Staring Business Failure in the Face? This 8 Step Plan will help.
Nobody likes to fail? We are brought up to believe that we must be successful, make something of our lives, do some good in the world.
The internet is full of helpful slogans about believing in yourself, picking yourself up after a fall, keeping going. All you need to do is think positively and everything will be resolved. Or so we are led to believe.
The problem is that business failure doesn’t feel like a great learning experience when you are in the middle of it. When faced with a failing business, the typical response of a business owner is to keep on propping up the business with their own finances. It is Positive Thinking taken a step too far: pouring money into a relentless monster. Just a jangle of pennies at the bottom of an abyss, making no real impact on the underlying problems.
Few banks or institutions are in the business of rescuing small businesses. They have insufficient vested interest in doing so and they will probably recover what is owed to them through personal guarantees. Administrators will mop up the rest of the available cash or money owed. The kind of consultancy help that will get your business back on track is expensive and almost certainly unaffordable if you are struggling. So, what to do? The following is a practical 8 step strategy to help you fight your way back to success.
Failure doesn’t feel like a great learning experience.
Step 1 – Recognise that the business is failing.
This is easier said than done, but absolutely essential. If your sales are less than your spend, then sooner or later your business will fail. Simple, uncomfortable but true, the numbers really do tell you everything. The classic warning signs are:-
“We’re going to struggle to pay the wages this month”
“Bills are piling up”
“Suppliers are getting tetchy”
“Employees are miserable”
Step 2 – Consider if recovery is possible……that is… really possible.
Businesses fail for many and various reasons, some can be fixed, some can be fixed with investment, some can’t be fixed.
- If the product is good and there is demand for your product, it is fixable.
- If the problem is with poor management or control of business finances, it may be fixable.
- If the market place has fundamentally changed, it may not be fixable.
- If the product is poor and/or there is no demand for it, it is probably not fixable
- If you cannot raise all of the investment required to fix it, it is not fixable.
Step 3 – Assuming that recovery is possible, think of it as a plan for change
Draw up, as dispassionately as you can, what you think the change might look like. Answering the following will help to formulate a plan for change.
Where are we now?
Where do we need to be?
What are the positive driving forces for change.
What are the forces working against us?
How can we maximise the positive and neutralise the negative?
Will this achieve the change required?
Step 4 – Cost the plan
What investment is required to put the recovery plan into action? This is not just about financial costs, but the emotional and personal cost. Will the plan of recovery jeopardise your relationships or destroy your mental well-being? Will you be able to tolerate the additional stress of putting more time and energy into something that might still not work? Is the fear of failure still paralysing you into inaction?
Step 5 – Assess the risk. Do not take risks that are personally unacceptable.
What is the best and worst that can happen? If the best that can happen is that your business plods along at break even, this may be fine for some people, but not for others. If the worst that can happen is that you lose your house, your wife (or husband) leaves you and your kids disown you, that risk may be unacceptable. If the risks attached to implementing the recovery plan are unacceptable, quit now.
Step 6 – Identify people that can help you put your recovery plan into action. Mobilise all the free resources available to you. Trade with what you have.
Study your personal contact lists and those of your family and friends. Put the word about that you are struggling and need help. Be confident that people will come forward to assist. Don’t worry about money. Trade with what you have. If you can’t pay money for services, offer to write an online review or a testimonial. If you have a DIY skill, trade that for someone who can help you with something on your change plan.
Step 7 – If your plan is successful, celebrate your success with everyone who contributed to it.
Hold a party; invite everybody who gave you even the tiniest bit of help. Turn it into the best networking event ever and publicise your success widely. Thank everybody!
Step 8 – If your plan doesn’t work, come to terms with failing, even if it was entirely your fault.
“If you’ve never failed at anything, you probably haven’t done anything”. Be proud that you tried. Be confident that you gave it your best shot. Be grateful that you had the opportunity to learn. The sun rises every day and tomorrow is a new day. You will have learned more from failing than your success. Whatever happens, you will survive.
By Cherry Iley
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