Being an entrepreneur is stressful and demanding. A difficult economy makes it even harder. When your business is thriving, you feel over the moon, but it can be a lonely journey when you fail. According to a survey by Fundera, over 20% of start-ups fail within the first year, 30% before the end of the second year, and 50% by the fifth year. Only 30% of businesses remain to complete ten years. While there are geographical variations in these figures, one thing is universal: owning a business is not for the weak of hearts.
One of the hardest lessons to learn for many small business owners is how to effectively overcome business failure and get back on their feet again. Nobody invests in a company to see it go out of business after a year. Sometimes to succeed, one must first fail.
We’ve put together a list of strategies for overcoming small business failure and using it as a foundation to build great things.
1. Have a Plan B
Every company must have a business backup plan as it helps us stay equipped for the worst-case scenario.
Here’s how your Plan B works: Should an unprecedented scenario occur, your company has a clear plan of action to implement. Backup plans are quite similar to your business plans, except that they include many examples of how your company can fail and how to recover from it. As you put together your contingency plan, consider the following tips:
- Test your plan to see if it is effective.
- Just like your business plan, keep changing scenarios depending on the phase your company is at.
- Choose a reputable IT company to work with so that your data is secure and easily accessible.
- Identify weaknesses by putting checks and balances in place.
- Make a list of your credit choices, such as business loans, as a fallback option to stay afloat.
2. Conduct a SWOT Analysis
A thorough examination of your company’s strengths, weaknesses, opportunities, and threats (SWOT) can help you see things from an array of perspectives. A SWOT analysis will help you not just to develop your business plan, but also identify the obstacles you’ll face and how to tackle them.
Every business, regardless of size, should do a SWOT analysis. The fundamental goal of SWOT analysis is to understand the complexities of your business and what factors are considered before taking any action.
3. Pay Attention to Your Customers
Carrying on operations without satisfied clients will eventually become impossible. For whatever reason, if you can’t generate leads or attract or obtain new customers, you should focus on the customers you already have.
When you can’t generate additional revenue, you must rely on your existing customers. According to Gartner Group, 20% of your current customers will provide 80% of your company’s future revenue. And if that isn’t enough to persuade you to build a loyal following, a 5% jump in client retention can lift a business’ revenue up to 95%. Focusing on your most devoted and frequent customers can be one of the wisest business strategies you can employ. This could involve anything from boosting sales with discounts and new products to using their support for email marketing strategic needs.
4. Control Your Cash Flow During a Crisis
When you are going through a difficult time in your business, save all the money you can. Your business may be unable to survive if you don’t have a steady cash flow. It will be challenging to run a business if there is no circulating money. There are various ways to obtain a continuous cash flow:
- Send timely invoices to guarantee that you are paid promptly.
- Reach out to clients that are behind on their payments.
- Accept payments in advance.
- Use an accounts receivable finance provider to top off the leftover money in your bank account.
- Try to pay bills on time to avoid incurring additional fees.
accounts receivable finance provider
5. Social Media Presence
If your business is not on social media, are you even a business? Many companies believe that social media is overused and ineffective. But the truth is that you have access to millions of potential consumers on social media.
Instagram, LinkedIn, Facebook, and Twitter are all key social media platforms that can be used to create new leads, promote your brand, and boost your digital operations.
6. Hire a Business Advisor
One of the reasons small or large businesses fail is because the business owner is unwilling to change or refuses to take accountability. We understand why. You don’t want to be told that the decisions you took were wrong, even though you put a lot of work into building your company from scratch. Hiring a business advisor or a mentor will be the best investment you make, regardless of whether your business is old or new. Business advisors, with their expertise in running a successful business, can help you understand what caused your business to fail, how to move forward, and how to reset your goals and visions so you can thrive.
7. Build a Team With Like-minded People
As you invest time learning how to develop your leadership capabilities, put them to use by building a team that can drive your company to new heights. It’s easier to embrace inspiring thoughts when you are surrounded by positivity. Negative people can hinder your creativity and ambition, which can ultimately result in the demise of your business.
Be it a street food stall or a retail company, running a business requires a lot of resources. From cash flow management to digital advertising, you may not know everything on your first day. It will take a lot of trial and error for your business to shine. That being said, the entrepreneurial journey has its ups and downs and if you have a hard time dealing with failure, then you should rethink starting a business. But with patience, courage, willingness to learn, and perseverance, you can succeed in this challenging business environment.