Running a small businesses comes with more than its share of ups and downs. But while many take growth and expansion for granted, difficult times can hit businesses particularly hard. There’s so much mental fortitude and belief in one’s own capabilities that is needed to gather your wits and work hard enough to succeed against overwhelming odds. Many small businesses have known what it’s like to face tough times, too, but the possibility of working your way back to the winning side is always there with the right tools.
Breathe Deep
When sales are down and cash flow is tight, the pressure on small business owners to do something can mount quickly. However, it is crucial to take the time you need to plan your turnaround strategy. Investing rashly in a “hail Mary” idea simply adds additional risk to your business plan. Take the time to contact trusted friends, advisors, and to do the difficult (but necessary) work of pinning down what’s been going wrong, and why. Only then, decide your next course of action.
Turnaround Tactics: Pivots, Pricing, and Pinpointing
There are many different ways to pick a business up and make a turn for the better. No one strategy is guaranteed to work for any specific business. However, most businesses will attempt one of three major strategic adjustments:
Pricing
Not every business setback needs to be met with a total reinvention or “pivot” of your business plan. However cathartic starting in a new direction might feel, it is possible to bring an existing business back to profitability by starting with the numbers; looking carefully at your balance sheets and the flow of cash in and out of the business, and adjusting your pricing model and cost management. If you decide to start your business comeback along this path, it can be invaluable to pair your efforts with those of any advisors or mentors you may be in contact with. It’s also an opportunity to reach out to your customers to understand what kinds of ideas they would like to see you implement.
Consider if dynamic pricing (pricing that fluctuates based on demand or season) may be a right choice for your businesses. Test out price adjustments (increase or decrease) and see what the results are. You can also try repackaging or adjusting your offerings to account for higher overhead costs on your part, or increasing the value of individual orders by grouping services or products together. Take the opportunity to test various new approaches, tweaking subtly until you find the one that results in the best improvement in revenue.
Pivots
Occasionally, the model by which you’re doing business can itself be due for some type of revision. Many businesses who struggled in the wake of the 2008 recession, for example, found footing in the e-commerce marketplace and were able to rebound successfully. Some small businesses have built their comebacks on the transition to new or unexplored markets, by investing in new distribution, or by shifting to innovative models such as on-demand and subscription services.
During the pandemic, some businesses closed their physical locations all together, or shifted to new models such as pick-up or delivery. Others adjust their offerings to account for changing consumer demand such as at-home activities, boxes, or subscription services. Invest time in understanding your customers’ habits and preferences in order to come up with new enticing offerings.
Pinpointing
Perhaps you’re deeply committed to your product and your process, but your business has had difficulty reaching the right people or standing out in the crowd. What makes your business unique? Capitalize on it: narrow your focus on what you’re doing best and pinpoint what differentiates you, while cutting out the cruft that is impacting your cash flow. It’s not possible for any business to be all things to all customers. Making a big impact on a small slice of the market might be the best way for your business to stage its comeback.
Financial Support
Employing any of the above strategies – in any combination, or individually – is tough to manage, especially if your goal is to remain open for business during the course of your efforts to bounce back into profitability and success, as opposed to taking some time off to re-tool and revise. Financial support from major institutions can be hard to come by in these situations, and no business owner wants to have to balance the need to invest in new ideas with the need to keep day to day operations moving, bills current, and obligations met. Merchant Growth was created to help in situations exactly like these. We can put some extra bounce in your rebound: learn more about how we can help.
