Many times when businesses fail, they don’t go with a bang, they go with a whimper. They die a slow death. Many small business owners feel overwhelmed by shrinking revenue and encroaching competitors, yet hold back from making drastic changes until it’s too late to effect business change.
Whether you run a small manufacturing business, a professional services firm, or a local retail establishment, there are at least 9 business recovery strategies you can implement to make a successful turnaround in your business fortunes.
1. Institute Regular Strategy Sessions
The first time you notice your profit margins shrinking and your customers abandoning you for your competitors, it should be a time when you consider reimagining who your company serves, what it does, and how it delivers value.
2. Business model innovation
While this may be obvious to manufacturers, even very small local businesses face strategic business risks from large-scale movements and trends taking place outside their industry, among their customers, or within society as a whole. Business model innovation means that you consider changing who you serve, your position in the value chain, your differentiating value proposition, or all three (among other factors).
3. Invest heavily in customer communication
It always amazes me how infrequently the average small business communicates with their customer base. Many business owners and CEOs simply assume that customers “don’t want to hear much from us.” My retort to that is always, “How do you know?”
One of the most dangerous habits you can get into as a business owner is turning assumptions into facts without research or experimentation. I have seen that this habit kills more companies than any external condition or competition.
Your customers have the most valuable business intelligence that money can buy. Aggressively seeking their feedback and feedback should be your first point of attack as soon as you suspect any structural weaknesses in your business or business model.
4. Conduct an audit of marketing assets
Many of a company’s alleged weaknesses and expenses could be marketing assets hidden in plain sight. For example, a list of former customers who have not purchased anything in the last two years could easily be reactivated with an honest, targeted direct mail campaign. Instead, I often see business owners whose attitude toward past customers is, “You’re dead to me.”
5. Establish a strategic alliance
The ideal strategic alliance partner has a business whose products or services complement their own. One of the fastest and most effective business turnaround strategies is to “force-feed” your lead generation system with a series of strategic alliances. These strategic alliances allow you to get endorsed referrals for targeted leads and earn additional revenue without increasing your overhead or overburdening your operating model.
6. Create a new profit center
One of the difficulties many small businesses (particularly local service or retail establishments) face is the inability to scale. For example, an assisted living facility that has only 10 beds has a bit of limitations as to how it can increase its income if all ten beds are filled and it is still in financial difficulty. However, there is often expertise that can be packaged into consulting opportunities or licensed to other establishments.
One of the easiest ways to turn a product or service-based experience into an additional revenue stream is through the creation of a closely related information-based business or profit center that leverages the intellectual capital locked up in the business. Such profit centers typically have much higher margins and lower operating overhead than your existing business.
7. Innovate your prices
Changing the price of your product often is a great way to generate new momentum in your business. IBM history shows that one of the key changes made by Thomas J. Watson when he became CEO of CTR (the struggling company that would later be renamed IBM) was to convert the pricing of his early machines from expensive purchases. direct on long-term leases and more affordable maintenance plans.
Simple pricing innovations, such as offering 3 tiers of pricing packages instead of a take-it-or-leave-it pricing, often result in higher sales conversions for many businesses.
8. Factoring and asset-based financing
Sometimes the unavoidable challenge in achieving business change is getting better cash flow from business assets. Factoring is a type of financial transaction in which a company receives a lump sum for selling its accounts receivable to a third party.
Factoring is just one of many asset-based financing strategies that could ignite a positive turnaround in the fortunes of a struggling small business. Another option is to receive structured working capital by obtaining loans secured by other business assets, such as inventory, machinery, and real estate.
9. Develop a unique selling proposition
Many small businesses get by for a long time on their tactical marketing efforts and only begin to appreciate the seriousness of true business differentiation when those marketing efforts begin to run out of steam. A unique selling proposition or USP can be the most powerful weapon for small business marketing success.
Having a clear reason why your market should do business with you instead of your competitors or substitutes instantly makes all of your advertising and marketing efforts more effective. It also gives each referring client and partner a very powerful referral script on their behalf. If your small business is already involved in a great deal of marketing and advertising, developing an effective unique selling proposition can be the most powerful weapon you have to turn your business around.
You don’t need to implement all 9 business recovery strategies right away. Pick one that feels right for you to alleviate the bottlenecks to your profitability and performance, and then get to work. Over time, if you try and implement these strategies, you’ll find your business on the path to explosive profit and revenue growth over the long term.
