Three business strategies in a crisis
If the viability of your business is at risk and you’re considering what to do next, we have three options you could take.
The first question to ask yourself is ‘how bad is the situation’? If you removed the immediate problem would the pressure disappear and does the business have a real long-term future? If access to money is all you need and the core demand is still sound, then you’ve more options compared to a business that doesn’t.
Here are three strategies to consider.
Strategy 1. Trade out of trouble
If you’re determined to keep the business intact there are some things you can do to increase the chance of surviving.
Initially focus on selling current products or services to your existing good customers, as it should be the easiest to do. They know you. Then contact the rest of your customer database with phone calls, emails, visits, social media or e-newsletters with special offers to cross-sell or up-sell to other product lines.
Next, look for wider opportunities to increase sales as some industries or markets will be doing better than others. There are a number of ideas you could investigate including:
- Approaching new customer segments
- Diversifying by branching into new products and services
- Moving parts of your business online
- Marketing in regions traditionally outside your area
- Selling through online marketplaces
- Using social media sales platforms (Facebook, Twitter, Instagram, Pinterest, YouTube etc).
You could also look at partnering or collaborating with other businesses, some who may be struggling but others will be thriving. Do whatever it takes to keep your business afloat until the market corrects itself back to business as usual.
Strategy 2. Re-structure
If drastic action is required, think about keeping the parts of your business that work and reinvent or re-structure your business to adjust to the new normal. Take a close look at what can be salvaged and then act like a new start-up to build a new, stronger business on the foundations of the old one. What would you do differently and how would the business look?
You may want to:
- Delete unprofitable product or service lines
- Close down parts of the business that no longer contribute
- Sell or lease assets not needed
- Change the expertise mix of your staff (possibly letting some go)
- Invest in new research and development.
- Refinance your existing debts
If you can, establish one or more identifiable target markets and then design your business around providing an exceptional service offering in that area. Customers will still need to know what is special about your business to set you apart from your competitors, so try to differentiate with unique products and services.
Once you decide to restructure, obtain as much input as you can from your advisors, existing staff, industry experts and those you trust for business advice. Don’t forget to search the internet, subscribe to industry news, visit business association sites and talk to suppliers to validate your ideas.
Strategy 3. Sell and move on
If options one and two are not viable for you, it may be time to move on and either close the business down or sell what you can. If you’re thinking about business succession, it’s crucial to work through the details that will help you maximize your price and make your business more attractive to potential buyers. If you can sell the business as a going concern you should return more than just selling any assets, inventory or premises.
To reduce the risks involved in moving on, employ experts to help guide you through the steps, from preparing to sell, putting the business on the market, through to completion of the transaction and handover. It’s a good idea to talk to your advisor, accountant and lawyer and to consider working with a business broker to assist with a sale.
Talk to your business partners, family or other business owners and seek expert advice from your business adviser, accountant or industry support if you’re unsure what to do: trade out, restructure, close or sell the business.