Top 7 Tips to Turnaround a Failing Startup
By Robert Munro
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Without a doubt starting a new business is a risky proposition. Just half survive five years or more and only a third get to ten years, according to recent data. Even those unicorn tech companies, overhyped private companies valued at $1bn or more, can end up in distress for any one of a number of reasons including, market change, a lack of capital, management problems or product issues. However, not all failing companies end up going bankrupt, so donít be disheartened if your startup is struggling as there are seven achievable steps that you can take to turn around your business before itís too late.
- Admit thereís a problem
When your company is in trouble, itís important that you stop and take a step back from the dream and take a closer look at the cold hard facts. If sales are falling or even stagnant, itís definitely time to reassess your business model and start preserving cash before you go bust. Ask yourself some basic questions: What do we do best? What could we do better? Itís essential to identify what has gone wrong and use this analysis to create a new business strategy. Perhaps, you arenít targeting the right audience or providing the best solution to your customersí problems. Look at whatís working and reconnect with your core strategy as this will give you the direction you need to help your business succeed.
- Create a new business plan
A business canít succeed without a solid business plan in place. If you already have one and the business is still struggling, itís definitely time to review and refocus the businessí strategy, financials, marketing, products and operations to pinpoint exactly what is and isnít working. Going forward, the strategy should be monitored more closely and more often than before until the business hits calmer waters. Companies that create and follow detailed and well-thought-out plans are much less likely to get into trouble. When the company is struggling through choppy waters, this is when a plan is most needed.
- Meet with key personnel
Have a frank discussion with key personnel within the business on how you are going to solve the companyís problems.These meetings are important so itís critical to be prepared and have a plan as people quickly lose confidence in leaders who donít have a vision for their business when tough times hit hard. These meetings can provide a valuable opportunity for you to hear suggestions from employees, who may present ideas on how to improve the business that you have never considered. Itís important to be open-minded and flexible to this input. Unfortunately, itís a fact that employees are the real assets of an organisation that are most often ignored. Asking your employees what they think isnít just an act of empowerment and trust, they may well suggest something that gives your startup its business edge.
- Follow the leader
Look closely at the market leader within your sector and try to understand its unique value proposition. What are they doing and how can your business model provide a similar value? Imagine your business as a multi-million dollar enterprise. How could you redefine your offering so that it emulates or improves on an already successful one? This could involve changing the pricing, marketing or finding a critical feature that could catapult your startup to success.
- Meet with customers
Try to have one-to-one interviews with customers as well as potential customers to find out how you can improve your offering. Sometimes just asking the right questions and forgetting what you think the answers should be can be enough to get your company back on track. Customer feedback can also help to perfect your pricing strategy. You may be nervous of overvaluing products or services and in this way risking buyer exclusion or even undervaluation and getting killed on margins. Their input here can guide you on the road to success. Once youíve established your pricing strategy, itís essential to stay focused as this is a critical success factor. So whether your pricing is based on targeting high ticket big fish or getting a large quantity of customers at more affordable prices, itís important that you stick to it.
- Trim the fat
Reducing costs drastically is the traditional approach to business distress that seems to work in most situations. This is the time when you should try to secure repeat business and stick to your core strengths, rather than expanding into new markets. Non-performing assets should be liquidated and capital expenditure should be reduced and operation expenses cut by making a list and deleting what you donít need. This is a tried-and-tested top tip that can buy you time so that you can fix the businessí problems. Additionally, think about which employees you could let go without damaging your business. This isnít easy, but it will save you money at this tough time. Nobody likes to let people go, but to enable the business to survive, you have to hold on to the people who are bringing in, making or servicing sales.
- Stay focused
Finally, when your company is in trouble, attitude is everything. Itís only natural to let feelings of failure, anger and embarrassment dominate valuable thinking time that could be better spent on moving your company forwards in a new direction. During these challenging times, try to channel all your energy into doing whatever it takes to succeed and to lead your team by example. Timing is everything and you canít afford to waste precious time on thoughts that donít serve the end purpose of business improvement and success.
By Simon Renshaw, Director at AABRS (http://www.aabrs.com/)
Article Submitted On: November 13, 2017