How to handle business failure
No one really prayed that their business should shut down but things happen even when we don’t plan it.
Building a business from the scratch is hard and stressful not to mention the capital that was invested in it and to everyone that invests in a business, they expect profit in return but what if the business later didn’t turn out the way we hoped for?
That is why we will be enlightening ourselves on how to handle business failure following the below outline.
- Causes of business failure
- How to handle business failure
- How to avoid business failure
CAUSES OF BUSINESS FAILURE
There are so many reasons that may result in business failure in this century we are in, most of them can be our fault while some are things we don’t really have control over and the list is as follow.
1. Inadequate planning – it has been said so many times that he who fails to plan has already planned to fail but I think a little readjustment should be made to that saying because planning isn’t enough these days but adequate planning is so important. We have heard of great people who used 5year and even more to plan a business and when they finally start the business, they are so much happy they took that time to do the planning because it is actually worth it.
Taking your time to start a business is a thing you should consider because it’s not about how early you start it but how well planned the business was established considering various factor which includes location, team, targeted customer, and many other factors.
2. Venturing into a business that isn’t solving a solution – in all the business-related content I’ve written or read, we are always told to check out the need of our society before venturing into any business that has been working so well for people who followed those rules. Starting a business that solves the problem of your society is a better way of approaching a business because it provides readymade customers that will drive customers to your newly established business. Venturing into a business that isn’t solving any problem is a quick way to fail because you will have to strive and struggle for customers.
3. Insufficient advertisement – Advertisement is very important and necessary especially for newly established businesses. It creates awareness for your business. This however may not bring immediate results because people will have to adjust to the product you produce before patronizing you but the advertisement is so much important and it should be nonstop because there are always new customers who haven’t made up their mind to know if they will be patronizing you or not. Insufficient advertisement is one of the causes of business failure.
4. Poor management – This is one of the most common reasons why a business fails. Poor management is a quick and straightway downfall for businesses and this starts from the inability to control workers, poor fund management, bad customer care, and indiscipline.
These are some forms of poor management we can mention and they are contributing badly to the detriment of businesses.
5. Focusing on some set of customers – This is one of the causes of business failure that we don’t pay much attention to.
We tend to focus so much on customers that buy more neglecting those that buy little of ones in a while and this isn’t the strategy of a business.
This has really affected some business because the neglected customers know they don’t really matter to them and whenever the main customer changes or refuse to buy from them for a short period, the sale drop so drastically.
The survival of your business shouldn’t rest on the shoulders of some set of people, that’s a quick and fast way to fall.
HOW TO HANDLE BUSINESS FAILURE
Has stated in the introduction, no one really prayed that their business should fail but if it does, what is the way forward?
1. Accept what has happened
We know it is not what you want or what is good but you will have to accept the fact that the business failed and you lose a lot of money, your strength, and time.
Accepting what has happened doesn’t mean you let the sadness weigh you down. Accepting what has happened means you don’t blame anyone for the failure but you see it has a new opportunity to develop something nicer than that.
2. Avoid Emotional Decision-Making
Making decisions based on emotions is one of the reasons behind a business failure. It may be easier said than done, especially when you are in a moment of rage or sadness.
That said, taking a few moments to collect yourself and become rational again is paramount to ensure you overcome the hurdles and barriers.
Go for a walk, grab a coffee or just take a deep breath – this is the entrepreneurial mindset you need to maintain during the bear and bull markets of your business cycle.
3. Note your mistakes
Only a fool falls without checking out what made his stumbles. You should note what really caused the failure.
Maybe it is part of the things listed above or not. Study your mistakes or the set of people who aid your failure. Check out the structure of your business and find out the hole where the failure came in.
4. Surround Yourself with the Right People
It is said that you are the company you keep, suggesting that if you surround yourself with the wrong type of people – morose, procrastinators, ignorant or lazy – then you will adopt their characteristics. There is some truth to that, particularly when you are running a company.
Imagine having someone in your office who shrugs about everything and says no to everyone.
This toxic behavior can significantly affect your business’s performance.
