Let's say you've been working on expanding your company all by yourself. If this is the case, it is easy for discouragement to knock you off your feet and cause you to doubt if you should be giving up on your business. You may even question whether or not it is really feasible to realise your ambition.
If you are experiencing terror at your company due to this situation, you are not alone. I, along with many of other businesspeople who are now successful, can empathise with your predicament.
When it comes to what causes a company to fail, it’s usually a combination of various circumstances, which might change depending on the sector in which the company operates. Most of the time, it’s a confluence of factors, including challenging economic conditions, trouble gaining access to capital, and an inability to adapt to an ever-shifting industry.
Businesses in the retail industry are currently suffering pressure on two levels. First, there is pressure on income caused by growing rent prices. Second, there is pressure caused by the increase of internet shopping.
A certain amount of weakness exists in particular industries, and there is also the development of technology that is pushing online sales in international markets. This has affected the market, and the businesses that have lost market share are the ones that have not adapted to the technical requirements of society.
“In addition, there are pressures on the cost level, which come in the form of rental commitments and personnel expenditures. However, certain localities exist where tenants may negotiate with their landlords for lower monthly rent payments. Whether or not this is possible for you highly depends on who you are.”
According to Rambaldi, it is quite improbable that you would be eligible for rental relief if your company is located in a retail centre that has a high occupancy rate, particularly in Melbourne.
In the automotive and industrial industries, the insolvencies are being driven by high-cost bases as well as difficulties in breaking into export markets.
According to Byrnes, “we always urge enterprises in these areas to have an export arm in addition to a local market,” but due to the high value of the Australian dollar, exporting has become challenging.
How did you get to the conclusion that the prices that you would charge for the goods or services that you provide are appropriate? When determining their prices, many owners of businesses make the common mistake of basing them only on what their rivals are charging or on what they “feel” is appropriate. This is a common mistake. This strategy is not practical because the prices you set for your products and services should take into account the resources and labour required to turn a profit for your company.
In order to accomplish this goal, you will need to have an accurate image of the costs that your company incurred, the amount of tax liability you face, the amount of debt that your company is presently carrying, and the amount of money that you anticipate to take home as paycheck each month.
By applying this incredibly straightforward calculation, which is as follows, you should be able to acquire a reasonable indicator of what your yearly revenue goal ought to be.
(Business Expenses Plus Desired Salary) / (1-Tax Liability Percentage Expressed as a Decimal) = Minimum Gross Revenue
Expenses incurred by a company include items like software subscriptions, payments made to contractors, payments made to employees, and payments made to interest on loans.
Your desired wage is the annual amount of money that you want to be paid by the company to yourself as compensation for your work there. Be conscious of the fact, however, that it is common practise for business owners to postpone paying themselves any money while the company is still in its early stages. The founder of the Boost Juice chain of juice bars in Australia, Janine Allis, did not start receiving a salary from the firm until three years after it had been formed; this was the time during which she was also responsible for building the chain.
When written as a decimal, the term “tax obligation percentage” refers to the proportion of your company’s gross income that will be appropriated for tax payments. In order for the formula to be accurate, this value must be expressed as a decimal. Therefore, if you are aware that your taxes take up about 30 percent of your total revenue, you will need to enter 0.3 into the formula. Then deduct that number from 1. Therefore, the formula that you just read requires you to enter.7 for the divisor.
It is in your best interest to discuss this matter with your accountant, given the wide variety of factors that go into determining a company’s tax liability.
This could be a problem with two facets: either your product isn’t viable because it’s too expensive to produce (in which case, you’ll need to reconsider your pricing strategy), or your product isn’t viable because no one wants to buy it. In either case, you’ll need to reevaluate your pricing strategy (in which case, you should think about validating your business idea with a straightforward “smoke test”).
Other than closing down your existing firm, your best choice is to pivot if your company is not generating a profit no matter how the pricing is structured and/or if you can validate a superior business plan.
If you are in the position to try out fresh concepts for your company, pivoting might also be a useful choice. YouTube, Twitter, and Instagram are just a few examples of firms that started out with one business idea but then shifted their focus to pursue other opportunities and became quite successful.
Let’s say you’ve managed to build up a customer base for your offering, but you’ve noticed that your business isn’t doing very well because those customers aren’t buying anything. In that instance, you may make the most of the circumstance by creating a product that is tailored to the requirements of the people who will be purchasing it.
As you can see, once you have amassed a sizable following, it is possible to reverse your strategy and create a product that is specifically catered to the needs of your engaged audience.
If you have launched a business selling financial coaching services for stressed-out creative entrepreneurs, but then you discovered from your audience that they need someone to get their bookkeeping set up and organised, you might want to consider selling bookkeeping services instead of the financial coaching services you were offering.
