Business downturns don’t just happen in recessions, they can happen anytime the market changes. Perhaps a new product has come on the market that makes yours less attractive, or the service you offered has been streamlined by a competitor and you cannot do the same. You are now in a position where the business is making less money and the profit margin is dwindling. Does this sound like your business?
Figuring out how to recover from a downturn in business can be hard. Sometimes you just can’t think what to do first. There is no simple answer, but it is important to act fast. The actions you take when your business is having a downturn are critical, it will define whether your business recovers and thrives in the future or whether your heading towards the end.
If you run a small business it can be harder to recover from a downturn, than for larger firms. Recovery might be slow. The first thing to do is to take a step back and evaluate your business. Are you on track with your business plan? What is different? Why are you in this downturn? Can you identify what has caused it? Does your product or service need refining? Try to this this from an outsider’s point of view, leave your emotional investment out of it. What is working and what is not? From here you can make plans to change what isn’t working and capitalise on what is.
Evaluate your staff. Do you have a good team? Are they confident on all aspects of the business? Are they enthusiastic about working for you? Any unhappy members of staff can bring your company down fast. Have you shown your appreciation for what they do for your business. If you haven’t done this for a while, maybe its time to take them out for lunch or a drink? Foster bonding. Do you run annual strategy days. Take a day out of the business to go away and brainstorm how the business is running and what could be done better. Your staff may see things that you don’t. Remember good management is just as important as the product or service that your business offers. Make sure your staff are productive, motivated and rewarded (Thank-yous cost nothing!).
Also, consider your costs. Are you staying within budget? What expenses can be cut? Could you get better deals from your suppliers? Are unpaid invoices making your cash flow tight? Perhaps you have extra office space you could think about renting out. When you need more staff, perhaps you could take on an apprentices or an intern. They usually cost less and are enthusiastic to learn.
Beyond that, funding is another option. Before you do this, make sure you are confident that you know why your business is not doing as well as it should and that there is a positive upturn on the horizon. Throwing money at the problem might not be a solution and it could cost you more in the long run.
Small businesses are highly volatile. Even with passion and hard work there is a chance that things won’t always go your way, so seek advice from a business consultant who has the benefit of extensive experience and an external vantage point.
The business advisors at RBSS Consulting can be reached on 0333 355 1696 or by email on firstname.lastname@example.org.