5. Revisit your plan
Sometimes, the failure of a business is so glaring and obvious in some business plans but the happiness of owning a business has engulfed the owner to the extent that he or she couldn’t notice the flaws in their plans until the business falls.
Now the business has fallen, try and revisit the business plan to figure out the error that lies within it.
6. Be SMART
Just how SMART is your company? This analysis can quickly revive your operations by quantifying the aims of your firm, enabling your organization to possess an articulated objective with all parties. You may be wondering by now what SMART is:
Specific: Your goal is quite elementary, my dear Watson. It is simple, precise, and unambiguous for all stakeholders.
Measurable: Your objective is easy to measure and assess your progress, allowing you to determine if you are on the right track.
Attainable: Your aim is realistic and achievable. If it is a pie-in-the-sky dream, you set yourself up for failure.
Relevant: Your target matters and relates to the entire firm, not just a select few (or none at all).
Time-bound: When do you wish to achieve your goal? The answer to that question can matter significantly because the timeline can affect your solutions and options. Six weeks or six months – your practices can vary by the calendar.
Do you feel SMART enough yet?
Failures bound to happen to the first failure shouldn’t stop you from trying again. Now that you have seen the flaws in your business plans, restructure the plan and restrategize it.
Fix up anything that needs to be fixed and tear off anything that needs to be removed.
This isn’t quite a hard thing to do but you really need to check out the plan and be sure it’s accurate and good this time around to avoid another failure.
Yes, a business can experience as much as a possible failure if they don’t realize their problem on time.
Doing a good job of planning so well will save you from another failure.
HOW TO AVOID BUSINESS FAILURE
However, there are a few things I will recommend you look more into as you restructure your failed business plans:
1. The location of your business – The location really says a lot about the sales of your business. It’s always advisable that you situate your business close to your market.
The market doesn’t really mean our big normal general market but it means nearness to your targeted audience.
Your customers that has an interest in what you do but the question now is how to know our market before starting the business and that will take me to the second point.
2. The need and the problem your business solves – This is the major determinant of how vast and big your business will grow. Businesses established based on people’s needs are always successful because they have ready-made customers even before starting.
For instance, let’s say you reside in an environment that doesn’t really have a good road and people find it hard to travel to the nearest market to get their day to day needs, you can represent a market in that area by establishing a business that will make sure goods are brought from wherever they are made right to that environment and since people are already in need of those good, you have your customers even before starting at all.
3. Your management – Starting again requires you to check out your management and ensure that there is orderliness, discipline, and maximum adequate disbursement of funds.
4. Hire a Business Advisor
One of the causes of a failing business is that too many owners are stubborn and refuse to adapt or even take responsibility.
We get it. You have put your blood, sweat, and tears into your company, and you don’t want to be told that a lot of what you did was wrong.
Whether you are just starting out or you have been an entrepreneur for a few years, hiring a business advisor can be one of the best investment decisions you will ever make.
Since a business advisor is a successful entrepreneur with a knack for the corporate world and the marketplace, you can pick their brain about what went wrong, what you can do to move forward, and how you can achieve success.
5. Manage Cash Flow During Downturn
During any hiccup, you must count your pennies. Without consistent cash flow, your firm could succumb to the basic laws of finance.
If you don’t have money coming in, it will be hard to keep your doors open. Until that dire day, there are several ways to attain a regular injection of cash:
Send out invoices on time to ensure you are promptly paid.
Contact clients that are in arrears and that have been bucking you for weeks.
Accept deposit payments in advance.
If applicable, use accounts receivable financing service to add the balance of money to your coffers.
Refrain from falling behind on your own bills to avoid additional expenses.
Even if some of the invoices seem inconsequential, there is an old saying that says follow the pennies and the dollars will follow
6. You can switch business – This is one of the hardest things people don’t love hearing but that’s just one of the things you should consider.
Many failed because they entered a business they don’t really have the ability and passion to run. Starting a business must come with conviction from your heart because there are some times that people won’t be available to motivate you but If you are convinced before starting, you will find the zeal in yourself to continue.
These are the things you can do whenever you are facing failure. Sometimes, failure is inevitable if you want to grow but learning how to handle it is a very important thing to learn.