You may have developed a fantastic product, but it appears that not a lot of people are acquiring it. Are you fantastic at what you do, but for some reason you just can’t manage to convert potential clients into paying customers? Do you deal with a lot of customers who are difficult to collaborate with or clients who are dissatisfied with the services you provide? There is a chance, my dear friend, that you are not attracting the kind of consumers that would be most beneficial to your business.
If the incorrect type of consumers is being drawn to your company or your company isn’t attracting any customers, I’m sorry, you’ll need to go back to the drawing board. You need to take another look at your ideal consumer. Have you never made one? So, therein lies your predicament!
A buyer persona can also be referred to as an ideal customer, which is another name for a customer avatar. A customer avatar is yet another name for a buyer persona. I don’t care for the term “customer avatar” since it makes the concept sound more like a character from a video game, when in reality, your customer avatar should be a real person. The phrase “client avatar” is the one I like to use.
This is the practice I recommend the most to those having trouble identifying their target clientele: Consider the existing customers or clients who adore your company’s offering and learn from them. One method for locating them is to investigate the individuals on social media who are complimentary of your company. Conduct a simple search on Twitter to find users who have referenced the handle of your company.
That is the person who sent you emails expressing gratitude for your work? Conduct a search in your inbox. These people should be considered your ideal consumers. Find out more information about them. Conduct interviews with the customers. You will get a deeper understanding of the factors that influence people’s decisions to patronise your company, the factors that contribute to their satisfaction with the product you offer, and the ways in which you can enhance your offering to provide superior customer service.
Your ideal customer, or customer avatar, should be the driving force behind all of your marketing communications. If you don’t have one, you’ll wind up attempting to please everyone, which will lead to no one being interested in you. This is because you won’t be able to narrow your focus.
It was once said by a wise person that “What gets measured gets controlled,” and this adage is still applicable in today’s world. You can never have a good grasp on the financial aspects of your company if you are unaware of the amounts of money that are leaving and entering your firm and if you do not know how much money is flowing into your organisation.
It is important to keep in mind that cash flow and profit are not the same things: While cash flow indicates the amount of money that enters and leaves your firm on a monthly basis, profit accounts for all income produced, regardless of whether or not it was received during that month. Cash flow shows the amount of money that enters and leaves your company on a monthly basis. When determining the long-term viability of your business, one of the most essential considerations you should make is, without a doubt, whether or not your firm is generating a profit. Having said that, a solid positive cash flow is what guarantees that the company will continue to operate properly on a day-to-day basis.
It’s possible to have a positive income but a negative cash flow, or the other way around. The proprietor of any service-based creative organisation needs to place a high priority on quickly comprehending the relevance of this differentiation in order to achieve their primary goal. If I operate a design company and we had recently got a $20,000 contract to construct a website for a client, I might require that they pay me half of the total sum up front before I begin working on the project. This would be because I want to ensure that I have enough funds to complete the job. After the completion of the project, which would take place two months later, the second half of the payment would become due. This month could be a good one for my income, but it could be a bad month for my cash flow. This is due to the fact that although though I made $20,000 this month, I was only paid $10,000 (and the remaining $10,000 won’t touch my bank account until two months from now, when I invoice my client for the remaining fifty percent of the total amount).
Knowing both your cash flow and your income is excellent since you want to know if you’ll be able to pay the bills and your staff this month (cash flow statement), but you also need to know if your company will be able to survive in the long run (income statement).
In order to simplify the process of generating reports, you should have your accountant prepare a cash flow statement, and an income statement, also referred to as a profit-and-loss statement.
Ignoring the issues will not cause them to disappear on their own. In order to keep track of your progress, you have to confront them straight on. Make it a habit to review and revise your company’s income and cash flow statement on the first Monday of every week. In order to have peace of mind regarding the state of your company’s finances, you need to have a weekly snapshot of them.
Your health deteriorating is just another indication that the business you’re running is not successful. Even if you run the most successful company in the world, if your health continues to deteriorate, it is unlikely that your success will be sustained for very long.
It is impossible to keep burning the candle at both ends in the long run. Neither working till you are exhausted nor not taking breaks is a good idea. If you don’t have your health, you don’t have anything else.
Another indicator that something is not functioning properly is that there are no days off. Although keeping yourself busy is not in and of itself a bad thing, there will come a time when you need to stop and focus on yourself.
Everyone requires downtime to rest and refuel their batteries. You should also schedule regular get-togethers, both immediate and extended, with your loved ones.
The alternative has the potential to cause strained relationships between spouses, partners, and other members of the family. On top of that, you risk missing out on significant events and occurrences that only occur once in a lifetime.
Here are a few ways to help turn around a failing business and help you implement them before it’s too late.
Many proprietors of businesses actively seek constructive criticism from their clientele. You should also build a way to collect critical feedback for your company. When things don’t go as planned, this is typically the point at which you may discover a significant portion of the “why” behind what happened.
