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A failing business is often not a bad or failed business as investors would often think during safe note financings. It is often just a wakeup call to make some adjustments and pivot.
There can be soft and hard pivots. They may be in different areas of your business. It could be the customer base you are after, going B2C versus B2B, your branding and positioning, pricing models, sales channels, product and service lines, or something else.
Or you may need to move up or down the supply chain. Instead of being the hot dog vendor on the street with a cart, you might need to be the supplier to hot dog vendors. Or even the creator of the wholesale product.
Just be sure that you validate your assumptions and pivot ideas. You don’t want to have to go through this again.
Get Your Investors On Board with Your New Plan
Having your “eureka” moment and laying out a new plan for yourself and direction for your company is great. Though chances are that you are not the only one who needs to follow through on it.
If you have existing investors, this may be a significant detour from your agreed upon plans. Depending on their stake, they may have a controlling vote on this. At a minimum, they may be able to ask for their capital back, or refuse to extend more money in future rounds or an extension round.
Create a new pitch deck. Present to them, and show them why this is the must make move. Get them on board.
If you can’t, find a way to cash them out, and bring on the right new investors before the condition of your business deteriorates any further.
Optimize Your Team
Whether making minute iterations or pivoting in a completely different direction, your team will play a massive role in this. They will be pivotal in the success or failure of your plans.
If you need to make layoffs, try to do it once. It’s better to layoff half of your team one time, than ongoing staff reductions that will kill morale and trust.
Bring in new experts to drive the business forward. This may be new management and executives, as well as outside consultants and advisors.
Get clarity, sell the vision and get buy in.
Restructure the Business
This doesn’t just apply to staffing. It means organizational, operational and financial restructuring.
Workflows may need to change. Along with software and the tools you use. Debt may need to be renegotiated with creditors.
Rebrand
Rebranding can be a great solution to fixing many failing businesses.
It could have been the branding alone that was holding you back or sabotaging you. Branding alone could make everything better in some cases.
Even a poorly chosen business name, logo, color scheme and tagline could have been sabotaging your potential all along.
The language you use, pricing, affiliations, and where and how you sell can all be factors in this as well.
M&A
There are many ways in which M&A deals can be the answer for how to fix a failing business.
Just some of these strategies may include:
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Acquiring smaller companies to improve efficiency and financials
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Acquiring others for growth metrics and customer access
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Merging with a larger company for capital and resources
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Selling and cashing out before going bankrupt
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Selling specific assets to recapitalize and refocus
Common Reasons for Business Failure
If you just want to avoid getting into this situation in the first place and reduce risk of failure, or are still trying to figure out why your business is failing, here are the most common reasons for business failure.
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Running out of money, including poor cash flow management, not raising enough
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Not being in a big enough market
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Not having a real business model with revenue, unit economics, sustainability, scale
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Poor management, from not hiring strong executives, department experts and advisors
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Weak and underperforming marketing and sales, or under-investment in them
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Not understanding the customer and problem; pricing, convenience, process, service
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Lack of flexibility and agility in adapting to changing market conditions: disasters, competition consumer trends and behaviors
Summary
There are lots of solutions for how to fix a failing business. Don’t just give up. No matter how bleak it looks today. Dig into the data. Get clarity. Optimize as necessary. Be sure you understand the areas of risk, and insulate your business from them to avoid these issues in the future.
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