For a host of reason beyond their control, and many for which they bear total responsibility, business owners fail to seek help when they’re in trouble.
A leader of the national economy for so long in many respects, Western Australia now has the dubious distinction of topping the count in terms of small business failures.
Almost 700 small businesses went under in the quarter to June in WA – twice the national average.
In my almost 30 years as a business turnaround and growth specialist it has become clear to me that the business community at large, and small business owners in particular, either fail to acknowledge when they are in trouble or, if they do, they don’t know what to do about it.
Let’s be really clear: there is help out there for struggling businesses but the secret is to know when to call and who to call.
Timing is everything in a turnaround situation. Trying to shut the door after the horse has bolted is futile, so having the foresight and the inner strength to admit that things are going wrong is the true secret to turning the situation around.
You need to first put on the brakes, take a pause in order to allow a pair of objective eyes to truly analyse the business in its entirety, and then get things moving in the right direction. Sometimes this involves streamlining before you can gather momentum; in other cases you have to accept that it is best to salvage what is left and move toward a sale.
The key to the first step of any business turnaround is realising that, in the short term, being profitable is not necessarily as important as whether money is coming in quicker than it goes out. In good times this isn’t a problem, but when times are tough it only takes one client to pay slowly or one supplier to demand quick payment to upset the rhythm and leave the business floundering.
It’s important to get a fresh perspective on your business from an objective party – a turnaround specialist – without being distracted by the day-to-day stresses of running it. This person may be able to negotiate payments from creditors more quickly, buy you time with landlords or financiers or arrange cash injections to cover temporary cash-flow problems.
The next step is to sort out the fundamentals of your business. The turnaround specialist will be able to look at more permanent solutions to boosting income and cutting costs. This may involve working more efficiently, developing new income streams or dropping unprofitable products or services from your business model.
Given that there is such help at hand, why do so many businesses still fail? Business owners are often too emotionally attached to make the necessary changes themselves or too inexperienced to see the writing on the wall. Sometimes sheer stubbornness gets in the way. Even if your business seems to have ended up with no options left, you can still call for help. It is never too late.
You may be able to sell your business as a going concern or even raise enough capital to get through by bringing in a partner. In some cases you can even voluntarily wind up the old company, sell the assets and move forward taking your experience and knowledge with you.
Whatever the outcome, the message is clear: there is help out there for struggling businesses if you know when and where to ask. If you can’t pay your staff, if you don’t know how you are going to pay your suppliers, if you can’t meet this month’s bills, if you dread going into work in your business you need to call a turnaround consultant.
You can’t afford not to.