The owners of businesses frequently have trouble separating themselves from the firms they run. You are not your business. The sooner you accept this, the easier it will be for you to maintain your objectivity and keep your head in the game.
Some enterprises collapse owing to irresponsible owners. Simply because your name is on the papers does not mean that you are entitled to a cut of the earnings. Come to an agreement on doing a wage review for both yourself and your team members to decide what is feasible at this time.
It would help if you also were willing to probe for further information. You are not the first individual to go through this stage of business; there have been others before you. I sought the counsel of a colleague who, in the eyes of some, would have been regarded as having less expertise or less clout when my second firm was failing. Nevertheless, the success of that objective activity was directly responsible for the rescue of my business. Make contact. Engage the services of a seasoned specialist in the field of business consulting if necessary.
You are not an island, and even with regard to your venture, you do not have access to all of the business information in the world. Keep an open mind to fresh concepts. It’s possible they’re excellent, but achieving success in life requires more than that. It’s possible that when you apply your brilliant ideas in the real world, you’ll find that they don’t always work.
The term “pivoting” is deceptively straightforward and may have a variety of connotations depending on the type of company being discussed. Altering your business model may be necessary for some, while for others, it may entail shifting to a whole new sector or shifting who you want to market your product or service to may be necessary. You could have believed that your product would sell well with people who play acoustic guitar, but in reality, it might sell better with those who play the piano.
It’s possible that you’ll need to market a completely different product. It is possible that the proprietors of the businesses in question did not adequately validate their business concepts or goods prior to the debut of their companies.
You need to perform an in-depth analysis of what aspects are successful and what aspects are not, and you should consider whether or not to make significant adjustments.
In the instance of Wrigley’s Gum, the decision to pivot was prompted by requests from customers. They may be known for selling gum now, but that wasn’t their first business.
Your team has made significant contributions that have gotten your company to this crucial point in the process. It is more important than ever before that you learn how to turn your workforce into an asset. It’s conceivable that your workers don’t fully grasp either the business strategy you use or the nature of the company itself. Some people may be only there for the salary. This is not beneficial to the success of any company.
Nothing is more beneficial to a company’s growth than having a focused team whose employees are fully invested in its success. Your staff members need to have the mindset that they are active contributors to the company and devoted stakeholders. By extension, your executives must become expert salesmen.
According to a well-known proverb, two people are preferable to one since the payoff for their combined efforts is greater. You will be astounded by the miracles a focused group of people can accomplish.
Instead of trying to market what you want to sell, focus on what your consumers want. Keep in mind that your company exists to provide services that are meaningful to your customers. Demand and supply will always be the central focus of economic analysis. Understanding your clientele and catering to their requirements are essential to the continuation of your company.
Make ensuring the happiness of your customers a top concern. Invest in a market survey that is both exhaustive and comprehensive. Get your consumers involved so you can figure out what it is they really want from your company. Then adjust your product model and marketing strategy to satisfy their requirements.
Existing clients alone won’t be enough to keep your company afloat in the long run. You will need to acquire new customers if you want your income to increase. Investing in low-cost advertising strategies is a smart way to raise brand recognition for your goods. If necessary, engage in one-on-one conversation with individuals; depending on the nature of your business, this may be something you should be doing anyway.
Should today be the day when your firm is not successful, your company’s assets can be the only solace you have left. Your company’s assets are designed to make money for the company, which shouldn’t alter even when things aren’t going well. The funds you may make by investing in these assets could very well be the saving grace you require to stay afloat.
Outbuildings and essential pieces of machinery might be leased for a hefty monthly payment. At this juncture, you will have want to sell, but you shouldn’t make a choice about it in a rash manner. Instead, give careful consideration to your options. You run the risk of suffering significant losses, and there is no shortage of those who are just ready to make money off of such an expensive error.
And remember, as entrepreneurs, we are risk-takers. We are aware that to produce money, we have to spend money, and there is a possibility that the worry will always be there that we do not have sufficient financial cushioning. To some extent, this is the price that we must pay to live a life that is both free and meaningful.
It is imperative that you take preventative measures when you are aware that your company is in its dying stages. Do not assume an inactive stance and wait for things to occur before taking action. It is important to take measures that are not just preventative (so that the situation does not become any worse) but also correct the apparent issues.
When an entrepreneur is successful in improving the situation of anything, there is no greater sense of accomplishment that they can have. Failure of a firm is one of the numerous obstacles that every entrepreneur must overcome. Even if your business is unsuccessful despite all of your efforts, try to look at the situation as a learning lesson. Many businesspeople who came before you tried their hand at entrepreneurship, and many of them failed several times before having their most significant break. There is just a requirement for you to be correct once.
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