My-business-is-failing-How-can-I-save-it-in-Birmingham

Common reasons small businesses fail

Upon closer examination, the ominous foreshadowing of a failing business often manifests in subtle indicators months before the actual downfall. Recognizable signs include stunted business growth, inadequate cash flow management, and a conspicuous dearth of innovation or distinctiveness.

According to CB Insights, the leading culprits behind startup failures can be distilled into the following four categories:

  1. Exhausted financial resources (38%)
  2. Absence of market demand (35%)
  3. Overpowered by competitors (20%)
  4. Fundamentally flawed business model (19%)


These statistics underscore the critical importance of proactive measures and strategic adjustments in averting the impending demise of ventures.


How to save a failing business in 10 steps

1. Adjust your mindset

Unlocking success isn’t shrouded in mystery; rather, it’s an amalgamation of various factors that propel both you and your business towards triumph. Undoubtedly, hard work and unwavering dedication play crucial roles, but the path to success extends beyond the confines of relentless hustle.

One transformative element lies in cultivating a positive growth mindset, a concept that may seem esoteric but is firmly grounded in neuroscientific research. This mindset hinges on the belief that intelligence is malleable and can be enhanced over time. Those embracing a growth mindset view setbacks not as stumbling blocks but as stepping stones in the learning journey, fostering increased motivation and resilience.

To nurture a growth mindset:

  1. Learn from Mistakes: In the entrepreneurial landscape, setbacks are inevitable. Acknowledge failures, learn from them, and view them as integral lessons shaping your business trajectory. Every loss becomes a valuable step towards eventual success.

  2. Stay Flexible: Plans seldom unfold seamlessly. The ability to adapt and adjust in the face of unforeseen challenges is paramount. Embrace flexibility to overcome disruptions and navigate the twists and turns on your entrepreneurial path.

  3. Inspire Yourself: Amidst the tumult of business challenges, carve out time for self-reflection and rejuvenation. Working tirelessly during rough patches may seem commendable, but self-care is equally vital. Recharge your mental batteries, for a burnt-out mind is seldom a productive one.


While hard work undeniably propels success, maintaining a resilient and contented mindset is equally pivotal. Incorporate these strategies to cultivate a balanced mental outlook, ensuring you not only endure tough times but emerge stronger on the journey toward your goals.

 

2. Set goals

With your mindset aligned for success, it’s time to embark on the journey of business transformation. A crucial compass on this path is goal-setting—a powerful tool that not only directs your focus but also sustains momentum, providing a beacon of hope when everything seems to be unraveling.

The correlation between goal-setting and elevated motivation, self-esteem, and self-confidence has been well-established through research. Moreover, it serves as a linchpin in the journey towards success.

Begin with small, manageable goals. The key is not to overwhelm yourself with grandiose objectives that may lead to disappointment. Instead, focus on setting frequent, smaller goals and celebrate each accomplishment. Create a roadmap of mini-goals that collectively pave the way toward achieving a larger objective.

For instance, envision a grand goal of acquiring 200 subscribers for your email marketing list. Break it down into achievable steps:

  1. Sign up for free email marketing software.
  2. Create a compelling landing page for email list sign-ups.
  3. Develop an engaging email campaign.
  4. Promote the email list on your website and across social media platforms.


If you’re still in the process of crafting a foolproof system for goal-setting, equip yourself with valuable insights by exploring “18 Essential Goal-Setting Tools for Entrepreneurs (2023).” These tools will serve as your arsenal in the pursuit of turning aspirations into tangible achievements.

 

3. Learn why customers are leaving

Customer exploration across various businesses is a norm, but when negative feedback becomes a recurring theme, it’s imperative to delve into the root causes. Unraveling the reasons behind customer departure is an essential step in fortifying your business against potential pitfalls.

Pinpoint the specific factors that might be driving customers away, including:

  1. Subpar Customer Service: A less-than-stellar customer service experience can be a significant deterrent.

  2. Unmet Product Expectations: If your product fails to live up to expectations, it could lead to customer dissatisfaction.

  3. Failure to Demonstrate Value: Convincing customers of the value your offerings bring to the table is pivotal for retaining their interest.

  4. Aggressive Sales Tactics: Pushing too hard on sales may alienate potential customers rather than win them over.


Establishing a robust feedback system with your existing customer base is crucial. Utilize tools such as UserLoop or Fuzzy Surveys to seamlessly collect insights and truly understand customer sentiments. The data garnered from these platforms will not only illuminate areas for improvement but also empower you to shape better products and refine marketing strategies, ultimately boosting sales and fostering customer loyalty.

 

4. Understand your target audience

A target audience constitutes the specific demographic towards which your marketing and advertising initiatives are directed. Understanding and defining your target market is pivotal, as it facilitates the identification of potential customers, leading to increased qualified leads and heightened sales on your website.

