How to Revive Your Business's Profitability
Bankruptcy is one of the worst fears that small business owners have to deal with. The enthusiasm with which you started your business eventually dims and may even disappear when you find your business crumbling. When sales are dwindling and you are deep in debt, desperation may push you to make a few not-so-wise decisions. And then, you may be left wondering if you should just shut up shop.
If giving up is not an option, propelling your business back to making profits is possible.
Start With the Problem
Identifying the problem is the first step to finding a solution. There are several factors that can affect business performance. Competition from a well-known brand with a strong footing in the market could be the issue. Or, you may not have modified your business offering to adapt to a changing market or your customers. Look at your performance objectively, and think about how the business was run when it was profitable. Make a note of subsequent changes and list the factors that could have led to your current situation.
Once you have a clear idea about the problem, planning for your business's revival becomes easier.
Refresh Your Marketing Strategy
Decide if your marketing plans are appropriate for the market conditions and the lifestyles and culture of your target market. If your product or service is for a niche audience, create a marketing campaign that focuses solely on them.
Talk to your customers directly or through social media platforms and obtain feedback about your products. Ask them for suggestions and see how you can incorporate them in your marketing plans and improve your sales. If there has been a change in customer preferences and needs, modify your products or services to suit them. This can help you to recapture lost customers.
Think of new ways to reach out to your customers. In the internet age when a large proportion of the population spends time online, placing newspaper ads won’t help. Look at online marketing methods like email marketing and social media marketing, which are cheap and effective.
Seek Help Outside Your Business
When your analysis fails to provide the reasons for failure, talking to people outside the business can help. Besides communicating with your customers, talk to your association members, accountants, marketing specialists and other industry experts. This will help you approach your problem objectively, in order to increase your customer base, retain existing customers, decrease costs and improve your sales.
When sales are down and debts are increasing, look at ways to decrease your existing costs. To cut costs, one of the first things that business owners tend to do is slash their team. While it may seem like the best way to reduce expenses, layoffs can have a negative affect on the performance of your business and restrain growth.
Before downsizing on personnel, look at other areas where you can reduce costs. Cut down the expenditure in non-productive areas and spend more where there are returns. For example, if you are spending a certain amount on making an unpopular product, stop offering it.
Consider slightly increase the prices of products that your high volume products. If the product is popular among your customers, they wouldn’t mind a small increase. This not only brings down the expenditure on the raw materials, but also improves your returns.
Altering the Business Model
Even businesses that have operated successfully for a long time can become unprofitable because of their outdated business models. While changing the model completely may not be easy, putting in the effort can save you from shutting down. Changing the business model may not necessarily mean changing your products or services. You may need to modify your products slightly, but the major focus would be on approaching your marketing, packaging, pricing and delivery practices differently.