How to fix a broken Business
Business in trouble?
You dread the phone ringing, fearing its people asking for money, you feel sick to the stomach when they come to your door asking for payment.
You know you’re in real financial trouble and your cash flow is terrible.
Don't do what I did and say it will get better and hope for the best. My business failed and I lost everything. it wasn't pretty and cost me my marriage, friends and my home. so if you find yourself in this position-
Be honest with yourself.
These problems are not going to get better by some miracle.
“Progress is a nice word. But change is its motivator. And change has its enemies.” – Robert F. Kennedy
You are your worst enemy! You must change first. Until you change your outlook then your business will not change.
It’s a fact of life that businesses will find themselves in trouble at times. This is the nature of business. It’s how you react that will define your outcome. After all, financial disaster can be the catalyst for future success.
I have been there and learnt from it and have since gone on to run several successful businesses and turned around many more both as a Manager and helping business owners as a consultant.
So, what do you do now?
1. Face your debts and cashflow problems
If your debts are mounting debts and you're juggling your cash – it's time to look at ways to improve your cash flow and get back on track.
Think about ways you could increase cash flow, such as:
· Prepare weekly/monthly/quarterly cash flow forecasts to understand what has to be paid and when it's due to be paid
· Have solid procedures in place for collecting outstanding debts from customers – and stick to them
· Can you free up any cash? Sell old equipment, chase clients that owe you money.
· Cut business costs, when was the last time you compared electricity or gas costs? When did you last negotiate discounts with your supplier? Is there a way you can streamline your processes to save labour.
It may be scary but talk to your creditors and explain your situation. They want their money back so it’s likely that they will work with you to put together a repayment plan that suits you both. Be honest with them, aim low and settle higher if necessary, without paying more than you can afford.
2. Reassess your budget
You’ll need to set a clear financial budget.
· Gross and net margins – check your stock prices and on costs and review expenses regularly to ensure that you are passing on any increases to your customers if possible
· Sales – do you have measures in place to retain and attract new customers, and are they working?
· Discounts, your profit will be impacted – look for alternative ways to offer extras to your customers, such as after sales service or multi deal buys that keep your margins.
· Staff review opening times and your rosters – make sure all of your staff are fully employed during their rosters and are trained and empowered to service your customers.
· Marketing, most business cut this first, but ask yourself – “why do Coca Cola, Mcdonalds and Nike advertise and sponsor daily, when they are some of the biggest and best known brands in the world?”
You need to make plan of where you want your company to be in the next 5/10/15 years. And then you need to stick to it. To many businesses think short term and this is one of the easiest ways to fail.
3. Review your current processes?
Are your current processes working?
1. What is your current process for…..?
It is essential that you answer this question. My experience has been that while most business owners and entrepreneurs know they ought to have standard written processes for everything in their business, most don’t.
Typically, their answer is something rambling like, “Well, you know … we usually tend to …. but, to be honest, we really don’t have any system that we follow consistently.”
In other words, the process is a “off the cuff” system based on whatever the person responsible for the process decided to do at that time (i.e. not a great process).
However, before you can fix anything, you need to see what it currently looks like.
2. What have we tried in the past that has worked?
This might seem like an unusual question to ask, but it’s not. Frequently, businesses, in pursuit of change, change things that are working. Then discover that the new systems aren’t as effective as the old ones.
So, with your process, was there something you used to do that got better results than what you’re currently doing?
So, is there something that you did in the past that might be worth revisiting to fix your current process problem?
Remember change for change sakes is not effective.
As the saying goes; “if it ain’t broke, don’t fix it”.
3. What have we tried that hasn’t worked?
As a consultant, this is one of my favourite questions—for three reasons.
1. I never want to suggest an idea that someone has already tried and it didn’t work.
2. It immediately eliminates a lot of wasted time as people suggest ideas that they know won’t work.
3. Sometimes, the list can help you discover a problem, either with their thinking or their solution.
4. What have we observed or learned from others?
What are your competitors doing well?
What are they doing badly?
Can we adapt this to make a process?
What are other businesses doing about this?
5. Based on the above, how would we redesign our process today?
You’ll be amazed at the results you get if you continually ask these five questions all the time about every process in your business.
· Have a recruitment plan in place that outlines what you need your staff to be/do, such as any qualifications, flexible to working hours, being a team player.
· Be an employer of choice – provide great support and training to your staff and the word will get around.
· involving staff in managing the business – you'll get more commitment when your staff have a say.
· making sure the culture within your business provides the types of rewards your staff are looking for.
· Make sure you empower your staff to make decisions to benefit your customers.
· Reward staff, happy staff stay longer and look after customers better making happier customers and more sales.
· Pay a decent wage, minimum wage is fine, but paying a bit more will set you out from the rest and give you the pick of the best people not just the best of the rest.
· Cross train your staff, this can help save money on agency staff and if one department is quiet then they can help out elsewhere to improve customer service, reduce production times, and make more sales or save money.
Sometimes the solutions are quite simple such as-
* The chalet rental business that went from break even to £50,000 profit a year with a new experienced marketing manager.
* The hotel business which tripled their sales and saw their profits increase by 4% when they hired a marketing expert and employed a stock taker.
* The nightclub with profits that suddenly increased by £400 a night when the evening manager was replaced by an honest man, following a mystery customer visit which identified the problem.
* The restaurant that changed the pricing structure on their menu and sales went up by 23% and their GP went from 61% to 67%.
More often more work is involved. change is hard but necessary. In business if your not moving forward, adapting and changing with the times then you will fail.
But don’t freak out and don’t bury your head in the sand and hide from your problems. The problems will only get worse.
Be honest and upfront and listen to advice, think carefully, plan, be positive, inspire and make the necessary changes.