While businesses fail for a variety of reasons, there are some things business owners can do to rescue a company from closure. According to the U.S. Small Business Administration, roughly 50 percent of small businesses fail within the first five years. Many failures are preventable, and there are ways business owners can try to turn things around at the last minute.
Market the most profitable products. This does not necessarily mean the products that are the best-sellers. For instance, if you sell 1,000 units of Product A per month and 200 units of Product B per month, then Product A is the best-seller. However, if you profit $10 per unit of Product A and $300 per unit for product B, your monthly revenue from Product A is $10,000 while it's $60,000 from Product B. Because Product B brings in the most revenue per item, you should focus marketing efforts on this product to jump-start sales.
Determine if products need adjustments. Conduct a survey or ask for testimonials from customers to find out if your products need improvements. Your products may be becoming obsolete due to a competitor, breaks after a few uses or they are no longer in demand. Use the information collected to come out with a new version, or develop a new product altogether.
Analyze business processes to reduce costs. See that the business is running efficiently and making the most of its resources. This can be done by making sure that the business does not order too much inventory at once, the cost of holding inventory and shipping is optimized and communications between departments is efficient.
Negotiate contracts or costs with vendors. Talk to vendors about reducing what they charge you for their services or products. For example, if you have been using the same hosting company, payment processor or supplier for several years, it may work out a deal with you so you will continue working with it in the future. Pay your bills on time with all vendors so they are more willing to work with you.
Evaluate the performance of employees. Find out if employees are working efficiently and performing their jobs competently. Even if you do not plan on laying off anyone, doing this evaluation can identify the weaknesses of particular employees. Meet with them and find out what can be done to improve their performance. Terminating employees should be a worse-case scenario, as it can hurt morale and motivation for those who are staying and reduce productivity instead of increasing it.
Return to your core competencies. Some businesses fail because they over-extend their businesses into many different areas. For instance, if your business was successful in selling camera equipment but in recent years you have added on picture frames, travel bags, briefcases and other products, return to selling camera equipment and promote your expertise in this one area. This is where you should “trim the fat” and go back to your business’s original mission and values.
Revise the marketing strategy. When businesses start to fail, they tend to reduce their marketing budget and focus only on costs. This is a mistake, as marketing is needed to attract more people to your business during this difficult time. Not all marketing efforts must cost money, as businesses can take advantage of social media sites such as Facebook, Twitter, YouTube and MySpace to get their messages across to the target audience. You can take out your home video recorder, bring it to the office and have employees come up with something brilliant to go viral on the Internet and bring people to you. This bit of fun can bring employees together and energize your workforce; plus, it is a free marketing tactic to get your message out there.
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