With the pandemic, these may be the worst of times for your small business. You may have been suffering before it hit, and now you're really in trouble.
Even in good times, ups and downs should be expected by any business owner.
Sometimes the business owner is at fault. They've neglected something or done something wrong.
Other times the reason is beyond their control. Outside forces – like corona or natural disasters – intervene and negatively impact business.
Either way, the fallout must be dealt with to get back on an even keel.
The following advice from various experts should help.
Obviously, some of the suggestions below only apply if your business is actually in operation now. But even if your business is temporarily shuttered because of the pandemic, you can still do some of these things, in preparation for re-opening.
Regarding the difference between a turnaround and “normal” business activity, Small Business Rainmaker Andre Palko says:
"All business is a constant course correction. We chart a course, start sailing and keep correcting to keep us going where we want to go. So at its heart, maybe a turnaround strategy is different only because we might have to take more extreme action. We’re encountering a gale versus a moderate wind shift."
The June 2020 MetLife and U.S. Chamber of Commerce Small Business Coronavirus Impact Poll indicates that the level of concern about the impact of COVID-19 subsided slightly over May's poll:
On the negative side:
Small businesses are taking action in various ways:
In light of the struggles facing small businesses during the pandemic, Main Street business advocate Ty Kiisel tapped turnaround CEO Dick Cross for 5 lessons that will help small businesses get through these difficult times:
Many small business owners are controlled by fear and suffer from the so-called "Imposter Syndrome." They fear having people discover that they're not as good at their job as they suspect people think they are.
His answer: "Admit that you don’t know everything. Surround yourself with smart people and learn from them."
Focus on the things that are really important and avoid tracking metrics of marginal importance just because you can. Pay attention to these metrics: customers, needs, positioning and competencies.
Inspire them to give their best every day. Don't treat them like they're disposable. They may go elsewhere. Create a workplace where employees want to be.
These are the character traits of a successful business leader:
Set aside 60 minutes of uninterrupted time three times a week to do nothing but think about your business. He argues that this is the real job of the person at the top. The insight and inspiration you’ll gain makes this the most important thing you do every week.
If you're one of the many small business owners devastated by Covid, you may be experiencing seriously depleted cash reserves, extensive layoffs of staff and personnel, and deep concerns about what lies ahead.
According to hard-hit small business owner Chad Otar:
"Because so many small businesses are lean and so many are bootstrapped, it doesn’t take much disruption to normal day-to-day operations to feel that squeeze. Small businesses certainly felt the impact of coronavirus first and continue to feel its impact disproportionately."
He offered 3 strategies to thrive during the pandemic:
1. As much as possible, normalize doing business just the way you always have. Your customers will feel a lot more comfortable and confident in businesses that aren’t making radical changes to their core business model for offerings.
2. Stabilize your cash flow situation as soon as possible. The Paycheck Protection Program is one option. And you'll see lots of quick ways to get cash and save money in the advice below.
3. Stay as flexible as possible going forward into this “new normal.” The economy is going to reopen, but the speed at which you're able to grow, build and expand will come down to your ability to remain fluid in how you serve your market and your customers.
Many things separately or together can conspire to threaten a business's long term survival, driving the need for a business turnaround, including:
According to research by Hassan Barau Singhry and Haruna Muhammad Khalid, Strategies for Reviving Non-Performing Small and Medium Enterprises,
"Managers tend to attribute performance decline and any resulting organizational crises to external factors beyond their control, such as competition. Empirical studies, however, show that very few business failures are the result of outside factors only. Instead, organizational failure is frequently linked to internal problems like failures to update products, invest in core competencies, and control cost.
The first stage of decline occurs when an organization’s adaptation to its domain or microniche (the product or market domain of the firm) deteriorates. The second stage occurs when the organization’s financial and human resources begin to diminish. Both stages of decline indicate that the organization has become less adapted to its microniche and is less successful at exchanging its outputs for new inputs.
Organizations enter the state of decline when they fail to anticipate, recognize, avoid, neutralize, or adapt to external or internal pressures."
Perhaps one of the most pressing factors impacting the need for turnaround is money.
