Is business in a bad way?
Is there a need for a business renewal, restructure, or perhaps some re-energising?
Although at times it may seem impossible, turning business around can be done. It just needs a commitment to first assessing why the business is failing and then taking the right steps to correct these issues. Below is a suggested list of why business may be failing along with a simple planning method to help turn things around.
Why Businesses Fail
There are many reasons why businesses fail and sometimes these reasons may not be clear. While the failure rate can vary by industry there does tend to be some common reasons for failure that consistently appear. These are listed below:
- Poor cash-flow management skills, or lack of understanding of cash-flow
- Beginning a business with too little money
- Not doing sufficient research on the business before commencement, or lack of a well-developed business plan
- Not setting pricing correctly
- Being too optimistic about achievable sales
- Not seeing the importance of promoting and marketing the business adequately
- Not being able to delegate appropriately – a good leader knows how to delegate!
- Hiring friends and/or relatives with no specific knowledge or skills
- Ignoring or not understanding the competition
- Too much reliance and focus on one client or customer
Although there may be others, the above list contains most of the common reasons why businesses fail. If business is struggling, then careful consideration of this list will provide some valuable insight into why this is happening. With an understanding of why the business is underperforming, the next step is to devise a business turnaround plan.
The Business Turnaround Plan
The overall goal of the turnaround plan is to return an under-performing or distressed company to normal, in the form of satisfactory stages of solvency, cost-effectiveness, liquidity and cash-flow.