How-To: revitalize and turnaround a failing small business
Turning around a failing business isn’t easy, but it is possible
The key is starting early. Often, entrepreneurs try to convince themselves that a slowdown is just another hiccup, and end up waiting until their business is on the brink of collapse before attempting a reboot.
But even though the thought of revitalization sounds daunting, it’s also a chance to tighten weak points and set a correct course for the future. So, what can an entrepreneur do when a major turnaround is necessary?
Every business is different, but there are basic principles that improve your chances of success.
Know when to get outside help
According to David Ian Gray, founder of consulting group DIG360, the first step is speaking with fellow entrepreneurs who faced similar challenges. Simply asking for advice and resources can put you on the right track.
“[Speak to someone who] isn’t going to recommend something that is overly risky, overly costly, or overly simplistic.’ Gray says.
He also notes that while it doesn’t hurt trying to fix the problem yourself, there are three signs that your business needs outside help:
You’ve tried everything and the downturn continues
You don’t have the time to plan a revitalization alone
You need help persuading others that something is fundamentally wrong.
Gray says small business owners may be averse to bringing in outside help, as they often overestimate their capabilities.
“[The owner has] been highly successful in a model that’s been developed for a time and place and situation,” Gray explains.
If a downturn is caused by a fundamental shift in the technology or, in the case of retail, the way people shop — and retail has been experiencing major shifts every 3-5 years — it can be hard for an owner to accept that they must rethink their entire business.
Gray says recognizing and being able to anticipate these game-changing shifts will help owners avoid future turmoil.
Do your homework
They key to success is research. Gray recommends taking a comprehensive look into the external and internal sources of your problems to avoid oversimplifying what you’re up against.
He says some small businesses see research as nothing more than an added expense and a waste of time. But for Gray, it is a mandatory part of consultation.
“I am adamant about this now — you invest and take two steps back so you can have success in the future,” he says.
Even the basics need to be reassessed on a regular basis.
“Something as simple as ‘Who is our customer’ becomes very complicated when it hasn’t been revisited in 5 or 10 years,” he says.
Gray adds that there is no simple answer when it comes to revitalization. Slowdowns can have many causes, including owners going on autopilot after achieving success, key staff members leaving, or a business failing to adapt to changes in technology or customer habits.
If your business is in bad shape, chances are there is more than one reason why things are unravelling.
Talk to your clients
Communicating with clients is essential to understand what’s going wrong and how to improve, says Brad Milne, co-founder of internal collaboration service ConnectedN.
After ConnectedN launched, an investor arranged a meeting for Milne and partner Sandy Gibson with two representatives of the nonprofit world — potential customers ConnectedN considered their ideal target market. Milne went to the meeting and explained his product.
“They didn’t want it.” They were receptive, he says, “but they weren’t willing to buy from us.” This was a red flag, as Milne needed clients willing to buy, not simply express enthusiasm.
So, he spoke with prospective clients to find out how the business should pivot.
“We asked — and we still ask — what can we provide that would help you,” he says. Simply asking these questions led his company to rebrand as Elevate Inc., and change their target market from nonprofits to businesses looking for a social media engagement platform to enable their employees to promote their brand online. It was a radical change, but it also saved the business.
Still, it’s easy to ask the wrong questions. Gray says, when trying to diagnose a complex problem, reducing questions into rudimentary queries, such as satisfaction scales, will give rudimentary answers, and not provide meaningful feedback. .
All changes have to be on the table
“It’s a tough pill to swallow that your idea, something you created, was wrong,” Milne says. “One of the things we had to learn is that nothing’s sacred.”
This includes the market ConnectedN was going after, the essence of the product, and even the brand.
“We’re constantly evolving how we describe what we do and how the product actually works, all in an effort to make it better,” Milne says.
Look at your staff, and yourself
The key to a successful revitalization, Gray says, depends on someone inside the business driving the changes that need to be made.
“All a consultant can really do is provide direction and some ideas,” he says. “No matter how correct, it requires adaptation [and] adoption on the inside.”
But finding someone to lead isn’t always easy.
“Even if the staff has a lot of loyalty and goes back years and years and years, to suddenly think about the business differently and to act differently can be extremely daunting,” Gray says. “I think it’s very challenging to do that with an existing team.”
Milne says having staff who believe in your vision is essential, noting it’s important to be willing to drop employees when necessary.
Before its revitalization, ConnectedN had to scale down to a skeleton staff of three. Milne then hired talent he felt were the right fit for his new vision, and they helped transition the company to what it is today.
“They are really the reason that we’re able to execute on our clients’ needs,” he says.