SUGAR, a cosmetics brand, exemplifies the significance of honing in on a target audience. Founder Vineeta Singh recounts the brand’s three-year journey to pinpoint its ideal customer base in a Shopify Masters podcast episode. SUGAR recognized a gap in the market for millennial women in metropolitan areas who struggled to find the perfect nude or red lipstick catering to deeper Indian skin tones.

The identified characteristics of SUGAR’s target audience included:

  1. Indian women aged 20 to 27
  2. Residents of metropolitan areas
  3. High consumers of digital content
  4. Inspired by global trends
  5. Seek trends tailored to Indian preferences


This insightful understanding led to the creation of SUGAR’s bestselling product: long-lasting liquid lipsticks tailored for the brand’s target audience, particularly suited for India’s hot and humid climate.

The strategic alignment with its audience propelled SUGAR from a single e-commerce store to a remarkable 10,000 retail touchpoints, establishing itself as a disruptor in the industry and securing over $21 million in Series C funding.

For businesses seeking to find their ideal customer base swiftly, invaluable insights and strategies can be gleaned from “Finding Your Ideal Customer: How to Define and Reach Your Target Audience.” This resource is a compass to navigate the path towards identifying and connecting with the right customers effectively.

 

5. Perform a SWOT analysis

For a small business grappling with challenges, this is the opportune moment to step back and gain a comprehensive perspective on its operations. Enter the SWOT analysis, a strategic tool that evaluates Strengths, Weaknesses, Opportunities, and Threats, offering a holistic view of the business landscape.

The SWOT analysis encourages a multifaceted examination of the business, shedding light on its internal and external dynamics. When meticulously incorporated into a well-developed business plan, it serves as a guiding compass for future performance assessments.

Strengths and weaknesses, classified as internal factors, are elements within the business owner’s control. Examples include the business’s reputation, partnerships, intellectual property, and the competence of its staff. On the other hand, opportunities and threats are typically beyond the business owner’s immediate control. These factors encompass external elements such as competitors, economic conditions, market size, emerging trends, and supplier-related challenges.

A SWOT analysis proves instrumental in realigning a struggling business. By identifying inherent problems, fostering changes and improvements, and guiding decision-making processes, this analysis serves as a dynamic tool to steer the business back on course. It facilitates the creation of a roadmap towards success by ensuring that the business adapts and evolves in response to both internal and external influences.

 

6. Take a hard look at your finances

Financial challenges can pose hurdles even for the most successful business owners, ranging from inadequate cash flow and inaccurate reconciliation reports to burdensome external liabilities and mounting debt. These challenges, though preventable, demand proactive management and a keen eye on financial health.

If financial strains are looming, a critical step involves scrutinizing your expenses and outgoing cash flow. Shifting to a weekly tracking system, as opposed to a monthly one, can provide a real-time overview, enabling you to stay ahead of potential issues. Early detection of financial challenges is pivotal in mitigating their impact and sustaining your company’s profitability.

Some common financial challenges include:

  1. Cash Flow Issues: The lifeblood of any business, cash flow problems can impede operations and growth.

  2. Lack of a Prepared Budget: Operating without a clear budget can lead to unmonitored spending and financial instability.

  3. Unforeseen Expenses: Unexpected costs can disrupt financial plans, necessitating quick and adaptive responses.

  4. Excessive Debt: Overreliance on borrowed funds can strain finances and hinder long-term sustainability.

  5. Poor Tax Compliance: Inadequate attention to tax obligations may result in financial penalties and legal complications.

  6. Mixing Personal and Business Finances: A common pitfall, combining personal and business finances can lead to confusion and hinder accurate financial tracking.

  7. Reporting Oversights: Inaccurate financial reports can cloud decision-making and jeopardize the overall financial health of the business.


To regain control of your books and navigate the complexities of accounting, leverage the guidance offered in the recommended articles. These resources serve as valuable companions in taming the accounting beasts, setting the stage for a more streamlined and productive business.

 

7. Get funding if you need it

Working capital challenges are a ubiquitous concern for businesses across all sizes, and for smaller companies with limited resources, the impact can be particularly harmful. While having enough cash to cover immediate expenses is crucial, the absence of sufficient working capital can severely impede crucial business functions such as hiring, replenishing stock, marketing campaigns, and new product development.

To surmount these challenges, proactive measures are essential. Begin by establishing a comprehensive budget for operations, meticulously outlining anticipated expenses and income. Importantly, research and secure financing options well in advance, creating a financial cushion before the need arises. This strategic approach ensures that funds are readily available when required, mitigating the risk of operational disruptions.

