Collapsing enterprises are not an uncommon feature of the Nigerian business landscape. Many of them are pummeled into oblivion by an unforgiving business climate; others are run into the ground by poorly informed entrepreneurs and aloof staff. Anyone who takes the chance of launching into the challenging waters of Nigeria’s startup environment must be sure that they are ready to weather its formidable storms. They must be certain that they are able to force their way into the market player’s arena because their industry isn’t going to offer a place in that space in exchange for small dues.
But, what if your business is already on the way down, tethering on the edge of the death cliff? Are your financials plunging into negative territory? Perhaps, sales have sunk sharply, and you’re struggling- and failing -to keep customers, let alone find new ones. How do you turn this situation around, for good?
Here, we’ll reel out the steps that experts usually advise businesses in dire straits to take. You could give your business a new lease of life by following them through.
Assess the situation
Examine your business to ascertain where the fatal flaws and potential dangers lie. Ask probing questions about your products, finances, staff, customers, brand and processes. Here’s a sample set of questions you may ask as part of the assessment process:
-Do my products really have a market for them? Do they meet real needs? How do they compare with similar offerings from competitors?
-Is my business profitable? In what direction is cash flow? Does the business have a significant debt profile?
-Are my workers as productive as their work descriptions, pay and skills indicate they should be? Are poor working conditions and internal conflict hindering staff productivity?
-Are you capturing the right customer demographic? Are your clients paying?
-Is your brand appealing to your intended target audience, or failing in this regard (and if it’s failing, why is it)?
-Are my business’s processes (procurement, production, distribution, etc) efficient, or wasteful?
Your answers to these questions could reveal the problems that are causing your business to falter.
A detailed assessment of the business’s state should expose waste and inefficiency if they exist. You’ll then be able to plug the loopholes and put a stop to practices that drain your resources but offer comparatively less in return. For example, you might change the type of raw materials you use, and replace them with less costly alternatives of comparable quality. You may also have to lay off some staff, especially those who may not be producing as much as their positions demand (but hold on to real talents).
If you have been providing a variety of services, you should focus on the ones that you’re really good at- the ones that generate more revenue. Unless you’re sure that you have what it takes to keep the other services, you’ll have to trim them off if they’re not giving you satisfactory return on investment.
With declining business fortunes, comes customer dissatisfaction (actually, the causality might be in the opposite direction). When it becomes common knowledge that a business isn’t doing well, the public’s perception of its brand takes a hit. Sometimes, it gets damaged beyond repair. In many cases, an enterprise resuscitation process requires a brand overhaul. This could mean changing brand colours and logos and initiating new marketing campaigns. These moves help to push a narrative of renewal and convince the public that the company is moving in a new, positive direction.
There’s one universally agreed-upon sign that a business is failing: crumbling finances. Cash-strapped businesses need funds to stay afloat. But isn’t it the case that they struggle precisely because they don’t have the funds they need?
It’s better to make taking a bank loan the last financing option. Try propping up your business with money from personal savings. Make sure you take the cost-cutting measures described in step two before doing this, so you won’t be throwing precious resources into a black hole. Your business is more likely to succeed if new injections of cash come when it has been cut into a leaner, more efficient shape.
You might also consider selling some of your fixed assets to raise money for further inward investment.
- Track progress
It’s important to work with the aim of reaching measurable goals. Outline your targets in clear terms, and state the specific signs of recovery that you’ll be watching out for as you implement your plans. Take stock of progress and record milestones. If you need to work with a new business plan that reflects the new realities you’re operating in, then create one.
It takes time to steer a business out of troubled waters. But if it has potential beyond a crisis, you should do what you can to save it.