12 Ways to Overcome Small Business Failure and Thrive in Hard Times
Failures are inevitable as an entrepreneur. Here's how to overcome them.
A fundamental part of overcoming business failure is rooted in the mindset you have. It begins with a flexible and positive attitude and a willingness to change. Winston Churchill stressed this vital factor by saying, “To improve is to change; to be perfect is to change often.” Failure, including when running a business, is part of life. How we deal with it determines whether or not it ultimately leads to success.
We can learn a lot from successful business owners of the past, such as Colonel David Sanders, the founder of KFC (Kentucky Fried Chicken). At 65, this financially unstable retiree, with only a $105 to his name, roamed across America, trying to find an investor for his fried chicken business. He faced rejection. However, armed with the positive mindset for change, he pushed ahead with his plans. Finally, someone saw his worth, invested in him, and KFC was born. He sold the company for 2 million when he was 74. The ROI on the measly $105 he started out with was staggering.
The takeaway from Colonel Sanders is, a mindset eager to embrace change coupled with dedication, hard work and determination are some of the qualities you need for business success. This will help you overcome business failures when you’re up against a financial downturn, break-up, divorce, or any other personal or professional misfortune.
Follow these rules to keep your business on a firm foundation, ready to weather predicted or unexpected storms, aiming to damage your enterprise.
Adopt a Forward-Thinking Attitude
Think ahead. What outcomes do you want for your business? Where would you like the company to be in the coming months and years?
To help you decide, your vision could include:
- Your mission statement
- The products or services you will offer
- Your business niche
- Ways to find prospects
- Marketing strategies
- Problems you will solve and
- Ways to position yourself against your competitors
This list is not set in stone, however.
Your vision could be as large or as small as you want it to be. The important thing is making it workable and achievable.
Carry out Frequent SWOT Analyses of Your Business System
A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is an examination of the internal and external areas of your business.
The aim of this exercise is to identify areas that are working and those that are not. For example:
- Strengths are good internal factors within the business. Things are working in this area. Therefore, develop this part of your business. Use it as a model to build on.
- Weaknesses are damaging internal factors. Something is not working properly. Perhaps it’s your sales and marketing strategy. Look at how to make immediate changes, do something different, or stop what you’re doing.
- Opportunities come from external factors and represent good prospects for the future. Capitalize on these ventures, and optimize them.
- Threats are adverse external factors such as your competitors. Set goals to make improvements in the areas of your business affected by this problem.
To prepare a SWOT analysis, begin by making a list of your identifiable strengths and weaknesses. Ask yourself where you would like your business to be in the future. Look at where you are now. Use the results of your SWOT analysis to design the goals you intend to accomplish and to develop a plan of action.
Manage Cash Flow Efficiently
Without consistent cash flow, your business will eventually dry up and die. You need to have money coming in, or you won’t be able to pay expenses. First, have a cash flow forecast so you know what money is coming in and out.
Remember, this is only a forecast, but it will give you an insight into your financial future.
Use the forecast to project likely sales and expenditures (including cash transactions) so you know how much you’re likely to have in your bank account.
There are ways you can manage your cash flow efficiently, such as sending out invoices on time, taking deposit payments in advance, paying bills on time and promptly following up with late-paying customers.
Believe in Yourself, and Prepare for the (Inevitable) Bad Times
When you’re up against unexpected personal trials that breed stress, your mind becomes muddled. Plus, your self-esteem could take a tumble, having an undesirable effect on how you see yourself.
"Doubting your abilities will impact your business unfavorably. For that reason, make use of personal problems. See them as lessons to learn from," says David Christensen, a legal advisor who has counseled several individuals facing debt-related challenges.
Safeguard yourself by developing resilience. Understand that life comes with problems. Assess the situation objectively. Speak with a trusted friend or family member instead of ignoring the problem. Don’t be hard on yourself, and keep believing you can overcome the obstacles you are facing. Surround yourself with the right support network of people. Don’t give up.
"Never quit," says William Nobrega of CQS International. "If you believe, and you really need to believe, then you would be willing to sacrifice everything to achieve the mission. If you are fortunate enough to serve with the right team, they will have the same mentality. You will run into obstacles all along the way, but how you deal with them and how you overcome them will determine your success."
Perseverance, Determination, and a Positive Mindset Rein Supreme
Running a business and making it successful is not easy. If anyone tells you otherwise, they’re lying. However, it’s not impossible for you to survive in the business world. On the contrary. Embrace the warrior mindset, and refuse to become a number in the statistics of business failures. According to Small Business Trends, 50 percent of businesses fail within the first four years.
Steve Jobs persevered when Apple was on the brink of bankruptcy. He said,
“I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance. It is so hard and you pour so much of your life into this thing, there are such rough moments in time that most people give up. And I don't blame them, it's really tough.”
What would have happened to Apple if Steve had given in to defeat?
Use success stories of people who failed their way to success to inspire and motivate you. Stephen King, one of the most popular authors, had countless rejections. The nails he used to pin the rejection letters to his wall bent under their weight. Thomas Edison failed countless times before he was able to perfect the electric light bulb. After succeeding, he said,
"The electric light has caused me the greatest amount of study and has required the most elaborate experiments. I was never myself discouraged, or inclined to be hopeless of success. I cannot say the same for all my associates."
