A business downturn is the beginning, not the end.
It gives you the chance to learn, start new, and rebuild.
The first thing many business owners do to try and save their business is cut costs, but that only slows down the inevitable. What you need to do is breathe new life into a dying business by jump-starting it.
This article will help give your dying business the jolt of energy it needs to get back on the path to success.
Common reasons small businesses fail
If you look closely, there are a few signs associated with failing businesses months before it happens. Some of these signs include a halt in business growth, poor cash flow management, and a glaring lack of innovation or differentiation.
CB Insights found the top four reasons startups fail:
- Ran out of money (38%)
- No market need (35%)
- Beaten by the competition (20%)
- Flawed business model (19%)
How to save a failing business in 10 steps
- Adjust your mindset
- Set goals
- Learn why customers are leaving
- Understand your target audience
- Perform a SWOT analysis
- Take a hard look at your finances
- Get funding if you need it
- Pivot and change direction
- Invest in marketing
- Take action
1. Adjust your mindset
There is no secret to success. But there are many factors that go into what makes you and your business successful. Sure, there is hard work and dedication.
But there are also more ways than hustling and grinding 24/7 to make it happen. Developing a positive growth mindset can help you stay on the path to success.
This may sound a little “woo woo,” or dubiously mystical and unscientific. Yet neuroscientific research has shown that our actions are triggered by intentions, incentives, or intrinsic values.
A growth mindset is defined by the belief that your intelligence is changeable and improvable. Individuals with a growth mindset see setbacks as a part of the learning process and “bounce back” by becoming more motivated.
Develop a growth mindset by:
- Learning lessons from your mistakes. There will be a running list of failures in your business. I’ve built three businesses from the bottom up and it was never a smooth ride. Every loss becomes a win. So if you feel like a failure, brush it off. Look at what happened in your business and figure out what you’ll do differently in the future.
- Staying flexible. Chances are, nothing will go according to plan. Being able to adapt and adjust will help overcome the many business interruptions in your path.
- Inspiring yourself. Make time for yourself. It’s easy to work yourself to the bone when your business is going through a rough patch. Endless work will wear you down and make you want to quit.
It’s true that hard work is important, but staying headstrong and happy is even more important to achieving your goals. Use the above tips to achieve a healthy, balanced mind to get through the tough times.
2. Set goals
Now that your head is in a good place, it’s time to work toward turning that business around. Setting goals helps guide your focus and sustain momentum. Goals help you reach for a specific result when you feel like everything is falling apart.
Goal setting is linked with higher motivation, self-esteem, and self-confidence. Research has also established a strong connection between goal-setting and success.
Start small. Don’t go crazy by setting massive goals, because you’ll be disappointed if you don’t achieve them. Set frequent, smaller goals and reward yourself after completing them. Create a series of mini goals that lead to a big goal.
For example, say your big goal is to get 200 subscribers for your email marketing list. Your mini-goal list could look something like this:
- Sign up for free email marketing software
- Create landing page for email list sign up
- Create an email campaign
- Promote email list on website and social media
Don’t have a tried-and-true system for setting and achieving goals just yet? Build your own by reading 18 Essential Goal-Setting Tools for Entrepreneurs (2023).
3. Learn why customers are leaving
It’s common for customers to shop around with other businesses. But if you’re getting negative feedback from customers, you need to find out why.
Learn why customers are leaving your business. It could be a number of reasons you’re unaware of, such as:
- A poor customer service experience
- Your product failed to meet expectations
- You didn’t prove your value
- Your sales tactics were too aggressive
Establish a feedback system with existing customers. You can use an app like UserLoop or Fuzzy Surveys to collect feedback and understand what customers really want. This data can help you create better products and marketing strategies that increase sales and loyalty.
4. Understand your target audience
A target audience is the group of people you aim marketing and advertising efforts at. Do you know who yours is? Identifying your target market is important because it helps you find new customers easier and bring more qualified buyers to your website, which results in more sales.
It took cosmetics brand SUGAR three years to truly nail down its target audience. “While we were running our ecommerce business between 2012 and 2015,” founder Vineeta Singh says in a Shopify Masters podcast episode, “we realized that there were a lot of millennial women who couldn’t find that perfect nude lipstick or a perfect red lipstick. There were a lot of colors that were perfect for, say, Caucasian skin, but wouldn’t work on the deeper Indian skin tones.”
From there, the brand identified that its buyers:
- Were Indian woman between 20 and 27 years old
- Live in metropolitan areas
- Consume a lot of digital content
- Are Inspired by global trends
- Want trends Indianized for them
This led SUGAR to create its first bestselling product: liquid lipsticks. These lipsticks are extremely long lasting, which, with India’s humid and hot weather, are perfect for the brand’s target audience.
SUGAR went from having one ecommerce store to over 10,000 retail touchpoints, and has become an industry disrupter, raising more than $21 million in Series C funding.
Find the right customers faster by reading Finding Your Ideal Customer: How to Define and Reach Your Target Audience.
