Facing the Reality:When a Business Fails!
According to Bloomberg news, 8 out of 10 businesses fail! This figure should scare away anyone thinking of starting a business. Yet, no one wants to believe that his business will fail. But what if (fingers crossed) it does? What next?
Turn to your mentor
This is that time in your entrepreneurial career when you need your mentor the most. If you don’t have a mentor, find one. If you already do, talk to him briefly and honestly explain your problems. It is most likely that he also faced problems similar to yours, and has found solutions to them. Follow his instructions and see if things work out.
I did the same recently when Sasto Deal was not performing as I had wanted it to – the sales were slowing down and at the same time we had taken up the challenge to scale-up our business to become the industry leader. During this, I met Bishwas Dhakal (CEO, F1Soft and E-sewa), Shailendra Raj Giri (CEO, merojob.com), and Vidhan Rana (CEO, Biruwa Ventures). I listened to their advice, and now I have my business back on track.
Re-think and re-work
Most businesses fail because they run out of cash. But it is not as simple as it may sound. Why businesses run out of cash is what most entrepreneurs fail to figure out. The reasons could be one of thousands such as a business’s inability to differentiate its products and services and deal with intense competition or its failure to communicate with the customers and to identify its value propositions.
The obvious thing to do would be to identify what is not working as early as possible and formulate a solution. Re-think and re-work the business model, the management or the products and services, if need be.
For instance, we ran out of cash during our initial stages at Irish Pub. We tried cutting down on expenses, but it didn’t work. We changed the management and had to lay off a few employees, yet that didn’t prove to be beneficial. Then we changed our entire target market, shifting from Generation X to Generation Y, and within months we saw our profit soar.
This should be your last resort, but it may just save the company. When you have tried other options and nothing seems to work, it would be best for you and the company to step down and let someone else take his share of the joy/horror. This not only gives the company a fresh new approach, but also re-energizes it.
Admit it, when a business fails, you are tired and frustrated. This adds more layers to the already existing problems. But when someone new enters into the arena, he is energized with new thoughts and ideas, and this is just what the company needs.
Sometimes, even world-class football players are substituted for a rookie because it is the game that matters, not the players.
Money keeps the wheels of a business running. And money is what makes more money. If your business is failing, it is most likely that you did not start out with adequate working capital. If that is the case, convince your shareholders to invest more money and time, even if the business is failing. If they can’t, find an investor who believes in you and your business. And go back to step 2!
Look for an exit
“Winners don’t quit!” is easier said than done. Remember, in business, quitting does not make you a loser. If things are going downhill and nothing seems to work, immediately implement an exit strategy. An exit can be found by selling off the company or simply shutting it down.
Also remember, you have nothing to lose and everything to win. All that experience you garnered will only make you stronger and wiser when you start another enterprise. Quit your business if you have to, but don’t quit being an entrepreneur.