There are many more entrepreneurs and business owners you can add to this list. They all exhibited unwavering perseverance and determination.
Work Through Loss by Reaching out to Family Members, Friends, and Professionals
The experience of losing a loved one is inevitably accompanied by various emotions, including sadness, helplessness, anxiety, and anger. These feelings are a natural part of the mourning process.
Involving others in your grieving can make it more bearable. Talk about it. Tell your close friend or family member how you feel. If you don’t have access to them or if you feel you need more support, consult with a health professional or a grief counselor.
Don’t bury your emotions and lose yourself in your business. Ask your business partner to take over for a while, or close your business for a few days. It’s important to work through the grief instead of trying to run the business as usual when your mind is somewhere else.
Keep Your Customers at the Heart of Your Business
Eighty percent of a company’s revenue comes from 20 percent of its customers, according to Gartner statistics. Loyal customers are the success stories of your business. Involve them in your business strategies when planning marketing campaigns and developing new products. Share their case studies, consider their points of view and feedback (good or bad), and make them feel important.
Starbucks, the number one coffee shop chain in the world, takes their customer experience seriously. When hiring, some of the qualities they look for in potential staff are having a good attitude, interest in the customer and enthusiasm to meet their needs. And they are not afraid to invest time and money into creating the best customer service experience they can deliver.
Plan Ahead by Considering the Financial Impact of a Divorce on Your Business
Going through a divorce can not only break you emotionally but also destroy your business financially. Funding the divorce could wipe out a substantial part of the hard work you put into developing your business.
How do you cushion yourself against the nightmare of a divorce and its possible impact on your business?
One way to plan ahead is to have a prenuptial agreement before getting married. Plus, it might help to consider how much involvement your new spouse should have in your business.
When it comes to the legal side of the divorce, instead of acting on emotion, try to handle your divorce pragmatically. Julia Rodgers, the co-founder of Holistic Divorce, believes you should educate yourself on the law and how it applies to your divorce before moving forward. She says,
“Thinking and acting strategically will have a direct effect on the emotional and financial aspects of your post-divorce life.”
A divorce doesn’t have to rob you of your business. Seek guidance from an experienced divorce attorney and advisors to help you through the process. They will understand your challenges and work with you to support you and your business’s needs.
Embrace Failures as Short-Term Setbacks, and Seek Help to Find Solutions
Bill Bartman, named one of the wealthiest people in the world by Forbes in 1997, lost $3 billion. But instead of wallowing in self-pity, he said,
“We all stumble and fall. Maybe I've done it more cataclysmically than most. But you can learn so much if you open your eyes rather than blame everyone else and feel pity for yourself. You need to dust yourself off, turn around backward, and learn what you could have done differently. When you can do that, big things can result.”
Most of us were taught failure is bad. Therefore, when we fail, we are tempted to throw in the towel and give up. But successful people use failure as stepping stones to climb out of their troubles. Understanding their struggles will boost your motivation when you are faced with failure.
Reflect on what went wrong, and find solutions to the problem that caused the failure. Learn from your mistakes, and do things differently next time. And draw inspiration from people who failed many times but eventually achieved their dreams.
Set Smart Goals and Develop Achievable Strategies to Attain Them
Write down your goals. This will give you clarity and make it easier to work towards achieving them. Use the SMART goal-setting method and read through these examples to keep yourself focused:
- Specific: State what you want to accomplish
- Measurable: What results do you want to see? Break them down into easy, doable steps.
- Achievable: Are your goals realistic? Make sure you have the time and resources to make them a reality.
- Relevant: Your objectives should line up with what you’re trying to accomplish for your business.
- Timely: Set a deadline to work towards.
Next, develop a plan to put your SMART goals into action. Answer these questions to get ahead:
- What’s the time frame?
- What are the steps you will need to take?
- Who will help you?
Invest in an Advisor or Mentor, and Draw from Their Expertise
Invest in a business mentor or advisor to guide you. Draw from their pool of knowledge and personal experiences to help your business grow. According to a survey carried out by Sage, 93 percent of medium-sized businesses credited their mentors for helping them succeed.
It’s tough running a business alone. Entrepreneurs need encouragement, guidance, and reassurance when faced with problems. Because mentors have been in similar situations, they know how to help you. They’ll share valuable advice, give you constructive feedback and connect you with the right people.
Take Sensible Risks and Step out of Your Comfort Zone
Taking a sensible business risk is not gambling blindly without considering the consequences. Think carefully, weigh the options, and test them out.
For example, you want to try a new marketing strategy costing 20 percent more than your usual campaign. Test it out first by doing a sample run with a smaller investment. If it’s successful, pour more money into this strategy.
Don’t take risks when your emotions are running high. Be objective, and discuss your plans with colleagues, friends or family. At the end the day, however, you’ll have to take sensible risks and step out of your comfort zone with your business. Just use wisdom, knowledge, and experience before going ahead.
Having a failing business doesn’t mean it’s the end of the road. You will encounter obstacles along the way, but you will also find ways to overcome those obstacles. Someone somewhere has gone through the same trials you face. Learn from their stories, and use your own story as a lesson for improvement and business success.