If your business is feeling the pressure of financial stress, know that you're not alone. Some of the biggest enterprise corporations - like Netflix and Best Buy - have had to change things to pull out of a business death spiral. Those changes could be revamping marketing strategy, dropping product lines that aren't working, or letting go of staff that doesn't match the new face of the company. The stress could also be brought on by mismanaging company financials.
If your business is financially stressed, consider these questions and strategies for a company turnaround.
Look at Your Competition
Maybe your business started off strong and the decline has been gradual. When is the last time you looked at what you're competitors are doing? Is there a new, more aggressive competitor in your market? Is there a new way to market what you're already doing? If your business relies on certain market conditions, maybe it's time to examine the market and re-evaluate your strategy. Are your clients going elsewhere to buy or have they simply stopped buying?
Turnaround strategy tip: Consider how your business can innovate. Pay attention to market forces and your competition. Determine what you can improve to keep your clients' interest.
Look at Your Business Practices
One of the reasons for a downturn in your business could be that there are more efficient ways to do what you do. Are their new tools or systems that can be used to increase production? Do you need the number of employees that you have on-board or can they be used in a different way? Has your company culture gone too lax or too strict to keep quality employees? Are you screening your employees so that you know you have trustworthy staff that participate and care about the business?
Turnaround strategy tip: Improve your processes to be more efficient at what you do. Tune into your staff to see if they have ideas for making things better. If your management isn't participating or willing to make the changes, you may need to consider hiring new talent.
Look at Your Clients
Your clients may already have opinions about why they are choosing to buy elsewhere. Have you met with your clients or surveyed them to see how you can improve? If you've noticed that your sales are up but your profits are down, do you have clients who regularly pay late or not at all? Your clients may be facing their own business challenges such as bankruptcy or downsizing and this may affect their ability to pay you. Is it time to fire clients who don't pay on time?
Turnaround strategy tip: Listen to your best clients for their ideas for innovating your product or services. Have your credit manager screen clients before extending credit and consider stricter credit policies.
Look at Your Books
If your expenses are too high or your sales or profits too low, you may want to include a good look into your company financials. An accounting audit may be necessary to identify areas of improvement. The audit will reveal mistakes in your books, unnecessary expenses, cash flow challenges, and help you prepare for other potential financial crises. Once your books are audited and accurate, you could seek funding from venture capitalists or other investors. If you find challenges with your accounts receivable, you may also consider commercial debt collections or factoring to increase your company cash flow.
Turnaround strategy tip: If you get a clear picture of why you're losing money, you will know what steps you can take to stop the flow. An influx of cash may be what is needed to get your business back on its feet again.
Not all of these challenges will be your business' reason for financial stress. The first step is to evaluate the situation with the questions suggested above. The evaluation will guide your next step. Maybe you need a new mission, a new staff, or a new way of doing things. A company turn around isn't immediate but could take months or even years. A business with a clear message, reliable employees, efficient processes, innovative products or services and proper accounts receivable management can begin the process of improving from a downturn.
