Data from the Small Business Administration Office of Advocacy indicates that about fifty percent of businesses fail within the first year. Even more disheartening is that ninety-five percent of businesses don’t make it beyond the five-year mark. Businesses have about a one in twenty chance of succeeding.
Even businesses that have been in operation for decades aren’t immune to the struggles that all organizations face from time to time. The factor that separates the successful businesses from the ones who fail is how they handle downturns.
A businessperson with an executive MBA may have the skills required to take an objective look at the situation and attempt to alleviate the struggle. What skills does such a person need?
Creative Thinking
Writing for Business Insider Australia, one business expert outlined key tips for turning a business around. Two similar tips were to question everything and re-engineer outdated systems and processes.
A turnaround cannot happen unless the people at the helm of the business recognize the need for significant changes. With the ultimate goal of saving the company, significant changes may include bidding farewell to processes and products that have been around for years or even layoffs.
Leadership
Jeff Haden, a contributing editor for Inc. Magazine, gave advice on how to save a struggling business. He wrote, “Focus on people. If a once-successful business is struggling, it's almost always a people-related issue. Not financing, not capital, [or] employees, management, or owners … The problem may be entitlement, complacency, laziness, or ego.”
Revitalizing a business may be a matter of helping the people within it to refocus on the company’s original mission. Shift the mindset back to innovation and customer relationships. An attitude adjustment can lead to positive developments in the bottom line.
On the other hand, it doesn’t always pay to make radical changes in philosophy. When Carlos Ghosen, a prominent businessman, was asked to help revitalize the automaker Nissan, he focused his strategy on two key principles. One of those principles focused on respecting the culture at Nissan while breathing new life into it. Finding a balance was necessary.
Analysis
Saving a struggling business also requires a head for analysis and number-crunching. Making the best use of available financial software, and perhaps even hiring an experienced financial advisor, can give a business the monetary basis it needs for revitalization. A sound analysis can identify areas of excess spending and pinpoint business aspects that may need more money in order to reach their full potential. Debt management is also key in turning a business around.
Saving a struggling business isn’t always possible, but the chances of success are better if you possess the proper skills. Creative thinking, leadership, and analysis all play a vital role. Businesspeople can acquire these skills through both experience and formal education. To learn more, visit Washington State University online.
Resources:
http://www.businessinsider.com.au/here-are-ten-tips-to-help-turn-around-any-struggling-business-2013-11
https://www.sba.gov/sites/default/files/FAQ_March_2014_0.pdf
http://www.inc.com/jeff-haden/how-to-turn-around-a-struggling-business.html
https://hbr.org/2002/01/saving-the-business-without-losing-the-company
How Financial Analytics Software Can Bring Life to Your Small Business
Photo courtesy of: https://www.flickr.com/photos/perki2000/213498949/sizes/m/