5. Perform a SWOT analysis
If you’re a struggling small business owner, now is the time to take a step back and look at things from a broader perspective. That’s where SWOT analysis (strengths, weaknesses, opportunities, and threats) comes into play.
A SWOT analysis pushes you to look at your business from different perspectives and provides insight into how you’ll perform in the future. If you write a well-developed business plan, a SWOT analysis will be part of it.
Strengths and weaknesses are internal factors, or something that you can control. Examples include reputation, partnerships, intellectual property, and staff. Opportunities and threats are normally outside your control, such as competitors, economy, market size, trends, and supplier issues.
A SWOT analysis will help get you back on track. It helps you identify problems, work on changes and improvements, and make the right decisions to help create a successful business.
Learn more by reading SWOT Analysis: A Simple Way to Find Your Competitive Edge (Plus a Free Template).
6. Take a hard look at your finances
Many issues can sprout up for even the most successful business owners related to finances. Insufficient cash flow, inaccurate reconciliation reports, high external liabilities, debt—these are only some of the preventable problems you can face.
If money seems to be your issue, you’ll need to look at your expenses and outgoing cash flow. You may want to track finances weekly versus monthly to stay on top of everything. Catching financial issues early can help lessen the impact and keep your company profitable.
Common financial challenges include:
- Cash flow issues
- No prepared budget
- Unforeseen expenses
- Too much debt
- Poor tax compliance
- Mixing personal and business finances
- Reporting oversights
To get your books under control, use the following articles as a guide. They’ll help you wrangle the accounting beasts and set you up for a more productive business.
7. Get funding if you need it
Working capital is a problem for businesses of all sizes, but it can be harmful for smaller companies with limited resources. Having cash to pay your bills and eat lunch is great, but lack of capital prevents you from hiring, replenishing stock, building marketing campaigns, and developing new products for the market.
To overcome these hurdles, you’ll want to establish a budget for operations, then research and secure financing options before you even need to.
Shopify Capital is one way to get quick and easy access to a business loan. There’s no lengthy application or credit checks. You can get funded within days of accepting an offer. Plus, you can repay from sales with payments that work for your business.
You can then use the funds to do many things, including:
- Hire new employees
- Bring on an expert consultant
- Stock up for seasonal sales
- Purchase bulk items on discount
- Order new materials
- Fuel marketing campaigns
8. Pivot and change direction
Pivoting sounds simpler than it actually is and could mean many different things to different businesses. For some, it might mean changing your business model.
For others, it might mean moving to a completely different vertical or changing your target customer. Maybe you thought your product would sell well with acoustic guitar players, but in fact, it might sell better with piano players.
You might need to sell an entirely different product. This sometimes happens because business owners didn’t properly validate their business ideas or products before launching. You need to do a close analysis of what’s working and what’s not, and consider making drastic changes.
9. Invest in marketing
At this point you’ve got the foundation to turn around your business. You know your audience, you’ve got cash in the bank, and you’re ready to get the word out. To attract the right customers, you’ll need to implement marketing strategies that attract, engage, and retain them.
You can get a lot of awareness on a small budget by using social media tactics:
Henry Chen, a serial entrepreneur and business coach, strongly recommends leveraging video marketing to promote your business online: “Create consistent, evergreen content. In particular, YouTube videos that are value-driven and searchable.”
He adds, “Focus on solving one to two simple but common and important problems in each video. People are more likely to do business with you after they see social proof and—free—value that you’ve provided. Being that it’s evergreen, your videos will work for you for months and even years to come.”
10. Take action
When you know your business is on its last legs, you need to be proactive. Don’t sit back and wait for things to happen before you take action. Take actions that are not only preventative (before things get any worse) but that also fix glaring problems.
There’s no better feeling for an entrepreneur than when he or she is able to turn something around for the better. Every entrepreneur is faced with challenges, and a short-term failing business is just one of many.
Even if your business fails despite all of your efforts, take it as a learning experience. Many entrepreneurs before you have had failures before their most successful venture. You only need to be right once.
Learning from your business failure
Recognizing that your own business is struggling is the first step. You must make difficult decisions to ensure you don’t run out of cash and close your doors.
Whether it’s finding a whole new customer base or getting funding, it’s OK to take a step back and get your business back on track. It’s all part of the entrepreneurship process.
Struggling business FAQ
How do you revive a struggling business?
- Adjust your mindset
- Set goals
- Learn why customers are leaving
- Understand your target audience
- Perform a SWOT analysis
- Take a hard look at your finances
- Get funding if you need it
- Pivot and change direction
- Invest in marketing
- Take action
What is one thing to do if your business is failing?
One thing to do if your business is failing is evaluate the performance of your business and identify any areas that can be improved. Additionally, take steps to research potential methods to increase revenue or reduce costs to put your business back on track.
What to do when your business runs out of money?
When your business runs out of money, identify what the cause of the shortage is and find ways to increase your revenue or reduce expenses. Speak with a financial professional and seek alternative sources of money so that you can keep your business afloat.
