If Your Business Is Not Doing Well
Written by Angela Ly for Gaebler Ventures
If your business is not showing the results that you want or expect to see, we suggest some ways you can turn the situation around.
Business is weak.
You're wondering what's wrong with it. You want to blame it on flippant market conditions, but then how do you explain the good results that are being seen by your competitors?
Next, you start to worry about your company's finances. Revenues are not coming in, your creditors are closing in on you, and you are starting to get anxious about the dwindling cash balance. If what we've just described sounds a lot like what you're going through, perhaps you should take a moment to assess your situation.
That said, the lackluster results could be a temporary problem. It could be due to the external environment. Hence, monitoring the business performance is important to determine whether it's really in trouble.
Evaluate Your Business Strategy
The first thing you should do is to evaluate your current business strategy. It could be lacking in certain elements that are helping your competitors achieve their financial goals, or it could simply be outdated.
In order to point out what is missing, look at what the competition is doing. What strategy are they going by, and what is their winning factor? Compare the differences between your company and the competitor. At the same time, spend some effort in conducting market research. Now that you have sufficient information to evaluate your current business strategy, think about whether you need to make any changes to it.
It need not be directional changes in your core strategy. Often, small incremental changes can make a huge difference. For example, step up marketing efforts to boost the image of your brand. Another way to increase revenues is to offer discounts for bulk orders, or long-term contractual orders. The goal here is to try to attract more customers to bring in the revenues.
Ensure That Processes Create Value
Evaluate the way your business is run. Look at your current practices and procedures. Are they creating value for the company? Do the processes complement one another? Business processes should be carried out for the purpose of achieving strategic goals. However, there are invariably some which, over the course of operating your business, stray away from this purpose. By eliminating such processes, you could lower costs for the company.
Keep an Eye on Costs
Reduce your costs. And keep on doing so. When revenues aren't coming in, there had better be less going out from the bank account. You also need to remember to preserve cash. For young companies, cash is king. You never want to have problems with creditors, and you also need cash for operating needs.
If you have already cut costs and still need to raise funds, selling a part of your business is an option. Understandably, you own a startup and typically do not have divisions to sell off. However, you probably do have assets that are worth something in the market. Take a look at your balance sheet and figure out what you can do without for the time being. A small temporary loss can sometimes help prolong the life of your business and even save it.
Angela is currently an MBA student at Nanyang Technological University in Singapore. Ms. Ly is looking to specialise in Finance, and has an interest in exploring topics in entrepreneurship and strategies for small businesses.
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