Hopefully you have spotted a profitable niche in the market, have carried out thorough market research and are successfully targeting your customers with a product or service they love. If you have, well done!
Sadly though, many businesses fail. In 2023, there were 25,158 filed for insolvency - the highest number since 1993. If you see clouds looming on the business horizon, don’t panic. We share ten evasive steps you can take to help ensure your business survival
1. Size up your problems
You won't be able to create a survival plan unless you know how much of a problem your business faces. Assess your cash flow for the next 12 months. How do your costs compare with your likely income? Are there any times when your business will face serious cash shortages? If your business is to survive, it must be able to overcome short-term cash flow crises.
2. Seek advice - now
You might not be able to come up with all of the answers, especially if you're under pressure and lack experience, but other people can help you. First explore sources of free support and advice, but don't rule out paying for tailored advice from an accountant if necessary. When trying to save a business, it's often wise to seek dispassionate professional advice from the outside. With their help, your problems might not turn out to be as insurmountable as you thought.
3. Cut your costs
If you fail to eliminate unnecessary costs, you'll significantly hamper your chances of survival. Assess every area of your business and find ways to eradicate waste and inefficiency. Rule nothing out. Often survival involves having to make tough decisions. Try to negotiate better deals with all of your suppliers. If you can save money, explore cheaper alternatives but be warned: cutting too much or in the wrong places can make matters worse, so your decisions need to be well informed.
4. Tighten up your credit control
Having an effective credit control system can help your cash flow remain positive, as well as lessening the chances your business will be affected by bad debts. Overtime, credit control can become slack, so look for ways to improve your system. If you are to avoid any nasty surprises, you must remain aware of your cash position at all times. Explore alternative sources of finance such as factoring and invoice discounting, because these might offer you a cashflow solution.
How to keep your business afloat when times are tough
5. Improve your offer
Are there any no-cost ways to enhance what you're offering? Perhaps you could enhance, update or otherwise improve your products to provide better value for money. Maybe you could introduce new products/services, but only if it won't place even more demands on your time. Don't rule out trying new things. As other business fail, there could well be new opportunities for your business.
6. Assess your prices
Could you justify increasing your prices? Inflation has hit everyone over the last few years and so it's highly likely that you will be paying more for everything from raw materials, fuel and rent to deliveries. Consumers are well aware of this and are used to being asked to pay more for the things they buy. Even a small price increase can make a big difference to your bottom line. If you can't increase prices, try to reduce your costs. Even if you're desperate, don't slash your prices unless you've worked out whether your business can afford it first. You must protect your margins.
7. Refocus your marketing
Cutting costs doesn't mean stopping all your marketing activity, but it does mean putting a stop to wasting time and money on things that don't deliver enough sales. Reassess your marketing strategy. If you haven't already done so, explore no-cost and low-cost ways to publicise your business, including social media websites such as Twitter and Facebook and make sure you have a Google Business Profile. Find ways to ensure your own website is more effective. Ask yourself whether going back to basics (eg sticking cards in local shops or carrying out a door-to-door leaflet drop) would bring additional sales.
8. Sell more to existing customers
Selling to new customers is more difficult and according to some as much as eight-times more expensive than selling to existing punters. Try to find ways to sell more to your existing customers, maybe through offering new products/services or discounts for spending more. You could offer them rewards for recommending your business to new customers? Building greater customer loyalty could help your business out of the mire.
9. Stop doing things that don't make money
You and any employees cannot afford to waste time doing things that ultimately do not bring any money into your business - especially when times are tough. Look for ways to boost efficiency and productivity so all team members can maximise their contribution to your business. You can easily maintain high levels of collaboration and productivity with Google Workspace.
10. Get full support
Survival is a team game. If your business has employees, you need their full buy-in if your business is to survive - you can't do it all by yourself. Ask your people for their ideas on how you could cut costs and make more sales. Crucially, you need to make sure employees remain focused and well motivated. Communication between yourself and your employees must be good. You should also be in touch with your accountant for advice while trying to ensure the survival of your business.
Many 'business turnaround' experts condense survival strategy into three key stages. The first is to work out exactly how bad things really are. The second is to solve the business' immediate cash flow problem. The third is to address the fundamental issues that created significant problems for the business.
