shoes. They can lend you some of their expertise so you don’t make the same mistakes as them.
2. Plan For The Worst Before, During, And After A Failure
You probably know that everything won’t go exactly as planned when you run a small business. You’re up against things you can’t control, like meeting consumers’ buying habits, losing inventory, dealing with building damage, or even burning down a laundromat.
Because you can’t control everything in business, you need to be prepared for worst-case scenarios. Is your business equipped to handle a failure? Are you prepared if the failure gets worse? And when the failure is over, do you have systems in place if it hits again?
When you run your business, you should establish and contribute to a cash reserve, which is an emergency fund. If you become strapped for cash, you can access the account to help you out. But, money might be a temporary fix, depending on your business’s setback.
Sometimes, your products or services go stale and you receive an influx of negative reviews. Or, your marketing strategy might not be reeling in enough customers. You should have a business plan for small business in place to help you focus your strategy and increase traffic to your company. And, you and your team should meet regularly to scope out new strategies to address customer complaints and other setbacks.
3. Denying Your Business Is Failing Will Only Make Things Worse
The only reason I was able to get my business moving again is because I finally accepted what was happening. I waited a while before realizing I needed to make changes, prompting my business to dig itself further into trouble.
The faster you are able to catch problems in your business, the easier it will be to get your company on track. And once you acknowledge and assess the problems, you can cut out what doesn’t work. Which brings me to my next point …
4. Eliminate Things That Aren’t Working
You might have had certain ideas that failed. You may have expanded too quickly and ended up going backward. You could have splurged a bit (e.g., a top-of-the-line cappuccino maker).
To help your business get back on track, you need to identify what’s not working in your operations and eliminate it. And, you need to scale back on your expenses. Having to go backwards might hurt your pride, but it’s the only way to propel your business forward.
When my small business was failing, I took notes of everything to help me figure out what was going wrong. I found out that there were a lot of processes that slowed down my employees and therefore my business. I also had to get rid of all the extra expenses we were wasting money on.
Eliminating expenses and unnecessary processes helped my business bounce back, but I learned that doing it sooner could have stopped my business from failing in the first place.
5. Bouncing Back Is Possible
The biggest thing I learned from my failing small business is that it’s not the end. Before you take on a defeatist attitude, remember that the majority of businesses have a setback in one form or another—if they all closed their doors the minute the going got tough, we’d be missing out on some great brands.
I didn’t know if I would be able to get my startup rolling again during the economic downturn of the recession. But if I gave up hope and didn’t give it my all, my business wouldn’t have had the chance to pull through and succeed beyond my wildest dreams!