Once working capital is secured, businesses can allocate funds to various critical activities, including:

  1. Hiring New Employees: Expanding the workforce to meet growing demands or address skill gaps.

  2. Bringing on Expert Consultants: Tapping into external expertise to enhance business strategies and operations.

  3. Stocking up for Seasonal Sales: Anticipating and preparing for increased demand during peak seasons.

  4. Purchasing Bulk Items on Discount: Capitalizing on cost efficiencies by buying in bulk at discounted rates.

  5. Ordering New Materials: Ensuring a steady supply of raw materials for production and service delivery.

  6. Fueling Marketing Campaigns: Investing in marketing initiatives to expand brand visibility and attract customers.


By proactively managing working capital, businesses can navigate financial challenges, seize growth opportunities, and cultivate a resilient foundation for sustained success. The key lies in strategic planning, early financial preparation, and judicious allocation of resources to support vital business functions.

 

8. Pivot and change direction

Working capital challenges are a ubiquitous concern for businesses across all sizes, and for smaller companies with limited resources, the impact can be particularly harmful. While having enough cash to cover immediate expenses is crucial, the absence of sufficient working capital can severely impede crucial business functions such as hiring, replenishing stock, marketing campaigns, and new product development.

To surmount these challenges, proactive measures are essential. Begin by establishing a comprehensive budget for operations, meticulously outlining anticipated expenses and income. Importantly, research and secure financing options well in advance, creating a financial cushion before the need arises. This strategic approach ensures that funds are readily available when required, mitigating the risk of operational disruptions.

Once working capital is secured, businesses can allocate funds to various critical activities, including:

  1. Hiring New Employees: Expanding the workforce to meet growing demands or address skill gaps.

  2. Bringing on Expert Consultants: Tapping into external expertise to enhance business strategies and operations.

  3. Stocking up for Seasonal Sales: Anticipating and preparing for increased demand during peak seasons.

  4. Purchasing Bulk Items on Discount: Capitalizing on cost efficiencies by buying in bulk at discounted rates.

  5. Ordering New Materials: Ensuring a steady supply of raw materials for production and service delivery.

  6. Fueling Marketing Campaigns: Investing in marketing initiatives to expand brand visibility and attract customers.


By proactively managing working capital, businesses can navigate financial challenges, seize growth opportunities, and cultivate a resilient foundation for sustained success. The key lies in strategic planning, early financial preparation, and judicious allocation of resources to support vital business functions.

 

9. Invest in marketing

Now equipped with a solid foundation for business turnaround, with a defined audience, financial stability, and readiness for outreach, the next crucial step is implementing effective marketing strategies to attract, engage, and retain the right customers.

Achieving broad awareness on a limited budget can be efficiently executed through various social media tactics, including:

  1. YouTube Marketing
  2. TikTok Marketing
  3. Instagram Marketing
  4. Facebook Ads


According to Henry Chen, a seasoned entrepreneur and business coach, prioritizing video marketing is key to promoting your business online successfully. Chen recommends creating consistent, evergreen content, particularly on platforms like YouTube. He emphasizes the importance of delivering value-driven and searchable content.

Chen’s advice is clear: “Focus on solving one to two simple but common and important problems in each video. Providing free value and showcasing social proof increases the likelihood of customers choosing your business. With evergreen content, your videos continue to work for you, yielding results for months and even years to come.”

 

10. Take action

When your business is in dire straits, proactive measures are essential. Waiting for things to unfold is not an option. Take preventative actions to address issues before they worsen and fix glaring problems. Entrepreneurs thrive on the satisfaction of turning things around. Challenges are inevitable, and a short-term business setback is just one among many. Even if your efforts don’t salvage the business, view it as a learning experience. Many successful entrepreneurs have faced failures before achieving their breakthrough. Success often hinges on learning from mistakes and perseverance.

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Options when your business is failing

Even if your business is struggling, it’s not necessarily beyond rescue. Depending on the scale of the challenges, one of the following options might turn your company around:

a. Refinancing – Small business loans or invoice factoring can quickly boost cash flow. Yet, be cautious, especially if you suspect insolvency. Consult an insolvency practitioner before seeking new finance. Avoid actions that could worsen creditors’ positions.

b. Company Voluntary Arrangement – A formal payment agreement with creditors lets you restructure existing debts over a more manageable timeframe. Additionally, as part of the process, some unaffordable debt may be written off.

c. Administration – Administration can be beneficial for your company, keeping creditors at bay during restructuring. It allows a company to stay in administration for up to 12 months, providing time for financial and operational restructuring without the threat of legal action from creditors, helping the business get back on track.

d. Pre-Pack Administration – The sale of the company’s assets to a third party, potentially an existing director of the failing company, enables operations to continue with the same suppliers, employees, and customers, without the burden of existing debt. A pre-pack administration sale is agreed upon before the company enters administration.

If your business is on the brink of failure, acting swiftly is crucial. As debts pile up and creditors grow impatient, seeking prompt action becomes a priority. 

Vanguard Insolvency has a nationwide network of offices across the UK. Our team of licensed insolvency practitioners can guide you through the options, whether you aim to save or close your failing company.

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.