by Stacey Thompson
With an unstable economy not only in the US, but all over the globe, businesses that struggle or even fail outright are not uncommon events. Whether its stiff competition, obsolescence (products or services of a company are suddenly outdated and obsolete, like beepers when digital mobile phones arrived), mismanagement, or unforeseen events and circumstances (such as natural calamities and wars), businesses fail. It’s a fact of life.
Even the best entrepreneurs have failed in one endeavor or another, and it has given them the hard lessons that allowed them to succeed in their other ventures. Many successful enterprises encountered difficult times and manage to endure, adapt, and even grow stronger and larger because of the trials. Let Google be your guide in finding the dramatic stories of these companies and their remarkable founders and leaders. Protip: start with Apple’s tale of garage-to-riches, then take a gander at Yahoo’s epic rise – then decline – and now, gradual return to relevance.
Gleaned from personal experience and the experiences of time-tested businessmen and executives, here are a number of ways that entrepreneurs have stemmed the tide and led their companies out of a difficult spot:
Refocus Priorities.
A good number of businesses, especially those that are experiencing rapid growth, have often made the mistake of spreading themselves too thin, diversifying beyond their competencies and means. While it makes good business sense to branch out and seek other markets and revenue streams, this could also adversely affect the company’s profitability, especially if things don’t turn out well.
While in the red, it is best to be conservative with the company’s funds and suspend any particularly money-intensive projects that stray far away from the main business. Of course, this course of action may not apply in all situations, as sometimes it is the core business itself that is dragging the entire business down, and a new frontier could be the key to revitalizing the company. This underscores the importance of the leaders’ decisions on where to steer the business to.
Streamline.
Knowing the companies priorities, it would also be prudent to keep things “lean and mean” so the funds and your people’s energies are efficiently utilized. Given that you are in a veritable “state of emergency,” all available resources should be focused towards the projects and endeavors that matter, and those that will result in a better bottom line and an expansion (or at the least, preservation) of the market share.
There is definitely a wrong way to do this. Be careful and avoid shaving funds and attention off things that actually matter. For instance, depriving your people of essential tools and funding might affect their performance, and just as importantly, their morale. Remember, some of them are harboring the mentality that the ship is sinking; you don’t want them to start jumping overboard, especially your top performers.
Part of the streamlining effort is downsizing. Regrettably, the company really has to contract to reduce costs. This involves people, facilities, equipment, and other things that cost the company money to maintain. While it may not make a chief executive think twice to sell off equipment (nowadays, that’s even easier, given the advent of specialized online marketplaces like Next Truck Online and other similar venues), it truly is a burden on the conscience to lay people off. This is something a responsible company executive must be able to undertake.
Stay Positive.
Having a gloom and doom mentality will only ensure the downfall of your business. View this as a test of your company’s integrity and the strength of your leadership. With the right plan and a bit of belt-tightening, your business can weather the storm and come out stronger and more prosperous than before. Onward, entrepreneurs!
Stacey Thompson is a professional writer, marketer, entrepreneur, and a lover of weird little animals. She is based in San Diego, California, and maintains a blog with her closest gal pals, Word Baristas.