It's the rare business that doesn't experience revenue downturns at some point. No matter how the cash flow deficiency occurred (your fault or external factors) you'll probably need cash – and fast – to implement the needed change and increase revenues.
First, let's look at ways you can instantly SAVE money:
Here are 3 areas where you may be able to cut costs:
Don't be shy about getting payments. You deserve to be paid in a timely fashion for the goods and services you provide.
Take action to get what you're owed:
To inject new cash into your business, instead of turning to a bank or benefactor for a loan, look to hidden, untapped opportunities already existing in your business. These are typically your current or past customers and hot leads, usually through existing customers, past customers and past prospects.
But before you rush into grabbing the cash, get clear on exactly:
And, to avoid future cash flow problems and plan to cover gaps (and relieve anxiety), ask yourself if there are times of the year when you usually have cash problems.
Here are some strategies for quick cash injection:
It's much easier to sell to people who already know you and your products and services.
Entice buyers with a one-time sale. This works well with existing and past customers. You can also target a specific segment of your list.
Ideas for limited-time discount offers include:
Pre-sell the new product, service, or course before it's created. This brings in your instant cash. Make sure you clearly state when they'll receive the product, and deliver it on time.
New offers you can roll out quickly include:
Small changes in your pricing can make a big difference. Compare your prices to the competition and make adjustments. If you're offering a valuable product or service, be sure you're charging enough.
Inform customers that prices will be going up, and tell them why and when. Then offer the opportunity to get the product or service again at the current price.
And offer payment plans. For instance, break up a $500 product into 3 equal monthly payments that total a little bit more than $500. Or take an advance deposit and structure payment at specific milestones.
Set up ways to get payment immediately using services like PayPal, Stripe, Square, etc.
Upsells are an upgraded experience through higher-priced goods or services. Upsells at point-of-sale include:
Down-sells are a lower priced option of a product or service for those who want to spend less. For instance, offer a "taster" of your services that costs less than the full-price offering. Or break apart one product or service into multiple, lower-priced products or services.
Cross-sells are complementary items offered as a part of the purchase.
Examples include:
Bundling several items into one sale, at a discount, is another cross-selling option.
If product or service failure is plaguing your business, Andre Palko suggests:
"Take stock when faced with a product failure. Don’t destroy that great idea ... just yet. It is indeed possible to re-launch a failed or sluggish product and in turn, revive a failing business. And if your business instincts are usually right, that’s even more reason to figure out what went wrong."
Harvard Business Review's Chief Editor and Change Management Expert Rosabeth Moss Kanter says "the key is to spot symptoms of decline before they accumulate, and then shift toward the actions that build positive momentum."
One symptom of decline is withholding information. Inconvenient facts are papered over. Decisions are made behind closed doors. Accusations and blame abound. So it is almost impossible to know the full extent of problems.
Reallocate resources to restore assets. Improve the things that ARE working and think about eliminating things that aren't.
Teams and companies with negative momentum are characterized by fragmentation — a drift into many activities that get tacked on and stay, becoming ends in themselves. It is too easy to lose sight of the larger purpose of being together.
A cliché but still true. Convene strategy retreats. Find ways to heal wounds and promote stellar performance. Believe in and support team chemistry.
Every company is full of buried treasure. Find the ideas that might have been suppressed and bring them into the open or into action. Think small, as well as big.
Digital Marketing Strategist Nick Veneris laid out 6 steps to revive and turn around a failing business:
Look through your metrics and your past approaches:
Once, it might have been fruitful to be the business that had and did everything. Nowadays, it’s far more beneficial to be a business that specializes.
Known as partnered affiliates, you can employ the contractual help of other business owners and social media influencers who will promote your product and business to their followers.
Although time-consuming, this might just be your best option if your brand is truly on its last legs. By rebranding your company, you are changing its position in the marketplace, from the audience you are targeting to the way your company speaks.
You might feel that there is nothing you can do to turn around your business. But this crisis doesn’t have to mean the end of your business. Be ready to take some risks.
Finally, check out this monster list of 77 business turnaround resources to help you improve all areas of small business management, including:
Turning a business around can be a daunting prospect for businesses of any size or age. Yet it doesn’t have to be complicated. Step back, analyze, stick to business basics and make sure you have cash on hand to do what needs to be done.